The ACIT, Central Circle-1(1), Ahmedabad V. Shri Jivraj V. Desai, Mehsana

ITA 2376/AHD/2005

• Counselvise Citation: 237620514 RSA 2005
• Duration Of Justice: 8 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-12-2012
• Assessment Year: 1999-2000
• Appeal Filed On: 11-11-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C PATWARI; SHANKARLAL MEENA
• Assessee Lawyers: G C PIPARA
• Keywords: Unexplained investment; Gift; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Principle of natural justice; Opportunity of cross examination; Peak credit; Cost of acquisition; Bad and doubtful debts; Valuation report; Block assessment; Notional interest; Retraction; Bogus loan; Documents seized
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER IT(SS)A NO. 99/AHD/2004 THE ACIT, CENTRAL CIRCLE- 1(1), AHMEDABAD. V/S. JIVRAJ V. DESAI 5, ASHOKNAGAR SOCIETY, RADHANPUR ROAD HIGHWAY, MEHSANA, NORTH GUJARAT. PAN: AAWPD 8565F (APPELLANT) (RESPONDENT) IT(SS)A NO. 106/AHD/2004 JIVRAJ V. DESAI 5, ASHOKNAGAR SOCIETY, RADHANPUR ROAD HIGHWAY, MEHSANA, NORTH GUJARAT. PAN: AAWPD 8565F V/S. THE ACIT, CENTRAL CIRCLE-1(1), AHMEDABAD. (APPELLANT) (RESPONDENT) ITA NOS. 2376/AHD/2005 & 3437, 3438/AHD/2007 A.YS. 1999-00, 2001-02 & 2003-04 THE ACIT, CENTRAL CIRCLE- 1(1), AHMEDABAD. V/S. JIVRAJ V. DESAI 5, ASHOKNAGAR SOCIETY, RADHANPUR ROAD HIGHWAY, MEHSANA, NORTH GUJARAT. PAN: AAWPD 8565F (APPELLANT) (RESPONDENT) REVENUE BY : SHRI D.C. PATWARI AND SHANKARLAL MEENA, D.R. ASSESSEE(S) BY : SHRI G.C. PIPARA, A.R. / DATE OF HEARING : 19/09/2013 / DATE OF PRONOUNCEMENT: 13/12/2013 IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 2 - / O R D E R PER BENCH : THESE TWO CROSS APPEALS HAVE BEEN FILED BY THE REVE NUE AS WELL AS BY THE ASSESSEE EMANATING FROM AN ORDER OF CIT(A)-I AHMEDABAD DATED 19 TH OF FEBRUARY, 2004. THESE TWO APPEALS ARE CONSOLIDATED AND HEREBY DECIDED BY THIS COMMON ORDE R. A. IT(SS)A NO.99/AHD/2004 (REVENUES APPEAL). 2. GROUND NO.1 IS REPRODUCED BELOW: THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECT ING TO RESTRICT THE ADDITION OF RS.27,32,38,000/- MADE ON ACCOUNT OF UN ACCOUNTED INVESTMENT IN SHARAFI BUSINESS AS ON 01/11/1999 TO RS.52,29,000/-. 3. FACTS IN BRIEF; AS EMERGED FROM THE CORRESPONDI NG ASSESSMENT ORDER PASSED U/S. 158BC DATED 31 ST OF OCTOBER, 2002 WERE THAT A SEARCH ACTION U/S. 132 WAS CARRIED OUT ON 20 TH OF OCTOBER, 2000. THEREUPON, A NOTICE U/S. 158BC WAS I SSUED WHICH WAS SERVED ON 23 RD OF MARCH, 2001. IN COMPLIANCE A RETURN OF INCOME FOR THE BLOCK PERIOD 1991-92 TO 2001-02 WAS FILED ON 14 TH OF OCTOBER, 2002. HOWEVER, THE UNDISCLOSED INCOME W AS DECLARED AT RS. NIL. THEREAFTER THE ASSESSMENT PROCEEDINGS W ERE STARTED. THE AO HAS NOTED THAT THE ASSESSEE IS THE MAIN PERSON O F THE MASTER GROUP, WHICH IS ENGAGED IN THE DEVELOPMENT OF RESI DENTIAL AND COMMERCIAL BLOCKS. THE GROUP IS ALSO IN THE BUSINES S OF LAND TRANSACTION AND HOTEL BUSINESS. IN ADDITION; THE AO HAS NOTED THAT THE ASSESSEE WAS DOING A BUSINESS OF CASH FINANCING . DURING THE COURSE OF SEARCH CERTAIN EVIDENCES WERE STATED TO H AVE BEEN FOUND REGARDING THE SHARAFI BUSINESS. AS PER AO, THE SA ID SHARAFI IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 3 - BUSINESS WAS NOT DISCLOSED BY THE ASSESSEE IN THE REGULAR RETURN FILED BY THE ASSESSEE. THE AO HAS NOTED ABOUT THE SHARAFI BUSINESS AS FOLLOWS: SHARAFI TRANSACTIONS NOTED IN DIARY ANNEX. A-1 SEIZ ED FROM THE RESIDENCE OF ARVIND A. SHAH - DURING THE COURSE OF SEARCH EVIDENCES REGARDING UNACCOUNTED SHARAFI TRANSACTIONS WERE FOU ND. THESE EVIDENCES WERE CONFRONTED VIDE NOTICE U/S. 142(1) A ND ALSO IN SHOW CAUSE DATED 14.10.2002. THE SHOW CAUSE IS REPRODUCE D BELOW: SHOW CAUSE: VIDE NOTICE U/S. 142(1) YOU WERE ASKED AS UNDER:- REFERENCE IS INVITED TO DIARY BEING ANNEX. A-1 SEIZ ED FROM THE RESIDENCE OF SHRI ARVINDBHAI SHAH. FURNISH IDENTITY AND ADDRESSES OF ALL PERSONS WHOSE ACCOUNTS WERE MAINTAINED BY SHRI ARVIDN SHAH ON YOUR BEHALF. REFERENCE IS MADE TO ANSWER NO.28 OF Y OUR STATEMENT DT. 20.10.2000 WHEREIN YOU HAD COMMITTED TO FURNISH PAR TYWISE DETAILS OF THE CASH TRANSACTIONS NOTED IN THE DIARY. FURTHER I N YOUR STATEMENT YOU HAD ACCEPTED THAT THE FIGURES IN THE DIARY HAVE TO BE READ BY ADDING THREE ZEROES. FURTHER FROM THE PERUSAL OF THE CASH BOOK IT IS SEE N THAT NEGATIVE PEAK CREDIT OF RS.4,89,80,198/- IS REFLECTED ON 8.2.2000 . EXPLAIN THE SOURCE OF THIS MONEY. THE TRANSACTIONS IN THE DIARY HAVE BEEN WRITTEN ONL Y TILL 10.10.2000. UPDATE THE TRANSACTIONS FROM 10.10.2000 TO 19.10.20 00 ON THE BASIS OF ANNEXURE A-2 SEIZED FROM THE RESIDENCE OF SHRI ARVI NDBHAI SHAH. THE CASH BOOK IN ANNEX. A-1 IS MAINTAINED IN SINGLE ENTRY SYSTEM. PREPARE AND FURNISH THE JOURNAL P & L A/C, LEDGER A CCOUNT BY CONVERTING THE SAME INTO DOUBLE ENTRY SYSTEM. AS PE R REVENUES WORKING OF THE PROFIT GENERATED FROM SHARAFI BUSINE SS TRANSACTIONS REFLECTED IN ANNEX. A-1 AND A-2 THE PROFIT IS AS UN DER:- 1.11.1999 TO 31.3.2000 : RS.3,87,62,595/- 1.1.2000 TO 10.10.2000 : RS.4,15,04,155/- FURNISH DETAILS AS TO WHERE THIS PROFIT WAS REFLECT ED IN THE RETURNS FILED BEFORE THE INCOME-TAX AUTHORITIES. PREPARE THE OPENING TRIAL BALANCE AS ON 1.11.1999 O N THE BASIS OF WHICH THE CASH BOOK IN ANNEX. A-1 HAS BEEN PREPARED . EXPLAIN THE SOURCE OF THE MONEY INVESTED IN THE SHARAFI BUSINES S. EXPLAIN THE DIFFERENCE IN THE TRIAL BALANCES AS ON 4.9.2000, 9.10.2000, 1.6.2000 AND 29.6.2000 WHICH ARE REFLECTED IN THE S EIZED MATERIAL. REFERENCE ANNEX. A-2, PAGE 70, 69, 689 SEIZED FROM THE RESIDENCE OF ARVINDBHAI SHAH. IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 4 - 3.1 ON THE BASIS OF THE EVIDENCES AS RECOVERED DURI NG THE COURSE OF SEARCH A QUERY WAS RAISED THAT WHY THE WHOLE OF THE SHARAFI BUSINESS AS EVIDENCED IN DIARY A-1 BE NOT TAKEN AN UNDISCLOSED BUSINESS OF THE ASSESSEE. ON DIARY A-1, THE NOTING WAS JVD. THIS DIARY WAS FOUND TO BE WRITTEN BY ONE SRI ARVIND A. SHAH. HE WAS WRITING THE SAID DIARY IN THE CAPACITY OF THE ACCOU NTANT OF THE ASSESSEE. A STATEMENT OF SRI ARVIND A. SHAH U/S. 13 2(4) WAS RECORDED ON 20 TH OF OCTOBER, 2000 AND IN REPLY HE HAS STATED AS UNDER: IN HIS STATEMENT OF SHRI ARVIND A. SHAH U/S. 1323(4) ON 20 .10.2000 ON BEING ASKED ABOUT. DIARY A-1 HE HAD SUBMITTED TH AT THE SAME PERTAINED TO THE SHARAFI BUSINESS DONE BY SHRI JIVR AJBHAI V. DESAI. THE RELEVANT PORTION OF HIS STATEMENT IS REPRODUCED BEL OW: Q.14. I AM SHOWING YOU ANNEXURE A-1 WHICH IS SEI ZED FROM YOUR RESIDENCE. PLEASE EXPLAIN ABOUT THE CONTENTS THEREI N? ANS. IT IS A LEDGER ACCOUNT OF SHARAFI FINANCING BUSINES S DONE OF JIVRAJBHAI VASTABHAI DESAI. IN THIS LEDGER, PRINTED PAGE NO.1 IS AN ACCOUNT OF MODI SAHEB AND THE FIGURES MENTIONED ARE IN THOUSANDS I.E. RS.3,000/- WRITTEN ON THE CREDIT SIDE IS ACTUA LLY RS.30,00,000/-. LIKEWISE, WHATEVER FIGURES WRITTEN IN THIS LEDGER A RE WRITTEN AFTER DELETING LAST THREE ZEROS. THE DEBIT SIDE FIGURES S HOW THE AMOUNT RETURNED TO THE PARTIES BY US AND CREDIT SIDE FIGUR ES ARE SHARAFI AMOUNTS RECEIVED BY US FROM THE PARTIES. THE PARTIC ULARS APPEARING ON PRINTED PAGE NO.1 TO 60 ARE THE PARTIES FROM WHO FINANCE HAVE BEEN RECEIVED BY US AND THE PARTICULARS APPEARING O N PRINTED PAGE NO.60 TO 285 ARE DIFFERENT PARTIES TO WHOM FINANCE HAVE BEEN GIVEN BY OUR GROUP. ALL FIGURES WRITTEN IN THIS LEDGER AR E IN THOUSANDS I.E., WRITTEN AFTER DELETING LAST THREE ZEROS. THE FIGURE S WRITTEN NEARBY THE NAME OF PARTY ON EACH PAGE MENTIONS THE RATE OF INT EREST. 3.2 THE ENTRIES IN THE SAID DIARY WERE DECIPHERED A ND IT WAS NOTED THAT THREE ZEROS, I.E., 000 HAVE BEEN ELIMI NATED IN THE FIGURES NOTED IN THE SAID DIARY. ON INVESTIGATION, IT WAS FOUND THAT THERE WERE BANK TRANSACTIONS WITH MEHSANA NAGRIK CO . BANK, WHEREIN THE TRANSACTION WAS INCLUSIVE OF THREE ZERO S, WHEREAS IN IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 5 - THE DIARY THE TRANSACTIONS WERE RECORDED BY THE ACC OUNTANT BY ELIMINATING LAST THREE ZEROS. 3.3 AS PER PAGE 234 OF DIARY A-1, THE NARRATION NOT ED BY THE ACCOUNTANT WAS AS UNDER:- PAGE NO. 234 OF DIARY A-1 HAS THE FOLLOWING ENTRIE S: CREDIT DATE NARRATION 200 28.8.2000 MEHSANA NAGRIK B ANK, HYP 83 2000 31.8.2000 -DO-. 3.4 WHEREAS THE ENTRIES AS RECORDED IN THE HYP: ACC OUNT NO.83 OF MEHSANA NAGRIK CO. BANK AS UNDER: CREDIT DATE NARRATION 200000 28.8.2000 CASH WITHDRAWN 2000000 31.8.2000 -DO-. 3.5 THERE WERE SEVERAL OTHER EXAMPLES NOTED BY THE AO WHEREIN IN THE LIKE MANNER THE TRANSACTION WITH THE BANK WA S RECORDED IN THE DIARY BY ELIMINATING LAST THREE ZEROS. AFTER DE CIPHERING THE FIGURES OF THE DIARY THE AO HAS NOTED THAT SRI JIVR AJ V. DESAI, THE ASSESSEE, IN HIS STATEMENT DATED 20 TH OCTOBER, 2000 HAS ACCEPTED THAT THE DIARY A-1 CONTAINED THE CASH FINANCING BUS INESS CARRIED OUT BY THE ASSESSEE. THE SAID STATEMENT OF THE ASSESSEE RECORDED U/S. 132(4) DATED 20 TH OCTOBER, 2000 HAS FURTHER REVEALED AS FOLLOWS: Q-23 GIVE DETAILS OF YOUR FINANCIAL BUSINESS ACTIVI TIES: A-23 WHENEVER ANY PERSON COMES TO US FOR TAKING FIN ANCE WE TAKE MORAL COMMITMENT FROM HIM ON STAMP PAPER OR CHITS, WHICH CONSISTS OF THE PERIOD IN WHICH THE AMOUNT IS TO BE RETURNED AMOUNT OF INSTALLMENT AND DETAILS OF MORTGAGE LAND, WHICH IS IN THE NATURE OF SECURITY. IF THE ABOVE PERSONS RETURN THE AMOUNT IN TIME, THE TRANSACTION IS CONSIDERED AS COMPLETED, AND IF HE D OES NOT RETURN THE AMOUNT IN THE PRESCRIBED TIME THEN THE POSSESSION O F MORTGAGED LAND WILL BECOME OURS. THE RATE OF INTEREST IS ALSO SOME TIMES WRITTEN. THE RATE OF INTEREST IS DECIDED UPON THE FACTS LIKE POS ITION OF THE LAND, TITLE IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 6 - CLEARANCE AND TIME FOR REPAYMENT OF AMOUNT. THE MIN IMUM RATE OF INTEREST IS 2% BUT THE TITLE OF THE LAND IS NOT CLE AR THEN THE INTEREST RATE BECOME 3% AND MORE. Q.24 HOW DO YOU MANAGE THE AMOUNT TO BE GIVEN AS LO AN? A.24 I TAKE LOAN FROM BANKS, FROM DIFFERENT PERSON S AND SOMETIMES THROUGH MORAL COMMITMENT OF LAND MORTGAGED WITH US. Q.25 PLEASE EXPLAIN THE MODES OF YOUR BUSINESS. A.25 WE TAKE MORAL AGREEMENT ON PAPER. MOST OF THE TRANSACTION ARE IN CASH AND WHATEVER TRANSACTION ARE DONE THROUGH C HEQUE ARE RECORDED IN THE BANK ACCOUNT. Q.26 WHERE YOU HAVE KEPT THE DOCUMENT RELATED TO YO UR FINANCIAL TRANSACTION? A. 26 WE KEEP THESE DOCUMENT WITH US. Q.27 GIVE DETAILS REGARDING ARVINDBHAI SHAH. A.27 ARVINDBHAI SHAH VISIT OUR OFFICE ONCE IN A MON TH. HE LOOKS AFTER LIC ACCOUNTS AND OTHER ACCOUNTS. SINCE LAST THREE M ONTHS HE IS ILL. Q.28 I AM SHOWING YOU THE DIARY, WHICH IS A COLLECT ION BOOK (ANNEXURE A-1 OF PANCHNAMA DT. 20.10.2000) SEIZED D URING THE COURSE OF SEARCH AT THE RESIDENCE OF SHRI ARVINDBHAI SHAH. SHRI ARVINDBHAI SHAH HAS STATED IN ANSWER NO.14 THAT THE FIGURES WR ITTEN ARE TO BE READ IN THOUSAND (FOR E.G. IF THE AMOUNT IS 3,000 I F SHOULD BE READ AS 30,00,000). HE FURTHER STATED THAT IT IS A LEDGER O F FINANCIAL TRANSACTION OF JIVRAJBHAI VASTHABHAI DESAI. EXPLAIN THE SAME. A.28 IT CONTAINS THE INFORMATION ABOUT MY CASH FINA NCING BUSINESS DETAILS OF LOAN & RATE OF INTEREST TO THE OFFICE LA TER ON. .. Q. 52. WE HAVE ALREADY SHOWN ALL THE SEIZED PAPERS TO YOU. IF THER IS ANY UNDISCLOSED INCOME FOR BLOCK PERIOD YOU MAY DIS CLOSE IT. A.52 I WONT ABLE GIVEN THE ACTUAL ESTIMATE RIGHT N OW. BUT I WILL GIVE THE FOLLOWING ISSUE WISE INFORMATION: 1. I WILL ESTIMATE THE TRANSACTION DETAILS OF SAVIT APARK CO. OP. SOCIETY, VIRA BAHAGAT CO. OP. SOCIETY. AFTER CONSIDERING THE DISCLOSURE UNDER VDIS SCHEME THE REMAINED UNDISCLOSED INCOME WILL BE WORKED OUT AND SUBMITTED. 2. I WILL ESTIMATE THE TRANSACTION IN DIFFERENT DEV ELOPMENT ACTIVITIES LIKE SHARAFI INCOME. I WILL WORK OUT THE SHARAFI IN COME AS PER ANNEXURE A-1 SEIZED FROM RESIDENCE OF ARVINDBHAI, A CCOUNTANT, PANCHANAMA DATED 20.10.2000. I WILL GIVE DETAILS OF UNDISCLOSED INCOME FORM MY ASSETS AS PER ANNEXURE A-1. IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 7 - 3.6 ON THE BASIS OF THE ABOVE STATEMENTS, THE AO HA S CONCLUDED: (I) THAT THE ASSESSEE WAS ENGAGED IN THE SHARAFI BUSINE SS. (II) THAT THE UNACCOUNTED SHARAFI BUSINESS WAS RECORDED BY SRI ARVIND A. SHAH (III) THAT SRI ARVIND A. SHAH WAS AWARE ABOUT THOSE PARTIES. 3.7 AGAIN AN STATEMENT OF SRI ARVIND A. SHAH WAS RE CORDED U/S. 131 ON 19.9.2002 AND 24.9.2002 BY THE AO. IN THAT S TATEMENT SRI ARVIND A. SHAH AS STATED AS UNDER: Q-4. WHO WAS IN CONTROL OVER THE SHARAFI TRANSACTIO NS NOTED BY YOU IN ANNEXURE A-1? A-4. FULL CONTROL OVER WHOLE OF THE SHARAFI BUSINESS WAS IN THE HANDS OF JIVRAJBHAI DESAI ALONE. IT WAS ONLY ON HIS INSTRUCTION THAT MONEY COULD BE GIVEN ON INTEREST. NONE OF THE OTHER S MEMBERS OF JIVARAJ V. DESAI HAD DIRECT CONNECTION WITH THE SHA RAFI BUSINESS. Q-5. WHO HAD RIGHT AND CONTROL OVER THE INTEREST IN COME EARNED FROM SHARAFI BUSINESS? A-5. WHOLE OF THE INTEREST INCOME EARNED FROM SHARA FI BUSINESS WAS UNDER THE RIGHT AND CONTROL OF JIVRAJBHAI DESAI. EV EN IF THIS INCOME WAS USED FOR SOMEBODY ELSE IT COULD NOT HAVE BEEN D ONE WITHOUT THE PERMISSION OF JIVRAJ DESAI. 3.8 HOWEVER THEREAFTER THE APPELLANT HAD DENIED THA T THE TRANSACTIONS RECORDED IN THE SAID DIARY WERE RELATE D TO ANY SHARAFI BUSINESS. ACCORDING TO HIM THE TRANSACTIONS RECORD ED IN THE DIARY WERE RELATED TO A LAND DEAL MENTIONED AS THALTEJ L AND DEAL. A STATEMENT OF THE ASSESSEE- SRI JIVRAJ V. DESAI WAS RECORDED ON 7.10.2002. IN THAT STATEMENT THE ASSESSEE HAD ADVAN CED AN ALTOGETHER NEW THEORY OF THALTEJ LAND DEAL. IN FA CT, THE ASSESSEE WAS CONFRONTED WITH THE STATEMENT OF SRI ARVIND A. SHAH WHICH IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 8 - WERE RECORDED ON 19.9.2002 AND 24.12.2002 BY THE AO . THE ASSESSEE HAS GIVEN THE ANSWER IN THE FOLLOWING MANN ER: Q.2 IN HIS STATEMENT ON 19.9.2002 SHRI ARVIND SHAH HAS STATED THAT DIARY SIMILAR TO A-1 WAS BEING MAINTAINED BY HIM FR OM 1.11.1997 AND 1998 WHICH WAS HANDED OVER BY HIM AT THE TIME OF DI WALI TO YOU. A-2. I HAVE STATED IN MY PREVIOUS STATEMENT DIARY H AS PRIMARILY ACCOUNTS RELATED TO THALTEJ LAND DEAL FOR WHICH I W AS A MEDIATOR. HENCE THE ACCOUNTS WERE BEING MAINTAINED BY YOU. A- 3, PAGE-11 & 12 HAS DETAILS REGARDING THE THALTEJ LAND AND HAS BEEN SIGNED BY MY SONE AND JIGNESH RABARI. THIS AGREEMENT IS ALSO IN THE H ANDWRITING OF SHRI ARVIND SHAH WHICH MAKES IT CLEAR THAT ARVIND SHAH K NEW SHRI V.V. RABARI AND HIS STATEMENT THAT HE DOES NOT KNOW ABOU T SHRI RABARI IS UNTRUE. SHRI ARVIND SHAH EVERY MONTH USED TO SEND T HE DIARY FOR PERUSAL OF SHRI RABARI. Q-3. IN HIS STATEMENT IN ANSWER-11 SHRI ARVIND SHAH HAS GIVEN DETAILS REGARDING THE ACCOUNTS MAINTAINED IN DIARY A-1. PLEASE STATE YOUR COMMENTS ABOUT THE SAME. A-3. I HAVE GONE THROUGH THE DETAILS FURNISHED BY S HRI ARVIND SHAH IN HIS STATEMENT REGARDING THE NAMES NOTED IN DIARY A-1. FROM THIS ALSO IT IS VERY CLEAR THAT JIGNESH DESAI, NATU POPU LAR, CHHAGAN KAKA, ACCOUNTS ARE RELATED TO THALTEJ LAND DEAL. OTHER TH AN THIS ACCOUNT OF SHRI MANOJ VADODARIA NOTED IN DIARY A-1 ALSO PERTAI NS TO THALTEJ LAND DEAL. IN THESE ACCOUNTS THERE ARE CONTRA ENTRIES BE TWEEN THE ACCOUNTS OF NATU POPULAR AND MANOJ VADODARIA. FOR E/.G/ IN A NNEX. A-3 PAGE 98 & 99 SEIZED FROM ARVIND SHAHS RESIDENCE THERE A RE ACCOUNTS RELATED TO THALTEJ LAND DEAL WHICH PERTAINED TO NAT U POPULAR AND MANOJ VADODARIA HAVING NOTING ON 17.10.1999. IT IS FROM HERE ONWARDS ONLY THAT DIARY LIKE A-1 WAS BEING MAINTAIN ED. FURTHER IN THE SEIZED DIARY THE DEBIT OPENING BALANCE SHOWN IN THE ACCOUNT OF MANOJ VADODARIA PERTAINS TO CONTRA ENTRIES RELATED TO THA LTEJ LAND DEAL. NO FINANCIAL TRANSACTIONS HAVE BEEN DONE OTHER THAN TH IS. IN THIS WAY, THE DEBIT BALANCE SHOWN IN THE ACCOUNT OF SHRI MANOJ VA DODARIA IN DIARY A-1 PERTAINS TO PENDING PAYMENTS RELATED TO THE THA LTEJ LAND DEAL AND AS THE SAME WERE NOT PAID IN TIME ACCRUED INTEREST HAS ALSO BEEN DEBITED. ALL PAYMENTS RELATED TO THALTEJ LAND DEAL WERE TO GO TO A TRUST AND I HAD NOTHING TO DO WITH THIS. WHATEVER CASH WA S RECEIVED WAS HANDED OVER TO THIS TRUST AND THE ACCOUNT OF THE SA ME IS NOTED IN THE DIARY MAINTAINED BY SHRI ARVIND SHAH. IN THIS WAY, I HAVE NOTHING TO DO WITH THE ACCRUED INTEREST WITH THE ACCOUNT OF SH RI MANOJ VADODARIA. I SHALL FURNISH WITHIN 2 TO 4 DAYS COMPL ETE DETAILS REGARDING THE NOTINGS RELATED TO TAHLTEJ VITHOVA TR UST LAND DEAL IN THE SEIZED MATERIAL. FURTHER I SHALL ALSO ESTABLISH THE LENGTH BETWEEN THE SEIZED MATERIAL AND THE DIARY A-1. I SHALL ALSO FUR NISH THE 7/12 EXTRACT OF THE LAND CONCERNED. IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 9 - Q-5. IN HIS STATEMENT DT. 24.9.2002 SHRI ARVIND SHA H STATED THAT YOU WERE TO COMPLETE CONTROL OVER THE SHARAFI BUSINESS NOTED IN DIARY A-1. FURTHER YOU ARE ALSO HAVING THE RIGHT AND CONTROL O VER THE INTEREST INCOME GENERATED FROM SHARAFI BUSINESS. A-5. MOST OF THE MAJOR ACCOUNTS NOTED IN DIARY A-1 PERTAINED TO THALTEJ LAND DEAL AND THE INTEREST CHARGED IN THOSE ACCOUNTS WAS PAYABLE TO THE TRUST AND I HAD NO INCOME OR BENEFIT FROM THE SAME. THE SAME HAS ALSO BEEN CLARIFIED IN THE AGREEMENT L ETTER SEIZED BY THE DEPARTMENT. IN THE STATEMENT DT. 24.9.2002 AL;SO IN THE DESCRIPTION OF PAGE 93 & 99 OF ANNEX. A-2 ALSO IT HAS BEEN MENTION ED THAT THESE ACCOUNTS PERTAINED TO THALTEJ LAND DEAL. FURTHER ON PAGE 94 OF A-2 THERE IS A CONTRA ENTRY OF RS.8 CRORE TRANSFERRED T O THE ACCOUNT OF MANOJ VADODARIA. THIS ENTRY IS OF 30.9.1999. IT IS THIS ENTRY AND SUCH TYPE OF OTHER ENTRIES WHICH MAKE UP THE OPENING DEB IT BALANCE IN THE ACCOUNT OF SHRI MANOJ VADODARIA. Q-6. IN YOUR STATEMENT YOU HAVE STATED THAT VITHOVA TRUST LAND AND THE ACCOUNTS OF NATU POPULAR AND MANOJ VADODARIA AR E RELATED. FURNISH COMPLETE DETAILS REGARDING THE SAME. A-6. WITHIN 2 TO 4 DAYS I SHALL FURNISH COMPLETE DE TAILS REGARDING THE RELATIONSHIP OF THESE ACCOUNTS WITH THALTEJ LAN D DEAL. I SHALL ALSO FURNISH THE RELATIONSHIP OF OTHER NOTINGS IN THE SE IZED MATERIAL WITH THESE ACCOUNTS AND THE LAND DEAL. 3.9 IN ADDITION TO THE SAID DIARY CERTAIN SLIP PAPE R CHITTI HAVE ALSO BEEN SEIZED DURING THE COURSE OF SEARCH. THOSE SLIPS PERTAINED TO SHARAFI LOAN AND IN THOSE SLIPS THERE WAS A REFE RENCE OF JIVRAJBHAI MASTER. THE AO HAS NOTED THAT THOSE SL IPS HAVE MENTIONED THE NAME OF THE ASSESSEE. THE TRANSACTION NOTED ON THOSE SLIPS WAS MADE BY THE ASSESSEE IN HIS PERSONA L CAPACITY AND NONE OF THOSE SLIPS HAVE MENTIONED THE NAME OF THE FIRM, I.E., MASTER DEVELOPERS. ACCORDING TO AO, THE SHARAFI B USINESS WAS CARRIED OUT BY THE ASSESSEE IN HIS PERSONAL CAPACIT Y AND THE ASSESSEE HAD OVER-ALL CONTROL OVER THE INCOME SO G ENERATED BY THE UNACCOUNTED SHARAFI BUSINESS. THE ASSESSEE HAD ATTE MPTED TO EXPLAIN THAT THE SHARAFI BUSINESS WAS CARRIED OUT B Y THE FIRM M/S. IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 10 - MASTER DEVELOPERS, BUT ACCORDING TO AO THERE WAS NO DOCUMENTARY EVIDENCE TO SUBSTANTIATE THE SAID CLAIM . AFTER EXAMINING THE PARTNERSHIP DEED OF THE FIRM MASTER D EVELOPERS, AS ALSO THE PROFIT SHARING RATIO OF THE PARTNERS, THE AO HAD DRAWN A CONCLUSION THAT THERE WAS NO EVIDENCE OF SHARAFI B USINESS CARRIED OUT BY THE FIRM OR THERE WAS DISTRIBUTION OF PROFIT OF SHARAFI BUSINESS AMONGST THE PARTNERS OF THE FIRM. ON THE B ASIS OF THE ABOVE INVESTIGATION THE AO HAS SUMMARIZED AS FOLLOW S: FROM THE ABOVE ENUMERATED EVIDENCES AND STATEMENTS IT IS VERY CLEAR THAT ALL OF THE SHARAFI BUSINESS NOTED IN DIARY A-1 WAS CARRIED OUT BY YOU IN YOUR PERSONAL CAPACITY AND THUS YOU ARE REQU IRED TO SHOW CAUSE AS UNDER: I. WHY THE OPENING INVESTMENT REFLECTED IN THE DIARY A S ON 1.11.1999 BE NOT TREATED TO BE YOUR UNDISCLOSED INC OME UTILIZED FOR OFFERING THE UNACCOUNTED LOANS. AS PER THE WORK ING OF REVENUE THE OPENING BALANCE AS ON 1.11.1999 IS OF RS.27,32,38,000/- TILL DATE YOU HAVE NOT OFFERED YO UR WORKING OF THE INITIAL INVESTMENT HENCE THE WORKING OF REVE NUE IS TAKEN TO BE CORRECT. FURTHER NO EXPLANATION REGARDING THE SOURCE OF INITIAL INVESTMENT IN THE SHARAFI TRANSACTION HAS B EEN FURNISHED. II. WHY THE SHARAFI INCOME REFLECTED IN DIARY A-1 BE NO T TREATED TO BE UNDISCLOSED INCOME EARNED BY YOU DURING THE BLOC K PERIOD FROM UNACCOUNTED SHARAFI BUSINESS. 3.10 THE ASSESSEE WAS CONFRONTED WITH THOSE CONCLUS IONS AND A SHOW CAUSE NOTICE WAS ISSUED WHEREIN THE ASSESSEE W AS REQUIRED TO EXPLAIN THAT THE SHARAFI BUSINESS AS EVIDENCED IN D IARY A-1 WAS THE UNDISCLOSED INCOME OF THE ASSESSEE. FOR THE BLOCK P ERIOD THE NET INTEREST INCOME WAS PROPOSED TO BE TAXED IN THE FOL LOWING MANNER: GROSS INTEREST INCOME 1.11.99 TO 31.3.2000 RS.38762595 1.1.2000 TO 10.10.2000 RS.41504155 RS.80266750 LESS: INTEREST PAID AS PER DIARY A-1 IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 11 - 1.11.99 TO 10.10.2000 RS.22,57,270 NET INTEREST INCOME RS.7,80,09,480 3.11 THE ASSESSEES REPLY, AS REPRODUCED BY THE A.O ., CONTAINED MAINLY THAT THE SAID DIARY WAS MAINTAINED BY THE AC COUNTED SRI ARVIND A. SHAH ON THE INSTRUCTION OF ONE SRI J.V. R ABARI AND V.V. RABARI. THE TRANSACTION PERTAINED TO A LAND TRANSA CTION OF VITHAL MANDIR TRUST. IN THE SAID TRUST SRI R.V. RABARI AN D SRI V.V. RABARI WERE STATED TO BE THE TRUSTEES. IT WAS MENTI ONED BY THE ASSESSEE THAT THERE WAS A LAND ADMEASURING ABOUT 21 ,300 SQ. YARD BEARING PLOT NO.73, MOJE THALTEJ, TALUKA DASCORY TH ALTEJ HIGHWAY. ACCORDING TO ASSESSEE, SRI R.V. RABARI ENT ERED INTO AN AGREEMENT FOR SALE OF THE LAND TO ONE SRI NATUBHAI POPULAR ON 5.7.1998 ON A RATE OF RS.9,509 PER SQ. YARDS. THE A SSESSEES VERSION WAS ALSO REPRODUCED BY THE AO IN THE ASSESS MENT ORDER AS FOLLOWS: OUR HUMBLE REQUEST IS TO KEEP THIS STRICTLY CONFIDE NTIAL. 6. IN VIEW OF ABOVE, IT IS ESTABLISHED BEYOND DOUBT THAT THE ABOVE REFERRED TRANSACTIONS ARE ABSOLUTELY BELONG TO SHRI JIGNESH V. RABARI AND NATUBHAI POPULAR AND OTHER PERSONS AS MENTIONED ABOVE AND I HAVE NO INTEREST THEREIN. IT IS ALSO SUBMITTED THAT YOU HAVE RECORDED MY STATEMENT ON 3 RD OCTOBER 2002 WHEREIN ALSO I HAVE VERY CATEGORICALLY EXPLAINED THE FACTS OF THE CASE AND S TATED THAT THE SAID TRANSACTIONS ARE BELONGING TO ABOVE NAMED PERSONS. IN THE INTEREST OF NATURAL JUSTICE AND TO MAKE A FAIR AND REASONABLE A SSESSMENT. I REQUEST YOU TO ISSUE A SUMMONS U/S. 131 TO THE CONC ERNED PERSONS SO AS TO BRING TO LIGHT THE CORRECT STATE OF AFFAIRS A ND ALLOW ME THE CROSS EXAMINATION OF THE CONCERNED PERSONS. THE NAMES AND ADDRESSES OF THE PERSONS IS SEPARATELY ENCLOSED FOR YOUR READY R EFERENCE. THE ASSESSMENT FINALIZED WITHOUT EXAMINING THOSE PERSON S WILL BE AGAINST THE RULES OF NATURAL JUSTICE AND VOID ABINITIO. IT IS SUBMITTED THAT IT IS A SETTLED LAW THAT THE TAXING AUTHORITY ENTRUSTED WIT H THE POWER TO SETTLED LAW THAT THE TAXING AUTHORITY ENTRUSTED WITH THE PO WER TO MAKE ASSESSMENT HAS TO DISCHARGE QUASI-JUDICIAL FUNCTION AND IS BOUND TO OBSERVE THE PRINCIPLES OF NATURAL JUSTICE IN REACHI NG THE CONCLUSION. IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 12 - ANY ASSESSMENT ORDER MADE IN VIOLATION OF RULES OF NATURAL JUSTICE IS NULL AND VOID. RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS:- (I) CIT VS. EASTERN COMMERCIAL ENTERPRISES, 210 ITR 103 (CAL.) (II) MENKA GANDHI VS. UNION OF INDIA, (AIR 1978 SUP REME COURT OF INDIA 597) (III) P.S. ABDUL MAJEED VS. ACIT & ITO (209 ITR 821 (KER.) (IV) ITAT HYD. BENCH A (SPL. BENCH) COLONISERS VS . ACIT. 3.12 THE AOS VERSION WAS THAT DURING THE WHOLE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAD NOT FURNISH ED THE IDENTITY AND THE ADDRESSES OF THOSE PERSONS WHOSE NAMES HAVE APPEARED IN THE DIARY A-1. ACCORDING TO AO, THE ASSESSEE HAD NO T BROUGHT ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE THAT CERTAIN O THER PERSONS WERE LINKED WITH THE SAID DIARY; SUCH AS SRI MANOJ VODADARIA AND NATU POPULAR. THE AOS OBSERVATION IN THIS CONNECTI ON WAS AS UNDER: FURTHER THE ASSESSEE HAS NOT BROUGHT ANY DOCUMENTAR Y EVIDENCE ON RECORD TO SUBSTANTIATE HIS SUBMISSIONS REGARDING TH E LINK BETWEEN THE ACCOUNTS OF SHRI MANOJ VADODARIA AND SHRI NATU POPU LAR. ASSESSEES CONTENTION THAT THE TRANSACTION NOTED IN THE ACCOUN TS OF SHRI MANOJ VADODARIA ARE NOT RELATED TO HIM IS FOUND TO BE INC ORRECT. THESE EVIDENCES ARE DISCUSSED IN DETAIL IN THIS ORDER WHI LE DISCUSSING ASSESSEES UNDISCLOSED INVESTMENT IN SOLA LAND. ASSESSEES CONTENTION REGARDING THE RELATIONSHIP OF THE ACCOUNT OF SHRI CHHAGAN KAKA WITH THE THALTEJ LAND AND THE CONTENTI ON THAT HE HAD NO RELATION WITH THE SAME IS ALSO FOUND TO BE INCORREC T. EVIDENCES REGARDING TRANSACTIONS OF ASSESSEE WITH SHRI CHHAGA N KAKA HAVE ALSO BEEN FOUND DURING THE COURSE OF SEARCH. THESE EVIDE NCES ARE DISCUSSED IN THE ORDER WHILE DISCUSSING ASSESSEES BENAMI PROP ERTIES IN SAVITA PARK. ISANPUR UNDER THE HEADING SALE OF FLATS IN ISANPUR . 3.13 THE AO HAS DRAWN THE CONCLUSION AS UNDER: ON THE BASIS OF THE EVIDENCES NARRATED IN DETAIL I N THE SHOW CAUSE DT. 14.10.2002 AND ON THE BASIS OF THE ABOVE REBUTTAL O F ASSESSEES SUBMISSIONS THE FOLLOWING FINDINGS ARE ARRIVED AT. WHOLE OF THE INVESTMENT IN SHARAFI TRANSACTION NOTE D IN DIARY A-1 AS ON 1.11.99 ARE TREATED TO BE UNDISCLOSED INCOME OF THE ASSESSEE EARNED IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 13 - DURING THE BLOCK PERIOD AND UTILIZED FOR OFFERING T HESE LOANS. TILL DATE THE ASSESSEE HAS NOT CONTENDED REVENUES WORKING OF OPENING BALANCE AS ON 1.4.99. HENCE REVENUES WORKING IS TAKEN TO BE CORRECT AND OPENING BALANCE AS ON 1.11.99 IS TAKEN TO BE RS.27, 32,38,000/-. THE DETAILED WORKING OF THIS OPENING BALANCE WAS ENCLOS ED ALONGWITH THE SHOW CAUSE DT. 14.10.2002. THIS WORKING IS MADE PAR T OF THIS ORDER ANNEX. 0-1. (ADDITIION: RS.27,32,38,000/-) 4. BEING AGGRIEVED, THE AFORESAID ADDITION WAS CHAL LENGED BEFORE THE FIRST APPELLATE AUTHORITY. BEFORE THE LE ARNED CIT(A), THE ISSUE SUMMARIZED AS UNDER: (I). DIARY A-1 ON ITS HARD COVER HAS THE NOTING J VD IN THE HANDWRITING AND STYLE OF SHRI ARVIND SHAH, YOUR ACC OUNTANT WHO MAINTAINED THE DIARY WHICH EVIDENCES THAT THE DIARY AND THE TRANSACTIONS PERTAINED TO YOU. (II) THAT FROM ANS. NO. 14 OF THE STATEMENT OF SHRI ARVIND SHAH, IT IS CLEAR THAT HE HAS ACCEPTED THAT ALL THE ENTRIES IN THE LEDGER ACCOUNTS MAINTAINED IN ANNEX. A-1 ARE IN THOUSANDS I.E. 100 IS TO BE READ RS.1,00,000/-. (III) THAT IN ALL THE ENTRIES NOTED IN THE DIARY A- 1, 000 HAVE BEEN ELIMINATED WHICH IS BORNE OUT BY COMPARING THE FIGU RES NOTED IN THE DIARY WITH THE BANK ACCOUNT STATEMENT OF THE ENTITI ES OF THE GROUP. THE ENTRIES ARE ALSO REFLECTED IN THE BANK STATEMENT OF MASTER DEVELOPERS. FROM THE SAID INSTANCES, IT IS CLEAR THAT SHARAFI T RANSACTION NOTED IN DAIRY A-1 PERTAINED TO YOU AND HAVE BEEN MAINTAINED METICULOUSLY AFTER ELIMINATING 000 FROM ALL THE ENTRIES. (IV). THAT IN YOUR STATEMENT DATED 20.10.2000 ON BE ING CONFRONTED WITH THE DIARY A-1 AND WITH THE STATEMENT OF SHRI ARVIND SHAH DATED 20.10.2000, YOU HAD ACCEPTED THAT THE DIARY CONTAIN ED INFORMATION ABOUT YOUR CASH FINANCING BUSINESS AND THAT YOU WOU LD SUBMIT PARTYWISE DETAILS TO THE DEPARTMENT SUBSEQUENTLY. (V). THAT ON THE BASIS OF THE STATEMENT OF SHRI ARV IND SHAH DATED 19.09.2002 AND 24.09.2002, IT IS CLEAR THAT WHOLE O F THE SHARAFI WAS UNDER YOUR PERSONAL CONTROL AND INCOME GENERATED FR OM THE SAME WAS UNDER YOUR CONTROL AND RIGHT. (VI). THAT NO CONTEMPORARY DOCUMENTARY EVIDENCES HA VE BEEN SUBMITTED TO SUBSTANTIATE YOUR CLAIM THAT THE SHARA FI BUSINESS PERTAINED TO YOUR FIRM MASTER DEVELOPERS. 4.1 THE ASSESSEES EXPLANATION IN SUPPORT OF THE TR ANSACTIONS RECORDED IN DIARY A-1 WAS AS UNDER: IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 14 - IN SO FAR AS THE EXPLANATION FOR THE TRANSACTIONS N OTED IN DIARY A-1 SEIZED FROM SHRI ARVIND SHAH IS CONCERNED, THE APPE LLANT VIDE SUBMISSION DATED 28.10.2002 ELABORATELY FURNISHED T HE EXPLANATION IN RESPECT OF THE TRANSACTIONS NOTED IN DIARY A-1, WHI CH AS BEEN REPRODUCED BY THE A.O. ON PAGE NO.15 TO 18 OF THE A SSESSMENT ORDER. THE APPELLANT IN THE SAID SUBMISSION HAS CLARIFIED THE FOLLOWING POINTS- (I) THAT THE SAID DIARY WAS SEIZED FROM THE RESIDENCE O F SHRI ARVIND SHAH WAS MAINTAINED BY HIM AS PER THE INSTRU CTIONS OF SHRI J.V. RABARI AND SHRI V.V. RABARI. (II) THAT THE MAIN TRANSACTIONS NOTED THEREIN ARE IN RES PECT OF LAND TRANSACTIONS VITTHOBA MANDIR TRUST OF WHICH SHRI R. V. RABARI, BROTHER OF SHRI V.V. RABARI IS A TRUSTEE. (III) THAT AS EVIDENT FROM THE COPIES OF RECORD OF RIGHTS IN FORM NO.7/12 DATED 21.11.2000 AND 7.10.2000 OF LAND ADME ASURING APPROXIMATELY 21,300 SQ. YARDS OF FINAL PLOT NO.73, BEARING SURVEY NO.37 & 38, SITUATED AT MOJE, THALTEJ, TAL, DASCROI, THALTEJ HIGHWAY IS HELD BY SHRI RANJODBHAI VISHABHA I RABARI AS ADMINISTRATOR OF VITTHAL TEMPLE. (IV) SINCE THE SAID IMPUGNED LAND WAS OWNED BY SHRI RANJ ODBHI VISABHAI RABARI, WHO IS THE ELDER BROTHER OF SRI VI RAMBHAI VISABHAI RABARI. ACCORDINGLY, IN THE RECORDS OF REV ENUE, WHICH ARE PLACED ON PAGE NOS.72 TO 78 OF THE PAPER BOOK, THE SAID LAND WAS IN THE NAME OF VITTHOBA MANDIR TRUST AND IN THE NAME OF SHRI RANJODBHAI VISABHAI RABARI HAS BEEN SH OWN AS ADMINISTRATOR OF THE SAID TRUST. THE IMPUGNED LAND WAS AGREED TO BE SOLD BY THE SAID SHRI RANJODBHAI VISABHAI RAB ARI TO SHRI NATUBHAI PATEL OF M/S POPULAR BUILDERS AND ACCORDIN GLY, AN MOU WAS EXECUTED ON 5.7.1998, WHICH AS BEEN FOUND A T THE TIME OF SEARCH FROM THE RESIDENCE OF SHRI ARVIDN SH AH AND SEIZED ON PAGE NOS. 33, 34, 35, 36, 38, 39, 40 AND 41 OF ANNEXURE A-3. IT IS IMPORTANT THAT ALL THESE COPIES OR MOU HAS BEEN FOUND AND SEIZED FROM THE RESIDENCE OF SHRI AR VIND SHAH, FROM WHOM THE IMPUGNED DIARY MARKED AS ANNEXURE A-1 WAS FOUND AND SEIZED. THE A.O. HAS MADE THE ADDITION ON THE BASIS OF ANNEXURE A-1, WHICH IS IN COMPLETE CONTRAVENTION TO ANNEXURE A-3 AND THEREFORE, ENTIRE SEIZED MATERIALS REQUIRES TO BE CONSIDERED TOGETHER. AS PER THE SAID MOU THE FOL LOWING ARE THE MAJOR TERMS AND CONDITIONS, WHICH BEING VERY IM PORTANT, THE SAME ARE REPRODUCED HEREUNDER: FROM THE ABOVE TERMS AND CONDITION AND THE NOTINGS, IT IS ABSOLUTELY CLEAR THAT THE IMPUGNED LAND IS OWNED BY THE TRUST OF WHICH SHRI RANJODBHAI VISABHAI RABARI IS THE ADMINISTRATOR AND THIS TRUST/LAND IS OWNED BY SHRI RANJODBHAI V. RABARI AND SHRI VIRAMBH AI V. RABARI, WHICH HAS BEEN SOLD TO SHRI NATUBHAI PATEL AND SHRI RAMANBHAI PATEL OF POPULAR BUILDERS ON CERTAIN TERMS AND CONDITIONS AND IN THE SAID MOU IT HAS BEEN EXPRESSLY BEEN AGREED THAT THERE IS NO RESPONSIBILITY IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 15 - OF THE APPELLANT. FURTHER, DURING THE COURSE OF SEA RCH NO EVIDENCES HAVE BEEN FOUND FROM THE APPELLANT SHOWING EITHER O WNERSHIP OF THE SAID LAND, POSSESSION OF THE SAID LAND OR ANY INTER EST IN THE SAID LAND AND FURTHER, NO EVIDENCES WERE FOUND INDICATING THA T THE APPELLANT HAS RECEIVED ANY PAYMENT FOR THE SAID LAND IN ANY CAPAC ITY. THEREFORE, CERTAIN ADDITIONS MADE BY THE AO WHICH HAS BEEN CHA LLENGED IN THIS GROUND OF APPEAL, PERTAINING TO THE SAID LAND REQUI RES TO BE IGNORED/DELETED. SINCE THE SAID MOU IS AN IMPORTANT PART OF THE ISSU E, WHICH HAS ALTOGETHER BEEN IGNORED BY THE AO FOR THE SAKE OF C OMPETENCE, THE XEROX OF THE SAID MOU IS SUBMITTED HEREWITH, FOR YO UR HONOURS READY REFERENCE:- 4.2 THE MAIN CONTENTION OF THE ASSESSEE BEFORE LEAR NED CIT(A) WAS THAT THE ASSESSEE HAD NOTHING TO DO IN RESPECT OF THE SAID LAND TRANSACTION. THE ASSESSEE HAD NO INTEREST IN ANY MA NNER IN THE SAID LAND. THE TRANSACTIONS WERE WRITTEN IN THE DIARY BY SRI ARVIND SHAH AND THE HAWALA ENTRIES WERE MADE UNDER THE DIRECTIO N OF SRI NATUBHAI POPULAR AND ALSO AS PER THE DIRECTIONS OF THE LAND OWNER. IT WAS SUBMITTED THAT SRI NATUBHAI AND SRI RAMANBHA I PATEL ARE KNOWN AS POPULAR BUILDERS. THEY WERE THE BUYERS O F THE LAND. THE LAND BELONGED TO VITHOBA MANDER TRUST AND THE L AND WAS SOLD ON BEHALF OF THE TRUST BY ONE MR. RABARI. THERE IS ALSO A MENTION THAT PART OF THE LAND WAS OWNED BY SRI A.T. DESAI. THE LAND WAS OCCUPIED BY SRI CHAGANBHAI DESAI. ACCORDING TO ASSE SSEE, THE DIARY WAS OWNED BY SRI R.V. RABARI. MR. RABARI WAS TO RECEIVE THE PAYMENT FROM SRI NATUBHAI PATEL AND SRI RAMANBHAI P ATEL. THERE WAS A DELAY IN MAKING A PAYMENT AS AGREED UPON HENC E BOTH THE PARTIES HAVE LOST THE FAITH IN EACH OTHER. AS A RES ULT, ONE SRI MANOJ VADODARIA CAME INTO PICTURE AND ACTED AS A MEDIATOR . SRI MANOJ VADODARIA HAS ACCEPTED THE AMOUNT ALONG WITH INTERE ST WHICH WAS PAYABLE TO SRI R.V. RABARI BEING THE LAND OWNER ON BEHALF TRUST. IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 16 - THE PAYMENT WAS MADE BY SRI NATUBHAI PATEL AND OTHE RS. THE ASSESSEE HAS THEREFORE CONTESTED THAT THE DIARY A-1 , IN QUESTION, HAD BEEN MAINTAINED BY SRI ARVIND SHAH FOR THE PURP OSE OF RECORDING THE TRANSACTION BETWEEN SRI R.V. RABARI, SRI NATUBHAI POPULAR, SRI JIGNESBHAI RABARI. THAT THE ASSESSEE W AS NOT CONNECTED WITH THE TRANSACTIONS RECORDED IN THE DIA RY. 4.3 THE ASSESSEE HAS EXPLAINED THE WORKING OF THE A DDITION AS MADE BY THE AO AND THE TRANSACTION RECORDED IN DIAR Y A-1. THE TRANSACTION RECORDED IN DIARY A-1 AS ON 1.11.1999 W AS AT RS.27,32,38,000/-. THE AO HAS GIVEN PARTY-WISE DETA IL OF THE CREDIT SIDE AT RS.6,78,74,600/-. AS AGAINST THAT AS PER AO THE TOTAL OF THE DEBIT SIDE WAS RS.34,10,92,600/-. THE NET DI FFERENCE OF RS.27,32,38,000/- WAS THUS CONSIDERED BY THE AO AND ADDED IN THE HANDS OF THE ASSESSEE. THE AO HAS TREATED THE AMOUN T AS OPENING BALANCE AS ON 1.11.1999 WHICH WAS TREATED AS UNDISC LOSED INCOME IN THE HANDS OF THE ASSESSEE. THE MAJOR AMOUNT OF T HE DEBIT BALANCE WAS STANDING IN THE NAME OF SRI MANOJ VADOD ARIA. ON THE OTHER HAND, THE ASSESSEE HAS ARGUED THAT THE DEBIT ENTRY WAS NOTHING BUT HAVALA ENTRY PERTAINED TO THE LAND TR ANSACTION. ACCORDING TO ASSESSEE, THE FOLLOWING AMOUNTS RELATE D TO THE LAND TRANSACTION: PARTICULARS LOOSE PAPER PAGE NO. AMOUNT (DEBIT) MR. MANOJ VADODARIA 134 23,43,08,700 MR. JIGNESH V. DESAI 104 2,21,71,300 MR. VIKASHBHAI SHAH 111 1,15,29,000 TOTAL 26,80,09,000 IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 17 - 4.4 EVEN THE ASSESSEE HAS DENIED THAT THE AMOUNT OF RS.2,21,71,300/- IN THE NAME OF SRI JIGNESH V. DESA I AS PER LOOSE PAGE 104 OF ANNEXURE A-1 WAS NOT THE PAYMENT MADE B Y THE ASSESSEE BUT IT WAS IN RESPECT OF THE LAND TRANSACT ION AS HE HAPPENED TO BE ONE OF THE OWNER OF THE LAND. LIKEWI SE, THE AMOUNT OF RS.1,15,29,000/- IN THE NAME OF SRI VIKASBHAI SH AH AS PER LOOSE PAGE 114 OF ANNEXURE A-1, IT WAS SUBMITTED THAT INI TIALLY HE HAD RIGHT IN THE LAND BECAUSE AT THE INITIAL STAGE THE LAND WAS SOLD BY R.V. RABARI TO SRI VIKASBHAI SHAH. THE ASSESSEE HAS PLACED RELIANCE ON MOU DATED 05.07.1998. IT WAS AGAIN AND AGAIN REITERATED THAT THE TRANSACTIONS BELONGED TO SRI JI GNESH V. RABARI AND SRI NATUBHAI POPULAR AND THE ASSESSEE HAS NO IN TEREST IN THOSE TRANSACTIONS. ON THE OTHER HAND, THE REVENUE DEPART MENT HAS CONTESTED BEFORE LEARNED CIT(A) THROUGH SEVERAL REM AND REPORTS THAT THE ASSESSEE WAS GRANTED SEVERAL OPPORTUNITIES IN RESPECT OF NINE LEDGER ACCOUNT IN THE DIARY A-1, BUT INSPITE O F SEVERAL OPPORTUNITIES THE ASSESSEE HAS NOT DISCHARGED THE O NUS OF IDENTIFYING THOSE PARTIES ALONG WITH THEIR OTHER DE TAILS. IN THE REMAND REPORT, IT WAS INFORMED TO LEARNED CIT(A) TH AT OUT OF THOSE NINE PARTIES ONLY THREE PARTIES HAVE BEEN IDENTIFIE D AND THEREFORE, NOTICES U/S. 158 BD WERE RESPECTIVELY ISSUED TO THO SE THREE PARTIES. AS REGARDS, THE SUMMONS ISSUED TO RAMANBHAI PATEL, JIGNESH DESAI AND MANOJ VADODARIA, ALL THREE OF THEM HAVE E XPRESSED THEIR INABILITY TO PRESENT IN COMPLIANCE OF THE NOTICES I SSUED U/S. 158BD OF IT ACT. THAT FACT WAS INFORMED TO THE LEARNED CI T(A) THROUGH A REMAND REPORT BY THE AO. IT WAS INFORMED THAT ONE O F THEM IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 18 - NAMELY, SRI RAMBHAI PATEL WAS LODGED IN THE JAIL AT THAT TIME, IN THE REMAND REPORT, IT WAS CONCLUDED THAT THE DIARY A-1 BELONGED TO JIVRAJ DESAI BECAUSE AT THE COVER OF THE NOTE BOOK JVD WAS WRITTEN. THE ACCOUNTS IN THE DIARY WERE WRITTEN ON THE BASIS OF THE CHITS FOUND AT THE TIME OF SEARCH. IT WAS INFORMED THAT THE ACCOUNT WAS MAINTAINED FOR FULL ONE YEAR AND ON EACH DIWALI THE OLD LEDGER WAS HANDED OVER TO THE ASSESSEE AND A NEW LEDGER WA S STARTED BY THE SAID ACCOUNTANT. THEREFORE, THE OPENING BALANCE IN THE NEW LEDGER AS ON 1.11.1999 WAS THE UNACCOUNTED INVESTME NT IN THE SHARAFI BUSINESS BY THE ASSESSEE. SOME OF THE ENTRI ES IN THE SAID DIARY WERE MADE THROUGH CHEQUES AND THOSE CHEQUE WE RE CORROBORATED BY INDEPENDENT EVIDENCES HENCE PROVED THE CORRECTNESS OF THE LEDGER BELONGING TO THE ASSESSEE . THE BANK ACCOUNTS HAVE ALSO TALLIED WITH THE TRANSACTIONS AS RECORDED IN THE DIARY, THEREFORE, THAT DIARY WAS BELONGING TO THE A SSESSEE. ACCORDING TO REVENUE, TRANSACTIONS IN THE BANK ACCO UNT WERE UNACCOUNTED TRANSACTIONS. 4.5 LEARNED CIT(A) HAS ANALYZED ALL THOSE ARGUMENTS AND THEREAFTER ARRIVED AT THE CONCLUSION AS UNDER: 5.11 I HAVE CAREFULLY CONSIDERED THE FACTS AND THE RIVAL SUBMISSIONS AND I HAVE ALSO GONE THROUGH THE SEIZED RECORDS. I HAVE ALSO GONE THROUGH THE REMAND REPORTS AND THE SUBMISSIONS OF T HE APPELLANT ON THE REMAND REPORT, AS REPRODUCED HEREINABOVE. IT IS AN UNDISPUTED FACT IMPUGNED DIARY BEING ANNEXURE A-1 HAS BEEN FOUND DU RING THE COURSE OF SEARCH, FROM THE RESIDENCE OF SHRI ARVIND SHAH, APPELLANTS ACCOUNTANT. APART FROM THE DIARY, THERE ARE OTHER V ARIOUS LOOSE PAPERS ALSO, WHICH HAS BEEN FOUND FROM THE RESIDENCE OF SH RI ARVIND SHAH, WHICH HAS DIRECT LINK WITH THE NOTINGS IN THE SAID DIARY, ON THE BASIS OF WHICH, THE AO HAS MADE THE ADDITION. WHEN THE STATE MENT OF APPELLANT WAS RECORDED U/S. 131 BY THE ASSESSING OFFICER DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS ON 3/10/2002, WHICH SEEMS TO BE THE ONLY STATEMENT OF THE APPELLANT RECORDED AFTER THE DATED OF SEARCH ON IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 19 - 20/10/2000 WHILE ANSWERING TO Q.11, THE APPELLANT H AS STATED THAT AFTER GOING THROUGH THE LIST OF VARIOUS NAMES AS AP PEARING IN THE DIARY, THERE ARE CERTAIN NAMES TO WHOM THE APPELLAN T WAS UNAWARE. HE HAS FURTHER STATED WHILE ANSWERING TO Q.11 THAT THE SAID DIARY CONTAINS THE CERTAIN TRANSACTIONS OF THE LAND OF VI THOBA TRUST AND FOR THIS HE HAS ALSO MADE REFERENCE TO PAGE NO.39 TO 41 OF ANN. A-2, SEIZED FROM THE RESIDENCE OF ARVIND SHAH AND STATED THAT T HE SAID PAPERS ARE COPY OF ACCOUNTS PERTAINING TO THE SAID LAND SITUAT ED AT THALTEJ AND HE HAS FURTHER GIVEN THE NAMES OF NATHUBHAI PATEL OF P OPULAR, SHRI V.V. RABAVI, SHRI MANOJ VADODARIA, SHRI JIGNESH DESAI. I N THIS RESPECT, THE Q.13 AND 19 AS WELL AS THE ANSWER TO SAID QUESTION OF THE STATEMENT DATED 3/10/2002 BEING IMPORTANT IS REPRODUCED HEREW ITH. QUESTION NO.13: PLEASE GIVE THE FULL DETAILS OF NAMES AND ADDRESS O F THE ABOVE SHOWN TRUST LAND AND WHO WILL BE THE OWNER OF THE T RUST LAND? ANSWER NO.13: NATUBHAI POPULAR, DASHRATHBHAI PATEL, WHO ARE BUILD ER KNOWN AS POPULAR BUILDERS, POPULAR HOUSE, ASHRAM ROAD AHMEDABAD. I DO NOT KNOW ABOUT HAWALA MADE THROUGH SHRI MANOJ VADODARIA AND NATUBAHI POPULAR. NO OTHER DEAL ING WITH MANOJ VADODARIA EXCEPT MY SOLA LAND. LAND PURC HASE OF SOLA BANAKAT AND RELEASE DEED IS SEIZED BY INCOME T AX DEPARTMENT. JIGNESH DESAI IS A SON OF V.V. RABARI ANNEXURE. A-3 , PAGE NO.12, 11 JIGNESH V. DESAI, SON OF V.V. RABARI HA S SIGNED THE PROPOSAL OF VITHOBA TRUST LAND. JIGNESH V. DESA I ALIAS JIGNESH V. RABARI, JIGNESH V. RABARI HAS SIGNED ON THAT PAGE. THE SIGNATURE OF MEENA V. RABARI, THE MOTHER OF JIG NESH V. RABARI IS ALSO MADE. THIS LAND MEANS VITHOBA THOUGH IS SITUATED AT NR. HOTEL SIGNOR, THALTEJ CHAR RASTA. F INAL PLOT NO.73 21300 SQ. YARDS. RATE PER SQ. YARDS RS.950 0. TODAY LAND IS IN POSSESSION OF NATUBHAI POPULAR AND DASHR ATHBHAI POPULAR. BUT THIS LAND IS IN LITIGATION WITH CHARIT Y COMMISSIONER WHO HAS NOT GIVEN A CLEARANCE ON THAT LAND AND HENCE THIS LAND IS IN POSSESSION OF VITHOBA TRUST. AS PER AGREEMENT FULL PAYMENT WAS MADE AS PER ANNEXURE A-3 , PAGE NO.39,40 AND 41. QUESTION NO.19: I AM SHOWING YOU PAGE NO.87 & 88 OF ANN. A-3, WHIC H IS SEIZED, FROM THE RESIDENCE OF SHRI ARVIND A. SHAH. GIVE THE DETAILS OF THE SAME. IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 20 - ANSWER NO.19: THIS PAGE CONTAINS THE DETAILS OF PAYMENTS OF TRAN SACTIONS FOR TRUST OF SHRI V.V. RABARI SAHEB AND INTEREST CALCUL ATION, A PRINT OF WHICH RECEIVED FROM POPULAR BUILDERS, WHICH IS P AYABLE BY POPULAR BUILDERS REGARDING TRANSACTION OF TRUST. TH ESE TRANSACTIONS ARE WRITTEN IN DIARY. HOWEVER, THE DAT ES MAY BE DIFFERENT. 5.12 THEREFORE, THE CONTENTION RAISED BY THE APPEL LANT DURING THE COURSE OF APPEAL HEARING WAS VERY MUCH AVAILABLE BE FORE THE ASSESSING OFFICER IN THE STATEMENT RECORDED BY, STI LL ASSESSING OFFICER HAS PREFERRED TO MAKE THE ADDITION IN THE HANDS OF THE APPELLANT ON THE BASIS OF SAID DIARY WITHOUT EXCLUDING THE TRANSACTI ONS PERTAINING TO THE SAID LAND , WHICH IN MY VIEW IS NOT CORRECT AS NEITHER DURING THE COURSE OF SEARCH, NOR IN THE POST SEARCH ENQUIRIES, INCLUD ING THE REMAND REPORTS, ANY EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER INDICATING ANY INVESTMENT BY THE APPELLANT IN THE SAID LAND . THEREFORE, IN ABSENCE OF ANY EVIDENCES, SUGGESTING EITHER OWNERSHIP OR CONTROL OR PAYMENT BY THE APPELLANT PERTAINING T O THE SAID LAND. I AM AFRAID NO ADDITION CAN BE MADE IN THE HANDS OF A PPELLANT FOR SUCH TRANSACTIONS, MOREOVER, WHEN DURING THE COURSE OF S EARCH, CERTAIN OTHER EVIDENCES WERE ALSO FOUND FROM THE RESIDENCE OF ARVIND SHAH INDICATING TRANSACTIONS BETWEEN SUCH PERSONS AS REF ERRED BY THE APPELLANT, WHICH I SHALL BE DISCUSSING IN THE LATER PART OF THIS ORDER. THEREFORE, AFTER GOING THROUGH THE STATEMENTS AND T HE VARIOUS LOOSE PAPERS, AS RELIED UPON BY THE APPELLANT. I HAVE NO DOUBT ABOUT THE FACT THAT THE SAID DIARY CONTAINS CERTAIN ACCOUNTS WHICH ARE PERTAINING TO THE SAID LAND AND AS PER LOOSE PAGE NO.35 & 36 OF A NN. A-3, WHICH IS A MOU SIGNED BY THE PURCHASER SHRI RABARI IN THE PRES ENCE OF TWO WITNESSES ON 5/7/98, SUNDAY IN THE NIGHT AT 8.00 O CLOCK FROM WHICH IT IS ABSOLUTELY CLEAR THAT TERMS AND CONDITIONS HAS B EEN ORALLY UNDERSTOOD BETWEEN THE OWNER OF THE LAND AND THE BU YER, WHEREIN IT HAS CLEARLY BEEN MENTIONED THAT THERE IS NO RESPONS IBILITY OF JIVRAMBHAI RABARI (THAT IS THE APPELLANT). IN THE S AID MOU, THE AREA OF THE LAND, RATE, TERMS OF PAYMENT, ETC. HAS BEEN CLEARLY MENTIONED AND THIS MOU HAS ALSO BEEN FOUND FROM THE RESIDENCE OF SHRI ARVIND SHAH, FROM WHERE THE IMPUGNED DIARY WAS FOUND. THER EFORE, WHILE MAKING THE ADDITION IN THE HANDS OF APPELLANT ON TH E BASIS OF THE SAID DIARY, THE TRANSACTIONS PERTAINING TO THE LAND IN W HICH THERE IS NO FINANCIAL INVOLVEMENT OF THE APPELLANT HAS TO BE EX CLUDED . BEFORE COMING TO THE SPECIFIC AMOUNT, WHICH REQUIRES TO BE EXCLUDED. I MAY DEAL WITH ONE OF THE ARGUMENT RAISED BY THE APPELLA NT PERTAINING TO THE BASIS ON WHICH ADDITION OF RS.27,32,38,000/- HAS BE EN MADE. IT HAS BEEN CONTENDED BY THE APPELLANT THAT TRIAL BALANCE DRAWN BY THE ASSESSING OFFICER ON THE BASIS OF LEDGER ACCOUNTS A S APPEARING IN THE SAID DIARY AS AT 1/11/99, IS INCORRECT AND IT INCLU DED CERTAIN BALANCE OF OTHER DATES, IS NOT ACCEPTABLE FOR THE REASONS THAT IN SPITE OF REPEATED IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 21 - REMINDERS BY THE ASSESSING OFFICER, THE APPELLANT H AS FAILED TO FURNISH THE SAID LEDGER ON A DOUBLE ENTRY BASIS. NO DOUBT T HE APPELLANT HAS EXPRESSED HIS INABILITY IN FURNISHING THE SAME, BUT THIS INABILITY CANNOT BECOME SHELTER TO THE APPELLANT THAT NO ADDITION CA N BE MADE ON THIS BASIS. APPELLANT HAS ADMITTED IN HIS SUBMISSIONS BE FORE ME AND ALSO IN HIS STATEMENT THAT THE SAID DIARY CONTAINS CERTAIN ACCOUNTS OF SHARAFI TRANSACTIONS WHICH ARE BELONGING TO HIM, FOR WHICH ALSO HE COUL D NOT FURNISH COMPLETE DETAILS AND THEREFORE, THIS CONTEN TION OF THE APPELLANT IS REJECTED. THE OTHER ISSUES RAISED BY THE APPELLA NT THAT ENTIRE ADDITION IS BASELESS, CREDITS ARE LOWER THAN THE DE BTS AND THEREFORE NO ADDITION IS REQUIRES TO BE MADE ARE ALSO REJECTED A S THESE ARE NOT SUPPORTED BY ANY EVIDENCES. THEREFORE, I UPHOLD THE BASIS ADOPTED BY THE ASSESSING OFFICER FOR THE PURPOSE OF ADDITION A S MAJORITY OF THE LEDGER ACCOUNTS APPEARING IN THE SAID DIARY ARE HAV ING OPENING BALANCES OF 1/11/1999. COMING TO THE WORKING OF THE ADDITION, AS OBSERVED BY ME HEREIN ABOVE THAT I INCLUDES CERTAIN ACCOUNTS WHICH ARE PERTAINING TO THE LAND, WHEREIN THERE DOES NOT SEEMS TO BE ANY FINANCIAL INVOLVEMENT OF THE APPELLANT, THE SAME AR E REQUIRED TO BE EXCLUDED. IN THIS RESPECT, APPELLANT HAS MADE AN EL ABORATE SUBMISSION, PERTAINING TO THE ACCOUNT OF SHRI MANOJ VADODARIA, HAVING A DEBIT BALANCE OF RS.23,43,08,700/-. THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.27,32,38,000/- IS ON ACCOUNT OF EXCES S DEBIT OVER CREDIT BALANCES AS PER ANNEXURE 0-1, ANNEXED TO THE ASSESS MENT ORDER. IN SUPPORT OF EXCLUDING THE BALANCE IN THE NAME OF SHR I MANOJ VADODARIA, THE APPELLANT HAS SUBMITTED THAT SAID SH RI MANOJ VADODARIA HAS ACCEPTED THE RESPONSIBILITY TO MAKE T HE PAYMENT TO SHRI V.V. RABARI AND OTHER ON BEHALF OF THE BUYER AND TH EREFORE, IN THE SAID DIARY THE ACCOUNT OF SHRI MANOJ VADODARIA IS DEBITE D AND IN TURN ACCOUNT OF R.V. RABARI & OTHER HAVE BEEN CREDITED. THE APPELLANT HAS ALSO MADE REFERENCE TO PAGE 82 OF ANN. A-3, WHICH H AS ALSO BEEN FOUND FROM THE RESIDENCE OF ARVIND SHAH WHICH IS TH E ACCOUNT WITH THE WORD M MEANING THEREBY MANOJ VADODARIA AND CO-REL ATED THE NOTINGS ON THE SAID PAGE WITH THE SAID ACCOUNT IN T HE LEDGER ON PAGE 134 OF THE DIARY AT A-1. THE SAID PAGE 82 OF A-3 AL SO CONTAINS THE LAND AREA, RATE, TERMS AND CONDITION, WHEREIN THE FINAL AMOUNT HAS BEEN WORKED OUT AT RS.22,36,03,000/- TO WHICH BROKERAGE OF RS.25,35,000/- OTHER EXPENSES AND LEGAL CHARGES OF RS.11,74,000/- AND PAYMENT MADE BY MANOJ VADODARIS TO JAC OF RS.60 LACS MAKING A TO TAL RS.23,33,08,700/-. MY ATTENTION WAS ALSO DRAWN TO T HE LEDGER ACCOUNT OF MANOJ VADODARIA AS APPEARING ON PAGE 134, WHEREI N TWO DIFFERENT FIGURES ARE MENTIONED, ONE AS 233,308.70 & OTHER AS RS.1,000/- AND STATED THAT THE FIRST AMOUNT OF RS.2,33,308.70 INDI CATES RS.23,33,08,700/- TO WHICH A FURTHER AMOUNT OF RS.1 0 LACS HAS BEEN ADDED BEING THE HAWALA FOR THE SAID LAND AND ACCORD INGLY, A BALANCE OF RS.23,43,08,700/- HAS BEEN WORKED OUT, WHICH HAS WRONGLY BEEN ADDED BY THE ASSESSING OFFICER IN THE HANDS OF THE APPELLANT. IN VIEW OF THESE DIRECT EVIDENCES AS FOUND DURING THE COURSE O F SEARCH, FROM THE RESIDENCE OF SHRI ARVIND SHAH AND IN ABSENCE OF ANY EVIDENCES IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 22 - INDICATING ANY AMOUNT WAS ADVANCED BY THE APPELLANT TO SAID SHRI MANOJ VADODARIA AND THERE BEING DIRECT LINK BETWEEN THE AMOUNT WHICH HAS BEEN ADDED AND THE WORKING OF THE LAND VA LUE AS DISCUSSED BY ME HEREIN ABOVE. I AM OF THE VIEW THAT IMPUGNED AMOUNT REQUIRES TO BE CONSIDERED IN THE CASE OF SHRI MANOJ VADODARI A. THEREFORE, I AM NOT CONVINCED WITH THE ARGUMENT RAISED BY THE AO IN HIS REMAND REPORT DATED 8/01/2004 THAT THERE ARE NO PARAMETERS TO DIFFERENTIATE THESE ACCOUNTS FROM OTHER ACCOUNT. THERE ARE CLEAR CUT EVIDENCES FOUND AT THE TIME OF SEARCH FROM THE VERY SAME PERS ON FROM WHOM THE IMPUGNED DIARY WAS FOUND, INDICATING THE LAND TRANS ACTIONS AND WHICH ARE ALSO SUPPORTED BY HIS STATEMENT THEREFORE, I AM NOT CONVINCED WITH THE ARGUMENT OF THE ASSESSING OFFICER IN THIS RESPE CT. HOWEVER, IT IS AN ADMITTED FACT THAT SUMMONS HAVE ALREADY BEEN ISSUED TO SHRI MANOJ VADODARIA, AND NOTICE U/S.158BD HAS ALSO BEEN ISSUE D IN HIS CASE BY THE SAME ASSESSING OFFICER, AS REPORTED TO ME IN TH E REMAND REPORT. IN THIS RESPECT, THE SUBMISSIONS OF THE APPELLANT VIDE HIS LETTER DATED 14/01/2004 WHICH HAS BEEN FILED PURSUANCE TO THE RE MAND REPORT DATED 8/01/2004 AND 9/01/2004, REQUIRES IMMEDIATE CONSIDE RATION AND THEREFORE, THE RELEVANT PARA OF THE SAID SUBMISSION IS REPRODUCED HEREINABOVE. THEREFORE, OUT OF THE TOTAL ADDITION M ADE BY THE ASSESSING OFFICER THE ADDITION TO THE EXTENT OF RS. 23,43,08,700/- IS DELETED. 5. BEING AGGRIEVED BY THE AFORE-REPRODUCED FINDINGS OF LEARNED CIT(A) NOW THE REVENUE IS IN APPEAL BEFORE US. 5.1 FROM THE SIDE OF THE REVENUE, LEARNED D.R. MR. D.C. PATWARI AND SHANKARLAL MEENA, D.R. APPEARED AND ARG UED AS UNDER (ONLY RELEVANT PORTION OF THE WRITTEN SUBMISSION RE PRODUCED): THIS PARA SHOWS THAT THE APPELLANTS STATEMENT ON 20.10.2000 WAS ALSO RECORDED U/S. 132(4) AND THE DIARY A-1 AS WELL AS STATEMENT OF SHRI ARVIND A. SHAH OF THE SAME DATE I.E. 20.10.2000 WAS CONFRONTED TO THE APPELLANT. IT IS NOTEWORTHY THAT THE APPELLANT DID NOT SAY THAT THE DIARY HAD NOT BEEN MAINTAINED ONLY FOR HIM. HE ACCEPTED T HE FACT THAT THE DIARY WAS ONLY IN RESPECT OF HIM BECAUSE HE STATED THAT HE WOULD SUBMIT PARTY-WISE DETAILS PERSONALLY TO THE DEPARTMENT SUB SEQUENTLY. IN FACT IN ANS. TO Q. NO.23, 24, 25, 26, 27 AND 28 AND EVEN IN ANS TO Q.NO.52 WHICH ARE REPRODUCED ON PAGE 10 AND 11 OF THE ASSES SMENT ORDER, IT IS CLEAR THAT THE APPELLANT HAS GIVEN MODUS OPERANDI O F CASH SHARAFI TRANSACTIONS CONTAINED IN DIARY A-1. IN ANS. TO Q. NO.28 ON PAGE 11 OF THE ASSESSMENT ORDER, THIS IS MADE VERY CLEAR THAT THE DIARY CONTAINED INFORMATION OF CASH FINANCING BUSINESS OF THE APPEL LANT. NOWHERE THE IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 23 - APPELLANT HAS STATED THAT THE DIARY HAD ANY OTHER T RANSACTIONS WHICH HAS BEEN CLAIMED LATER ON AND WHICH HAVE BEEN ACCEPTED BY THE CIT(A) EVEN WHEN IT WAS CLEAR FROM THE REMAND REPORT THAT THE P ROPER INQUIRY COULD NOT BE CONDUCTED BY THE AO IN THE ABSENCE OF FULL A ND PROPER DETAILS. IT IS VERY CLEAR THAT THE STATEMENT OF ARVIND A. SHAH WAS CONFRONTED TO THE APPELLANT AS STATED ABOVE AND PARA (E) PAGE 11 OF T HE ASSESSMENT ORDER SHOWS THAT IN ANS. TO Q. NO.4, SHRI ARVIND A. SHAH HAS CLEARLY STATED THAT THE APPELLANT ALONE WAS IN CONTROL OF THE SHAR AFI BUSINESS AND NONE OF THE OTHER MEMBERS OF THE APPELLANT HAD A DIRECT CONNECTION WITH THE SHARAFI BUSINESS. IN ANS. TO Q. NO.5 REPRODUCED ON PAGE 12 OF THE ASSESSMENT ORDER, SHRI ARVIND A. SHAH HAS CLEARLY S TATED THAT THE ENTIRE INTEREST INCOME WAS IN THE CONTROL OF JIVRAJBHAI DE SAI AND NOBODY COULD USE IT WITHOUT THE PERMISSION OF JIVRAJ DESAI. IT M EANS THAT MASTER DEVELOPERS FIRM WHERE THE FAMILY MEMBERS OF THE APP ELLANT ARE PARTNERS WAS ACTUALLY IN FULL CONTROL OF THE APPELLANT AND O F THE APPELLANT ONLY AND IN REALITY MASTER DEVELOPERS WAS NOTHING BUT TH E APPELLANT HIMSELF. EVEN THIS STATEMENT WAS NOT DENIED BY THE APPELLANT WHEN THE STATEMENT OF SHRI ARVIND A. SHAH WAS CONFRONTED TO HIM AS STA TED ABOVE. HOWEVER, FROM SEPTEMBER, 2002 ONWARDS, THE APPELLANT HAS SUD DENLY CHANGED THE ENTIRE SUBMISSION MADE EARLIER I.E. AFTER TWO YEARS OF THE SEARCH AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS. BOTH A RVIND A. SHAH AS WELL AS THE APPELLANT HAVE ALMOST TOTALLY DISOWNS E ARLIER STATEMENT AND THIS IS CLEAR FROM PAGE NO.12 OF THE ASSESSMENT ORD ER. THE STATEMENT OF ARVIND A. SHAH DATED 19.9.2002 AND 24.9.2002 SHOWS THAT THE VARIOUS ENTRIES MENTIONED IN DIARY ARE BEING INCLUDED IN RE SPECT OF ACCOUNTS RELATED TO THALTEJ LAND DEL. IN THE STATEMENT OF TH E APPELLANT DATED 7.10.2002 (PAGE 12 OF THE ASSESSMENT ORDER) THE APP ELLANT HAS STATED THAT THE DIARY WAS PRIMARILY IN RESPECT OF THALTEJ LAND DEAL FOR WHICH HE IS ONLY A MEDIATOR. IT WAS STATED THAT A-3, PAGE-11 & 12 HAS DETAILS REGARDING THE SALE OF THALTEJ LAND AND HAS BEEN SIG NED BY THE SON OF THE APPELLANT SHRI JIGNESH DESAI. IT WAS STATED THAT TH IS AGREEMENT IS IN THE HANDWRITING OF ARVIND A. SHAH WHICH SHOWS THAT ARVI DN A. SHAH KNOWS SHRI V.V. RABARI AND HIS STATEMENT THAT HE DID NOT KNOW SHRI RABARI IS WRONG. THE APPELLANT FURTHER STATED THAT SHRI ARVIN D A. SHAH SENT THE DIARY FOR PERUSAL OF SHRI RABARI. IF THESE ARE THE FACTS, THEN SHRI ARVIND SHAH WOULD HAVE MENTIONED THE THINGS IN HIS FIRST S TATEMENT RECORDED ON DATE OF SEARCH I.E. 20 TH OCTOBER, 2000. NEITHER THE APPELLANT NOR SHRI ARVIND SHAH MADE ANY SUCH STATEMENT THAT IN RESPECT OF THE LAND DEAL THE APPELLANT IS ONLY A MEDIATOR. SUCH AN IMPORTANT THING CANNOT BE MISSED BY BOTH OF THEM. IN ANS. TO Q. NO.3 IN HIS S TATEMENT DATED 7.10.2002, THE APPELLANT HAS FOR THE FIRST TIME COM E UP WITH THE ARGUMENT THAT JIGNESH DESAI, NATU POPULAR, CHHAGAN KAKA ARE RELATED TO THALTEJ LAND DEAL AND ALSO MANOJ VADODARIA WHOSE NAME IS NOTED IN DIARY A-1. THE APPELLANT, THEREFORE, TRIED TO SAY T HAT THE ENTIRE LAND DEAL WAS IN RESPECT OF THESE PEOPLE AND BE HIMSELF WAS O NLY A MEDIATOR. FURTHER, INTERESTINGLY THESE SUBMISSIONS WERE MADE BY HIM BY GIVING THE NAMES AND ADDRESSES WHICH COULD NOT BE PROPERLY VER IFIED A THEY WERE GIVEN ONLY A WEEK EARLIER TO THE LAST DATE OF THE A SSESSMENT ORDER. IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 24 - THESE STATEMENTS AND SUBMISSIONS MADE IN OCTOBER, 2 002 WERE TOTALLY CONTRARY TO THE STATEMENT RECORDED DURING THE SEARC H BUT HAS BEEN FULLY ACCEPTED BY THE CIT(A) WITHOUT ANY COGENT EVIDENCE AS IS CLEAR FROM THE CIT(A)S ORDER AS SEEN HEREUNDER: CIT(A)'S ORDER SHOWS THAT THE APPELLANT HAS FILED S OME NEWSPAPER CUTTING AND OTHER SUBMISSION TO SHOW THAT THE LAND WHOLLY OWNED BY SHRI RABARI WHO WAS RESPONSIBLE FOR MAKING PAYMENTS TO SOME OTHER PERSONS MENTIONED BY THE ASSESSEE IN THE SAME SUBMI SSION. ON PAGE 18, THE APPELLANT HAS STATED THAT HAWALA ENTRIES HAVE B EEN DULY CONFIRMED BY SHRI JIGNESH. IT IS NOT UNDERSTOOD WHY JIGNESH R ABARI HARASSED THE ASSESSEE FOR NON PAYMENT OF BANK LOAN IF THE ASSESS EE WAS ONLY A MEDIATOR AND HAD NO INTEREST. THE APPELLANT HAS GIV EN BREAK-UP OF THE ACCOUNTS RELATED TO THIS LAND WHICH ACCORDING TO TH E APPELLANT WAS WRONGLY CONSIDERED BY THE A.O. IN THE HANDS OF THE ASSESSEE. THESE AMOUNTS ARE OF RS.26.80 CRORES, MAJOR PORTION IN TH E NAME OF MANOJ VADODARIA AND BALANCE IN THE NAME OF SHRI JIGNESH D ESAI AND VIKAS SHAH. THE APPELLANT HAS TRIED TO SHIFT THE ENTIRE B URDEN IN THE HANDS OF THESE PEOPLE IN HIS LETTER SUBMITTED BEFORE CIT(A). THE VARIOUS SUBMISSIONS MADE BEFORE CIT(A) ARE AN ATTEMPT TO SH IFT THE ENTIRE LIABILITY TO VARIOUS PEOPLE. THAT THIS ATTEMPT MISE RABLY FAILED WHICH CAN BE SEEN FROM THE VARIOUS REMAND REPORTS QUOTED BY T HE CIT(A) IN HIS APPELLATE ORDER AS UNDER: .. IN CLAUSE (F) IT HAS BEEN SUBMITTED BY THE APPELLAN T ON PAGE 12 OF THE CIT(A)'S ORDER OF MANOJ VADODARIA THAT THE ASSESSEE DID NOT GIVEN ANY OPPORTUNITY TO CROSS EXAMINE EITHER SHRI JIVRAJ DE SAI OR ANY OTHER ASSESSEE OF HIS GROUP. IT IS VERY CURIOUS THAT CIT( A) IN THE CASE OF THE APPELLANT HAS ACCEPTED THE SUBMISSION OF JIVRAJBHAI DESAI, WITHOUT ASKING SHRI JIVRAJ DESAI TO PRODUCE THESE PEOPLE ON WHICH THE RESPONSIBILITY HAS BEEN SHIFTED. THE CIT(A) IN THE CASE OF THE APPELLANT HAS NOT EVEN CONSIDERED IT NECESSARY TO ALLOW CROSS EXAMINATION OF THESE PEOPLE TO THE AO AND STILL THE ENTIRE SUBMISS ION HAS BEEN ACCEPTED. THE CIT(A) IN THE CASE OF MANOJ VADODARIA IN HIS ORDER HAS GIVEN THE DECISION AS UNDER: '14 I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS AND PROVISIONS OF LAW WITH REGARD TO THE ISSUE INVOLVED. I FIND THAT THE ACTION AGAINST THE APPELLANT HAS BEEN INITIATED ON THE STRENGTH OF DOC UMENTS RECOVERED FROM 3 RD PARTY, I.E. MR. JIVRAJ V. DESAI AND HIS ACCOUNTANT , SHRI ARVINDBHAI A. SHAH. THE SEARCH ACTION TOOK PLACE EN 20.10.2000. THE RELEVANT DOCUMENTS ARE A SEIZED DIARY ANNEXURE A- 1, LOOSE PAPERS CONTAINED IN ANNEXURE A-2, A-3 & A-4. THE NOR MAL PRESUMPTION U/S.132(4A) IS THAT THE DOCUMENTS WERE BELONGING TO SHRI JIVRAJ V. DESAI. IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 25 - HE HAD WRITTEN THESE DOCUMENTS FOR MR. JIVRAJ V. DE SAI AND THAT THESE DOCUMENTS INDICATED SARAFI LOAN TRANSACTIONS AND CONSEQUENTIAL UNACCOUNTED INVESTMENTS OF SHRI JIVRAJ V. DESAI. IT IS AT A VERY LATE STAGE THAT SHRI JIVRAJ V. DESAI CAME FORWARD WITH T HE THEORY THAT THE DIARY MARKED ANNEXURE A-1 WAS MAINTAINED BY SHRI AR VINDBHAI A. SHAH AT THE INSTANCE OF SOME OTHER PERSONS. THE PLEA OF THE APPELLANT IN THIS REGARD FINDS DUE SUPPORT FROM THE LANDMARK JUDGMENT OF HONBLE SUPREME COURT IN THE C ASE OF CBI VS. V.C. SHUKLA & OTHERS REPORTED IN 3 SC CASES 410, WHEREIN THE APEX COURT CLEARLY LAID DOWN THAT ENTRIES IN THE DOCUMEN TS MAINTAINED BY A 3 RD PARTY HAD ONLY PROBATIVE VALUE AND SUCH ENTRIES AL ONE WERE NOT SUFFICIENT TO CHARGE ANY PERSON WITH A LIABILITY. C ORROBORATIVE INDEPENDENT EVIDENCES WERE ESSENTIAL TO ESTABLISH T RUSTWORTHINESS OF SUCH ENTRIES IN ORDER TO FASTEN A LIABILITY ON A PE RSON. THE CASE OF THE APPELLANT ALSO FINDS SUPPORT FROM THE DECISION OF H ONBLE MUMBAI HIGH COURT IN THE CASE OF ADDL. CIT VS. LATA MANGESHWAR 97 ITR 696 (MUMBAI). I, THEREFORE, HOLD THAT THE ENTRIES IN TH E DOCUMENTS RECOVERED FROM SHRI JIVRAJ V. DESAI AND HIS ACCOUNTANT SHRI A RVINDBHAI A. SHAH IN THEMSELVES WERE NOT SUFFICIENT TO FASTEN A LIABILIT Y ON THE APPELLANT. THE VARIOUS GROUNDS OF APPEAL RAISED BY THE APPELLANT A RE THEREFORE, DECIDED ON THE BASIS OF ABOVE ADJUDICATION. 6. ON THE STRENGTH OF THESE ARGUMENTS, LEARNED D.R. SHRI D.C. PATWARI AND SHANKARLAL MEENA, HAVE VEHEMENTLY PLEAD ED THAT THE ASSESSEE HAD TAKEN THE U-TURN WITHOUT ANY BASIS. AT THE TIME OF HEARING HE HAD GIVEN THE STATEMENT IN RESPECT OF HI S UNACCOUNTED SHARAFI BUSINESS; BUT LATER ON CONCOCTED THE STORY OF THALTEJ LAND DEAL. IN THE ABSENCE OF ANY EVIDENCE FOUND IN THE S EARCH OPERATION TO SUPPORT THAT CONTENTION, THE SAME SHOULD BE REJE CTED. 7. FROM THE SIDE OF THE ASSESSEE, LEARNED AR, MR. G .C. PIPARA APPEARED AND ARGUED THAT THE MAIN TRANSACTION WHICH WAS NOTED IN THE DIARY WAS IN RESPECT OF THE LAND TRANSACTION OF VITTHOBA MANDIR TRUST, OF WHICH SRI R.V. RABARI AND BROTHER SRI V.V . RABARI ARE THE TRUSTEES. THE SAID LAND WAS AGREED TO BE SOLD BY SR I R.V. RABARI TO SRI NATUBHAI PATEL OF M/S. POPULAR BUILDERS. THE SA ID MOU DATED IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 26 - 5.7.1998 WAS FOUND AT THE TIME OF SEARCH FROM THE R ESIDENCE OF SRI ARVIND SHAH. BECAUSE THE ENTRIES IN THE SAID DIARY WERE SUPPORTED BY AN EVIDENCE, I.E., MOU DATED 5.7.1998, THEREFORE , THE CONTENTS OF THE DIARY WERE RECORDED IN SUPPORT OF THE LAND T RANSACTION. IT WAS WRONG ON THE PART OF THE AO TO TREAT THE TRANSACTIO N RECORDED IN THE DIARY AS SHARAFI BUSINESS OF THE ASSESSEE. FROM THE DOCUMENTS SEIZED, IT WAS CLEAR THAT SRI R.V. RABARI AND OTHER S WERE REQUIRED TO RECEIVE PAYMENT FROM SRI NATUBHAI PATEL AND SRI RAMANBHAI PATEL; BUT THERE WAS A DELAY IN MAKING THE PAYMENT AS AGREED UPON, THEREFORE, BOTH THE PARTIES HAVE LOST FAITH IN EACH OTHER. AS A RESULT, LATER ON SRI MANOJ VADODARIA CAME INTO PICTURE AND HE WAS ACCEPTED AS A MEDIATOR. HE HAS REFERRED PAGE 82 OF ANNEXURE A-3. LEARNED AR HAS VEHEMENTLY CONTESTED THAT IT WAS WRO NG ON THE PART OF THE AO TO HOLD THAT RS.23,43,08,700/- WAS P AID TO SRI MANOJ VADODARIA. RATHER, THE ASSESSEE HAD NOT PAID ANY AMOUNT TO SRI MANOJ VADODARIA. IN HIS NAME IN THE DIARY THERE WAS ONLY HAWALA ENTRY IN RESPECT OF THE SAID LAND WHEREIN SR I MANOJ HAD ACCEPTED THE RESPONSIBILITY OF MAKING PAYMENT ON BE HALF OF SRI NATUBHAI PATEL TO SRI V.V. RABARI. LEARNED AR HAS A LSO PLEADED THAT THE ADMITTED FACTUAL POSITION WAS THAT THE TRA NSACTIONS IN DIARY A-1 WAS RECORDED BY THE SAID ACCOUNTANT ON THE BASI S OF THE CHITS RECOVERED FROM HIS POSSESSION. ACCORDING TO LEARNED AR, IT IS SIGNIFICANT TO NOTE THAT NONE OF THE CHITS WERE SIG NED BY THE ASSESSEE. IN SUPPORT OF THESE ARGUMENTS, LEARNED AR HAS CITED FOLLOWING DECISIONS AND THE COMMENTS WERE AS UNDER: 10. LEGAL POSITION : 10.1 LOOSE PAPERS TO BE CONSIDERED IN ENTIRETY IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 27 - CIT VS. D. D. GEARS LTD. (2012) 211 TAXMANN 8 (DEL HI) THE AO CANNOT TAKE NOTE OF ONLY INCOME PART REFLECT ED IN SEIZED MATERIAL IGNORING EXPENDITURE PART REFLECTED IN SAM E SEIZED MATERIAL. SMT. USHA TRIPATHY VS. ASSTT. CIT (2000) 113 TAXMAN 29 (ALL) (MAQ.) INDIA SEED HOUSE VS. ASSTT. CIT (2001) 116 TAXMANN 40/ (2000) 69 TTJ 241 (DELHI) (TM) WHETHER, WHERE BOTH RECEIPTS AND EXPENSES ARE FOUND RECORDED IN SEIZED DOCUMENT AND ENTRIES RELATING TO RECEIPTS AR E RELIED UPON WITHOUT BRINGING ANY FURTHER EVIDENCE, THEN ENTRIES RELATIN G TO EXPENSES SHOULD ALSO BE ACCEPTED AND ASSESSEE SHOULD NOT BE BURDENE D WITH ONUS OF BRINGING EVIDENCE FOR HAVING INCURRED SAID EXPENSES . 10.2 STATEMENT RECORDED ON OATH HAS EVIDENTIARY VALUE CIT VS. O. ABDUL RAZAK (2013) 350 ITR 71 (KER.) ANY STATEMENT RECORDED U/S. 132(4) STATUTORILY DEEM ED TO HAVE EVIDENTIARY VALUE CANNOT BE RETRACTED AT THE MERE W ILL OF THE PARTY. A STATEMENT MADE UNDER OATH DEEMED AND PERMITTED TO B E USED IN EVIDENCES, BY EXPRESS STATUTORY PROVISIONS HAS TO B E TAKEN AS TRUE UNLESS THERE IS CONTRA EVIDENCES TO DISPEL SUCH ASSUMPTION . KANTILAL C. SHAH VS. ACIT (2011) 133 ITD 57 (AHD) THE QUESTION OF EVIDENTIARY VALUE OF A STATEMENT RE CORDED U/S.132(4) IS NOT MORE RES INTEGRA. WHEN AN ASSESSEE HAD MADE A S TATEMENT OF FACTS, HE CAN HAVE NO GRIEVANCE IF HE IS TAXED IN ACCORDAN CE WITH THAT STATEMENT. ACIT VS. HUKUM CHAND JAIN (2010) 191 TAXMANN 319 (C HHATISGARH) WHERE NONE OF FORUMS HAD RECORDED A FINDING THAT ST ATEMENT U/S. 132(4) WAS OBTAINED UNDER DURESS AND ASSESSEE HAD TOTALLY FAILED TO DISCHARGE BURDEN OF PROVING THAT STATEMENT WAS OBTAINED UNDER COERCION OR INTIMIDATION RETRACTION OF STATEMENT WAS RIGHTLY RE JECTED. 8. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE SIDES. WE HAVE PERUSED THE VOLUMINOUS MATERIAL PLACED BEFORE US. A T FIRST, IT IS IMPORTANT TO MENTION THAT A STATEMENT RECORDED U/S. 132(4) HAS SIGNIFICANT EVIDENTIARY VALUE, WHICH WAS RECORDED D URING THE IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 28 - COURSE OF SEARCH OPERATION IN THIS CASE. WE ARE ALS O OF THE OPINION THAT ONCE A STATEMENT WAS MADE IN THE PRESENCE OF T HE WITNESSES AT THE TIME OF SEARCH AND THAT THERE WAS NO ELEMENT OF INDUCEMENT OR COERCION THEN THAT STATEMENT BEING BASED UPON THE E VIDENCES COLLECTED DURING THE COURSE OF SEARCH; IS A TRUE AN D CORRECT STATEMENT UNLESS AND UNTIL PROVED OTHERWISE. IN GEN ERAL, THERE IS NO SCOPE UNDER THE EXISTING LAW TO ALTER THAT STATEMEN T. WE HAVE NOTED THAT A STATEMENT OF SRI ARVIND A. SHAH U/S. 132(4) WAS RECORDED ON 20 TH OCTOBER, 2000. SINCE, A DIARY A-1 WAS RECOVERED FR OM HIS POSSESSION, THEREFORE, CERTAIN QUESTIONS WERE ASKED IN RESPECT OF THE SAID DIARY. THE DIARY IS TITLED AS JVD MAINTA INED FOR THE PERIOD 1.11.99 TO 15.10.2000. THE DATE OF SEARCH IS 20.10.2000. THE DIARY HAS SINGLE ENTRY LEDGER ACCOUNT OF VARIOU S SHARAFI BUSINESS RELATED PARTIES. THE REVENUE HAD SHOWN THE SAID DIARY TO SRI ARVIND A. SHAH WHICH WAS RECOVERED FROM HIM AND ASKED TO EXPLAIN THE CONTENTS OF THE SAID DIARY. SRI ARVIND A. SHAH HAS ANSWERED THAT THE DIARY WAS A LEDGER ACCOUNT OF SHARAFI/FINANCING BUSINESS OF THE ASSESSEE, NAMELY , JIVRAJBHAI VASANTBHAI DESAI. HE HAS ALSO INFORMED THAT THREE Z EROS (000) WAS TO BE ADDED IN THE FIGURES WRITTEN IN THE DIARY. HE HAS ALSO EXPLAINED THAT THE DEBIT SIDE SHOWED THE FIGURES OF SHARAFI AMOUNT GIVEN BY THE ASSESSEE OR RETURNED BY THE ASS ESSEE TO THE PARTIES. THE CREDIT SIDE FIGURES ARE SHARAFI AMOU NT RECEIVED BY THE ASSESSEE FROM THOSE PARTIES. HE HAS FURTHER EXP LAINED THAT THE PARTICULARS BEARING ON THE PRINTED PAGES 1 TO 16 AR E THE PARTIES FROM WHOM THE FINANCE HAVE BEEN RECEIVED BY THE ASSESSEE AND PARTICULARS BEARING ON PRINTED PAGE NOS.62 TO 85 AR E THE DETAILS OF IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 29 - THE PARTIES TO WHOM FINANCE WAS GIVEN BY THE ASSESS EE. IT HAS ALSO BEEN STATED BY SRI SHAH THAT THE RATE OF INTEREST H AS ALSO BEEN MENTIONED IN THOSE ACCOUNTS. IN THE LIGHT OF THE SA ID STATEMENT OF SRI SHAH, WE HAVE CAREFULLY PERUSED THE PHOTOCOPY O F THE SAID DIARY, BEING A PART OF THE COMPILATION AS WELL AS A N ENGLISH VERSION OF THE SAID DIARY PLACED BEFORE US FROM THE SIDE OF THE REVENUE. WE HAVE NOTED THAT A PARTY-WISE INDEX WAS MADE IN T HE BEGINNING OF THE DIARY. THEN PARTY-WISE LEDGER ACCOUNTS OF TH OSE PARTIES HAVE STARTED. FOR EG., AT PAGE 1 THERE IS AN ACCOUNT OF ONE MODI SAHEB. AT PAGE NO.2 IS THE ACCOUNT OF GANESHBHAI. ON PAG E 3 AMTHALAL DESAI, SO AND SO FORTH. OUR ATTENTION HAS BEEN DRA WN ON PAGES 134, 135, 136, 137 MENTIONING THE ACCOUNT OF MANOJ BHAI VODADARIA. 8.1 ON THE BASIS OF THE SCRUTINY OF THIS DIARY ONE THING IS APPARENT THAT THE SAME HAD BEEN WRITTEN IN A SYSTEM ATIC MANNER. THE AMOUNT GIVEN BY THE ASSESSEE WERE DEBITED IN TH E ACCOUNT OF THE SAID PERSON AND WHEN THE AMOUNT WAS RECEIVED BY THE ASSESSEE FROM THOSE PARTIES THE ACCOUNT OF THE SAID PARTY WA S CREDITED. THEREFORE, THE ENTRIES OF THE DIARY IS REQUIRED TO BE ADJUDGED BY JUXTAPOSING WITH THE STATEMENTS RECORDED U/S. 132(4 ) OF IT ACT OF THE ASSESSEE AND THE ACCOUNTANT. A STATEMENT IS A D ECLARATION HENCE ITS CONTENTS CAN NOT BE AND SHOULD NOT BE SUBSTITU TED BY AN OPINION. IT IS TO BE READ WHOLLY BECAUSE AS PER SEC 132(4) THE AUTHORISED OFFICER; DURING THE COURSE OF SEARCH; EX AMINE THE PERSONS ON OATH IN RESPECT OF THE ACCOUNTS, DOCUMEN TS, MONEY, JEWELLERY ETC. FOUND FROM THE SAID PERSONS POSSESSI ON. FURTHER AS IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 30 - PER THE EXPLANATION TO SECTION 132(4) AN EXAMINATIO N ON OATH IS IN RESPECT OF ALL MATTERS RELEVANT FOR THE PURPOSES OF ANY INVESTIGATION. 8.2 TO ESTABLISH THE OWNERSHIP OF THE DIARY, THE RE VENUE DEPARTMENT HAS NOTED THAT ON THE TOP OF THE DIARY I T WAS NOTED AS JVD. THE ACCOUNTANT SRI ARVIND A. SHAH HAS AFFIRM ED THAT THE DIARY WAS WRITTEN IN HIS HANDWRITING AND JVD STAN DS FOR JIVRAJBHAI VASANTBHAI DESAI, I.E., THE ASSESSEE. FU RTHER TO CORROBORATE THE FIGURES NOTED IN THE DIARY WITH BAN K ACCOUNTS, IT WAS ALSO INQUIRED BY THE REVENUE DEPARTMENT FROM TH E BANK AND ON INQUIRY IT WAS FOUND THAT THE ENTRIES REFLECTED IN THE DIARY HAVE MATCHED WITH THE BANK STATEMENT. THE AO HAS CHECKED THOSE ENTRIES; WHICH HAVE BEEN MATCHED WITH THE MEHSANA N AGRIK CO- OPERATIVE BANK (HYP. A/C-83). THE ONLY DIFFERENCE W AS THE LAST THREE ZEROS (000) NOT RECORDED IN A-1 DIARY. THE RE VENUE DEPARTMENT HAS, THEREFORE, MADE EFFORTS TO ESTABLIS H THAT THE ACCOUNTS WERE CONCLUSIVELY BELONGING TO THE ASSESSE E AND THE ASSESSEE WAS HELD RESPONSIBLE TO EXPLAIN THE NATURE OF TRANSACTION WITH CORROBORATIVE EVIDENCE. 8.3 THE ASSESSEE WAS THUS ALSO CONFRONTED WITH THE SAID DIARY A- 1 ON THE DATE OF SEARCH ON 20 TH OCTOBER, 2000. ACCORDING TO AO, ON THAT DATE THE ASSESSEE HAD ACCEPTED THAT THE DIARY CONTAINED THE UNACCOUNTED CASH FINANCE BUSINESS. IN THE SAID STAT EMENT RECORDED ON 20 TH OF OCTOBER, 2000 U/S. 132(4) OF IT ACT, THE ASSESS EE HAS STATED IN HIS ANSWER NO.23 THAT WHENEVER A PERSON A SKED FOR THE IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 31 - FINANCE THEN A MORAL COMMITMENT ON STAMP PAPER WAS TAKEN FROM HIM. SOMETIME CHITS HAVE ALSO BEEN MADE WHEREIN T HE PERIOD OF THE FINANCE; THE AMOUNT OF THE FINANCE; THE PERIOD OF RETURN OF THE FINANCE; AMOUNT OF INSTALLMENT, DETAILS OF MORTGAGE D LAND WHICH IS IN THE NATURE OF SECURITY, ETC. ARE NOTED. RATHER, IT WAS STATED IN THAT SAID STATEMENT BY THE ASSESSEE THAT IN A SITUATION WHEN THE AMOUNT WAS NOT RETURNED WITHIN THE PRESCRIBED TIME THEN TH E ASSESSEE TOOK OVER THE POSSESSION OVER THE MORTGAGED LAND. AN ANO THER FACT WAS REVEALED THAT THE RATE OF INTEREST WAS BASED UPON T HE TITLE OF THE LAND AS ALSO THE TIME OF REPAYMENT OF THE AMOUNT. I T WAS ELABORATED BY THE ASSESSEE IN THE SAID STATEMENT THAT THE MINI MUM RATE OF INTEREST CHARGED @ 2% BUT IF THE TITLE OF THE LAND HAPPENED TO BE NOT CLEAR THEN THE INTEREST WAS CHARGED @ 3% OR MOR E. IN AN ANSWER NO.28 THE ASSESSEE HAS ADMITTED THAT THE INF ORMATION CONTAINED IN THE DIARY WAS IN RESPECT IS CASH FINA NCE BUSINESS. THE DETAILS CONTAINED IN THE DIARY WERE IN RESPECT OF THE LOANS GIVEN AND THE INTEREST CHARGED FROM THE PARTIES. IN AN ANSWER TO QUESTION NO.52, THE ASSESSEE HAS ALSO GIVEN AN UNDE RTAKING THAT THE ESTIMATED INCOME OF DIFFERENT DEVELOPMENT ACTIVITIE S SHALL BE INFORMED. THE ASSESSEE HAS ALSO GIVEN AN UNDERTAKIN G THAT THE SHARAFI INCOME SHALL BE WORKED OUT ON THE BASIS OF THE DIARY A-1 SEIZED FROM THE RESIDENCE OF THE ACCOUNTANT SRI ARV IND A. SHAH. ON PERUSAL OF THE SAID STATEMENT, IT IS CLEAR THAT AT THAT POINT OF TIME THE ASSESSEE HAD ACCEPTED THE FACT THAT HE WAS ENGA GED IN SHARAFI BUSINESS. THE ASSESSEE HAS ALSO ACCEPTED THE FACT THAT THE TRANSACTION OF THE SHARAFI BUSINESS WAS RECORDED BY THE ACCOUNTANT IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 32 - SRI ARVIND A. SHAH WHO HAD MAINTAINED THE ACCOUNT O F SHARAFI BUSINESS ON THE INSTRUCTION OF THE ASSESSEE. 8.4 HOWEVER LATER ON; THE ASSESSEE HAS CHANGED THE SAID STATEMENT DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. DUE TO THE CHANGE OF THE SAID STATEMENT THE PRESENT CONTROVERS Y IS ADDRESSED TO US. THE ENTIRE CONTROVERSY REVOLVED AROUND THE F ACT THAT THE ASSESSEE HAD CHANGED HIS STAND DURING THE ASSESSMEN T STAGE. THERE WERE THREE SEGMENTS AS FAR AS THE ARGUMENTS ON FACT S ARE CONCERNED. FIRST SEGMENT IS ABOUT THE EVIDENCES COL LECTED AT THE TIME OF SEARCH, SECOND SEGMENT IS THE STATEMENTS RE CORDED IN THE LIGHT OF THOSE EVIDENCES AND THE THIRD SEGMENT IS T HE RETRACTION MADE BEFORE THE ASSESSING OFFICER. 8.5 AS FAR AS THE EVIDENCES COLLECTED AT THE TIME O F SEARCH ARE CONCERNED THE MAIN MATERIAL WAS A DIARY WHICH WAS T ITLED AS JVD. ON THE BASIS OF ABBREVIATION WRITTEN IT WAS HELD BY THE REVENUE DEPARTMENT THAT THE DIARY BELONGED TO THE A SSESSEE, NAMELY, JIVRAJ V. DESAI. THE ADMITTED FACTUAL POSIT ION IS THAT THIS DIARY HAD BEEN WRITTEN BY ONE SRI ARVIND A. SHAH. T HIS DIARY WAS RECOVERED FROM HIS RESIDENCE. NATURALLY, A STATEMEN T WAS REQUIRED TO BE RECORDED OF SRI ARVIND A. SHAH BECAUSE THE SA ID DIARY WAS WRITTEN BY HIM AND THE SAME WAS RECOVERED FROM HIS RESIDENCE. AS PER HIS STATEMENT RECORDED U/S. 132(4) OF IT ACT, D ATED 20 TH OF OCTOBER, 2000, HE HAS ADMITTED THAT THE DIARY CONTA INED THE SHARAFI BUSINESS OF SHRI JIVRAJBHAI VASTABHAI DESAI, I.E. T HE ASSESSEE. HE HAS ALSO CLARIFIED THAT LAST THREE ZEROES WERE OMIT TED WHILE WRITING IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 33 - THE FIGURES IN THE SAID DIARY AS THE SAME WAS IN TH E CODED LANGUAGE. HE HAS ALSO EXPLAINED THAT THE LEDGER ACCOUNTS OF E ACH PARTY ARE MAINTAINED ACCORDING TO WHICH IN THE DEBIT SIDE THE FIGURES NOTED ARE THE AMOUNTS GIVEN TO THE PARTIES FOR SHARAFI FI NANCING BUSINESS AND THE CREDIT SIDE FIGURES NOTED IN THE LEDGER ACC OUNTS ARE IN RESPECT OF SHARAFI AMOUNT RECEIVED BY THE ASSESSEE FROM THOSE PARTIES. ON THE BASIS OF THE SAID STATEMENT, THE RE VENUE DEPARTMENT HAD PROCEEDED FURTHER TO INVESTIGATE THE CORRECTNESS OF THE TRANSACTION RECORDED IN THE SAID DIARY. SO AS T O ASCERTAIN WHETHER THE DIARY BELONGED TO THE ASSESSEE OR NOT, THE AO HAD INQUIRED FROM MEHSANA NAGRIK BANK AND IT WAS FOUND THAT THE ENTRIES RECORDED AT PAGE NO.234 OF DIARY A-1 HAVE M ATCHED WITH THE ENTRIES RECORDED BY THE SAID BANK. SINCE, THE B ANK STATEMENT AND THE ENTRIES RECORDED THEREIN HAVE MATCHED WITH THE ENTRIES IN THE SAID DIARY, THEREFORE, IT WAS CONCLUDED BY THE REVENUE DEPARTMENT THAT THE ENTRIES RECORDED IN THE DIARY P ERTAINED TO THE ASSESSEE BECAUSE THOSE BANKS ENTRIES ALSO PERTAINED TO THE ASSESSEE. 8.6 THE SECOND SEGMENT IS THAT AN IMPORTANT FACT HA S ALSO BEEN NOTED BY US THAT STATEMENT OF THE ASSESSEE WAS ALSO RECORDED ON 20 TH OF OCTOBER, 2000 AND IN THAT STATEMENT DURING THE COURSE OF SEARCH IN AN ANSWER TO QUESTION NO.23 THE ASSESSEE HAD ADMITTED THAT HE HAPPENED TO BE IN SHARAFI BUSINESS. HE HAS STATED THAT WHENEVER ANY PERSON APPROACHES FOR TAKING FINANCE T HEN A MORAL COMMITMENT IS TAKEN ON STAMP PAPER OR ON THE CHITS. ON THE CHITS THE PERIOD FOR WHICH THE AMOUNT IS TAKEN ON LOAN IS NOTED AND THE TIME BY WHICH THE AMOUNT IS CREDITED TO BE RETURNED IS NOTED ALONG IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 34 - WITH THE INSTALLMENTS GIVEN TO THE SAID BORROWER. T HE LOAN IS GRANTED AGAINST THE MORTGAGE OF THE LAND. THE MORTG AGED LAND IS IN THE NATURE OF A SECURITY TAKEN BY THE ASSESSEE IF T HE AMOUNT IS RETURNED OR THE LOAN IS REPAID WITHIN THE TIME GRAN TED THEN THE TRANSACTION WAS CONSIDERED AS COMPLETED. IF THE AMO UNT OF LOAN IS NOT RETURNED BY THE SAID PARTY WITHIN THE PRESCRIBE D TIME THEN THE POSSESSION OVER THE MORTGAGED LAND WAS TAKEN BY THE ASSESSEE. THIS FACT WAS AFFIRMED BY HIM, QUOTE, POSSESSION O F MORTGAGED LAND WILL BECOME OURS UNQUOTE. IN HIS STATEMENT TH E ASSESSEE HAS ALSO AFFIRMED THAT THE RATE OF INTEREST IS DECIDED UPON THE FACTS SUCH AS POSSESSION OF LAND, TITLE CLEARANCE AND THE TIME GIVEN FOR THE REPAYMENT OF AMOUNT. HE HAS INFORMED IN THE SAID ST ATEMENT THAT THE RATE OF INTEREST WAS FROM 2% UP TO 3%. THE ASSE SSEE HAS ALSO ACCEPTED AT THAT TIME THAT SRI ARVIND A. SHAH IS WR ITING THE SAID DIARY AND HE USED TO VISIT THE OFFICE OF THE ASSESS EE ONCE IN A MONTH. HIS STATEMENT WAS RECORDED ONLY AFTER SHOWIN G THE SAID DIARY TO THE ASSESSEE DURING THE COURSE OF SEARCH O PERATION. IN AN ANSWER TO QUESTION NO.28 THE ASSESSEE HAS REITERATE D THAT THE INFORMATION IN THE SAID DIARY WAS IN RESPECT OF THE CASH FINANCING BUSINESS. HE HAD MADE AN OFFER TO DECLARE THE INCO ME OF THE SHARAFI BUSINESS LATER ON. RATHER THE APPELLANT HAD TOLD THE SEARCH PARTY THAT THE ACTUAL ESTIMATED FIGURE OF THE SAID INCOME COULD NOT BE OFFERED AT THAT POINT OF TIME BUT TO BE DECLARED LATER ON AFTER HAVING THE COMPLETE DETAILS. THE ASSESSEE HAD THUS MADE A STATEMENT THAT HE WILL ESTIMATE THE TRANSACTION OF SHARAFI BUSINESS AND SHALL WORK OUT THE SHARAFI BUSINESS IN THE LIGH T OF THE SEIZED DIARY A-1. IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 35 - 8.7 THE THIRD SEGMENT IS RETRACTION. LATER ON DURIN G THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAD TAKEN A TUR TLE-TURN. IN A STATEMENT WHICH WERE RECORDED U/S.131 DURING THE CO URSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAD RETRACTED F ROM THE SAID STATEMENT WHICH WAS RECORDED AT THE TIME OF SEARCH. ON ONE HAND THE ASSESSEE HAD DENIED THE SHARAFI BUSINESS, BUT O N THE OTHER HAND, EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS WH EN AN ANOTHER STATEMENT U/S.131 WAS RECORDED OF SRI ARVIND A. SHA H ON 19.9.2002 AND 24.09.2002, HE HAS RE-AFFIRMED THAT T HE FULL CONTROL OVER THE SHARAFI BUSINESS WAS IN THE HANDS OF THE ASSESSEE ALONE. ONLY ON THE INSTRUCTIONS OF THE ASSESSEE THE MONEY COULD BE GIVEN ON LOAN ON INTEREST. THE SAID ACCOUNTANT HAS ALSO I NFORMED THAT NONE OF THE OTHER MEMBERS HAD CONNECTON WITH THE SH ARAFIT BUSINESS AND THE ASSESSEE ONLY HAD THE CONTROL OVER THE BUSINESS. BUT THE ASSESSEE HAD NOT ACCEPTED THAT STATEMENT OF THE ACCOUNTANT AND THE EVIDENCES. IN A STATEMENT BEFORE THE AO THE ASSESSEE HAS STATED THAT THE DIARY CONTAINED THE ACCOUNTS RELATE D TO A THALTEJ LAND DEAL. ACCORDING TO HIM, HE WAS A MEDIATOR IN THE SAID DEAL. AS PER THE STATEMENT OF THE ASSESSEE THE ACCOUNT OF SRI JIGNESH DESAI, SRI NATU POPULAR, SRI CHHAGAN KAKA WERE RELA TED TO THE THALTEJ LAND DEAL. ACCORDING TO THE STATEMENT OF TH E ASSESSEE MADE BEFORE THE AO EVEN THE ACTION OF SRI MANOJ VADODARI A PERTAINED TO THE THALTEJ LAND DEAL. ACCORDING TO ASSESSEE, THE D EBIT BALANCE SHOWN IN THE ACCOUNT OF SRI MANOJ VADODARIA PERTAIN ED TO THE PENDING PAYMENT RELATED TO THE THALTEJ LAND DEAL. I N SHORT THE EMPHASIS OF THE ASSESSEE WAS THAT THE PAYMENT WAS R ELATED TO THE IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 36 - THALTEJ LAND AND HE HAD NOTHING TO DO WITH THE TRAN SACTIONS NOTED IN THE DIARY. HE HAS ALSO DENIED THAT HE HAD ANYTHI NG TO DO WITH THE ACCRUED INTEREST. 8.8 DUE TO THE SAID CHANGED STATEMENT OF THE ASSESS EE, THE AO HAD AGAIN CONFRONTED THE ASSESSEE WITH THE EXISTENC ES OF THE SLIPS, I.E., CHITTI, RECOVERED AT THE TIME OF SEARCH. IN THOSE CHITTI THE LOAN TRANSACTION WAS RECORDED AND THE REFERENCE HAS BEEN MADE AS JIVRAJBHAI MASTER. ACCORDING TO AO, THE CHITS WER E WRITTEN IN PERSONAL CAPACITY BY THE ASSESSEE AND THOSE WERE NO T RELATED TO A FIRM MASTER DEVELOPERS AS ALLEGED. THE AO HAD INF ORMED THE ASSESSEE THAT THE BUSINESS OF M/S. MASTER DEVELOPER S WAS NOT FINANCING BUT CONSTRUCTION BUSINESS. THE AO HA D SPECIFICALLY INFORMED THE ASSESSEE THAT NO CORROBORATIVE DOCUMEN TARY EVIDENCES WAS SUBMITTED BY THE ASSESSEE TO SUBSTANT IATE THE SAID CLAIM. WE, THEREFORE, HOLD THAT AN ASSERTION IS MEA NINGLESS IF NOT SUPPORTED BY COGENT EVIDENCE. 8.9. NOW WE SHALL DISCUSS THE THIRD ASPECT OF THE C ASE. ON ONE HAND, ALTHOUGH, THE EVIDENCES AND THE STATEMENTS WE RE ELABORATELY DISCUSSED BY THE AO BUT WE HAVE NOTED THAT ON THE O THER HAND, THE LEARNED CIT(A) HAS NOT DEALT WITH ALL THOSE EVIDENC ES WHICH WERE COLLECTED AT THE TIME OF SEARCH. LEARNED CIT(A) HAS CALLED FOR A REMAND REPORT AND IN THE SAID REMAND REPORT THE REV ENUE DEPARTMENT HAD STRONGLY SUPPORTED THE ADDITION MADE BY THE AO. IT WAS INFORMED TO LEARNED CIT(A) THAT IN RESPECT O F THE NINE LEDGER ACCOUNTS IN THE SAID DIARY A-1 THE ASSESSEE WAS GRA NTED SEVERAL IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 37 - OPPORTUNITIES TO PRODUCE THOSE PARTIES IN RESPECT O F THE CONTENTION THAT IT WAS NOT A TRANSACTION OF SHARAFI BUSINESS ; BUT THE ASSESSEE HAD NOT DISCHARGED THE SAID ONUS. RATHER, THE REVEN UE DEPARTMENT HAD INFORMED THE LEARNED CIT(A) THAT THE PARTIES WH ICH WERE IDENTIFIED WERE ISSUED NOTICES AS PRESCRIBED U/S. 1 58BD OF IT ACT. REVENUE DEPARTMENT HAD MADE CERTAIN ATTEMPTS TO INT ERROGATE SOME OF THE PARTIES BUT THE ASSESSEE HAD NOT CO-OPE RATED. ACCORDING TO US, LEARNED CIT(A) HAS NOT TAKEN THE C OGNIZANE OF THE STATEMENT RECORDED U/S. 132(4) OF IT ACT BUT TAKEN THE COGNIZANCE OF THE STATEMENT RECORDED U/S. 131 OF IT ACT WHICH WAS RECORDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. WE ARE NOT IN AGREEMENT WITH THE SAID APPROACH OF LEARNED CIT(A). RATHER, IN PARA 5.11 AND PARA 5.12 LEARNED CIT(A) COMMENTED TH AT STILL THE AO HAD PREFERRED TO MAKE THE ADDITION IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE SAID DIARY WITHOUT EXCLUDING TH E TRANSACTIONS PERTAINED TO THE SAID LAND WHICH WERE INFORMED BY T HE ASSESSEE AS PER THE STATEMENT RECORDED U/S 131 OF IT ACT. THIS OBSERVATION OF LEARNED CIT(A) IS IN CONTRADICTION WITH THE LAW AS WELL AS THE FACT. ACCORDING TO US, THE ASSESSEE WAS UNDER STRICT OBLI GATION TO DISCHARGE THE PRIMARY ONUS. THE LEGAL ASPECT OF THE MATER THEREFORE, ALSO TO BE DISCUSSED BUT IN BRIEF HEREUN DER. 8.10 ACCORDING TO OUR HUMBLE UNDERSTANDING OF LAW T HE POWER TO INTERROGATE ON OATH IS CONFERRED U/S. 132(4) OF IT ACT. THIS POWER IS NOT FOR THE PURPOSE OF GENERAL INVESTIGATION, BU T THIS POWER IS FOR THE PURPOSE OF SEEKING AN EXPLANATION AND TO GATHER ING INFORMATION IN RESPECT OF THE DOCUMENTS OR THE ARTICLES OR THE ASSETS FOUND IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 38 - DURING THE SEARCH OPERATION. IN THE PRESENT CASE, W E HAVE NOTED THAT THE STATEMENT U/S.132(4) OF IT ACT OF THE ASSESSEE WAS RECORDED AFTER SHOWING HIM THE SAID DIARY. A STATEMENT U/S. 132(4) BEING A STATEMENT ON OATH THUS CAN BE USED AS AN EVIDENCE A GAINST THE PERSON WHO HAD MADE THE STATEMENT. THE ONLY EXCEPTI ON IS THAT IF THE ASSESSEE WANTS TO CHALLENGE THAT STATEMENT ON O ATH THEN HE HAS TO PLACE ON RECORD A STRONG EVIDENCE IN SUPPORT OF THE REBUTTAL. LAW HAS PERMITTED TO CHALLENGE AN ADMISSION IF MADE INA DVERTENTLY AND THEN IT IS OPEN FOR THE DEPONENT TO SHOW THAT THE S AID ADMISSION WAS NOT FACTUALLY A CORRECT DEPOSITION. BUT THE SAI D DEPONENT IS UNDER STRICT OBLIGATION TO ADDUCE EVIDENCE TO PROVE HIS INADVERTENT ADMISSION. WE ARE OF THE VIEW THAT IT IS INCUMBENT ON THE DEPONENT TO SUBSTANTIATE HIS REBUTTAL WITH STRONG COGENT EVI DENCES. IN THE ABSENCE OF SUCH EVIDENCES THE REBUTTAL IS NOTHING B UT MERELY A VERBOSITY. IN THE PRESENT CASE, WE HAVE NOTED THAT LEARNED CIT(A) HAS OVERLOOKED THE STATEMENT RECORDED U/S. 132(4) O F IT ACT AND GIVEN UNDUE WEIGHTAGE TO THE STATEMENT RECORDED U/S . 131 OF IT ACT WHICH WERE OTHERWISE NOT SUPPORTED BY EVIDENCE. AT THIS JUNCTURE WE MAY LIKE TO FURTHER CLARIFY THAT THE EV IDENCES ARE THOSE EVIDENCES WHICH ARE FOUND AT THE TIME OF SEARCH IN SEARCH RELATED MATTERS. THE ENTIRE PROCEEDING REVOLVED AROUND THE EVIDENCES OR DOCUMENTS FOUND IN THE POSSESSION, AND UNEARTHED AT THE TIME OF SEARCH; SO AS TO DEMONSTRATE THAT THE DIARY A-1 WAS BELONGING TO THE ASSESSEE AND NOT TO ANY THIRD PERSON. TO BUTTRE SS THERE WAS A STATEMENT OF THE ACCOUNTANT. ADDITIONALLY; THE NATU RE OF THE TRANSACTIONS RECORDED IN THE SAID DIARY WERE SO EXP LICIT THAT THE IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 39 - REVENUE DEPARTMENT HAD NO DOUBT ABOUT THE PRESENCE OF THE FACTS THAT THE ASSESSEE WAS ACTUALLY ENGAGED IN THE SHARA FI BUSINESS. 8.11 IT IS ALSO WORTH TO MENTION THAT THE FIRST PRE SUMPTION U/S. 132(4A) IS THAT IF A DOCUMENT IS FOUND IN THE COURS E OF A SEARCH THEN UNDER THIS SECTION BY A LEGAL FICTION A PRESUM PTION IS THAT SUCH DOCUMENT BELONGED TO THE PERSON. FURTHER AS PER SEC TION 132(4A)(II) AN ANOTHER PRESUMPTION IS THAT THE CONT ENTS OF SUCH BOOKS OF ACCOUNTS AND OTHER DOCUMENT ARE TRUE. THIS PRESUMPTION CAN BE REBUTTED BY THE ASSESSEE, BUT THE REBUTTAL I S ALSO TO BE SUPPORTED BY COGENT EVIDENCE. ONE OF THE STRONG CON TENTIONS OF THE REVENUE DEPARTMENT WAS THAT THE ASSESSEE HAD ADMITT ED THAT THE FINANCE WAS GIVEN AGAINST THE SECURITY OF LAND. THE TRANSACTIONS OTHERWISE RECORDED IN THE DIARY AND HAVE FOUND RECO RDED IN THE CHITS, THUS ALSO CLEARLY DEMONSTRATED THAT THE LAND WAS TAKEN AS A SECURITY BY THE ASSESSEE WHILE ADVANCING MONEY TO T HE BORROWERS. THEREFORE, THE CONCLUSION IS THAT THE THALTEJ LAND WAS ALSO CONNECTED WITH THE SHARAFI BUSINESS AND THE ASSESSE E WAS MONITORING THE LAND TRANSACTION SO AS TO SECURE HIS LOAN ADVANCED TO THE PARTIES AS NOTED IN THE DIARY. LEARNED CIT(A ) HAS NOT LOOKED IN THIS ASPECT AND UNILATERALLY HELD THAT THE AMOUN T WHICH WAS RECORDED WAS REQUIRED TO BE CONSIDERED IN THE CASE OF ONE SRI MANOJ VADODARIA. THIS DECISION OF LEARNED CIT(A) AP PEARS TO BE INCORRECT BECAUSE ON HIS PART IN THE ABSENCE OF PER USAL OF THE CASE RECORD OF SRI MANOJ VADODARIA, IT WAS NOT JUSTIFIA BLE FOR CIT(A) TO TAKE DECISION BY APPRECIATING THE FACTS OF ONE SIDE ONLY. IT MAY NOT OUT OF PLACE TO MENTION THAT A NEW SECTION 292C HAS BEEN INSERTED IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 40 - IN THE IT ACT BY FINANCE ACT 2007, BUT WITH RETROSP ECTIVE EFFECT FROM 1.10.1975 TITLED AS PRESUMPTION AS TO ASSTS, BOOKS OF ACCOUNTS ETC. THIS SECTION ALSO PROVIDES THAT THE INCRIMINATING MATERIAL FOUND FROM THE POSSESSION OF ANY PERSON IS TO BE TREATED AS A TRUE EVIDENCE. 8.12 IN THE LIGHT OF THE ABOVE DISCUSSION ON FACTS AS WELL AS ON LAW, WE HEREBY REVERSE THE FINDINGS OF LEARNED CIT( A) AND AFFIRM THE FINDINGS OF THE AO, HENCE, THIS GROUND OF THE R EVENUE IS HEREBY ALLOWED. 9. GROUND NO.2 IS REPRODUCED BELOW: THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTI NG TO RESTRICT THE ADDITION OF RS.7,80,09,480/- MADE ON ACCOUNT OF UND ISCLOSED INTEREST INCOME FROM SHARAFI BUSINESS RS.1,79,06,430/-. 9.1 IN RESPECT OF THE ABOVE, THE AO HAS COMPUTED TH E INTEREST OF SHARAFI INCOME IN THE FOLLOWING MANNER: THE DETAILED WORKING OF THE SHARAFI INCOME REFLECTE D IN DIARY A-1 AS PER REVENUE WAS ALSO MADE AVAILABLE TO THE ASSESSEE FOR PERUSAL VIDE SHOW CAUSE DT. 14.10.2002. TILL DATE ASSESSEE HAS N OT FURNISHED DETAILED WORKING OF INTEREST INCOME GIVEN IN DIARY A-1. HENCE THE FOLLOWING WORKING OF THE INTEREST INCOME IS TAKEN T O BE CORRECT AND IS TAKEN TO BE PART OF UNDISCLOSED INCOME OF THE ASSES SEE EARNED DURING EH BLOCK PERIOD, IST THIS WORKING IS MADE PART OF O RDER AS ANNEXURE 0- 1. GROSS INTEREST INCOME 1.11.99 TO 31.3.2000 RS. 38762595 1.4.2000 TO 10.10.2000 RS. 41504155 RS. 80266750 LESS: INTEREST PAID AS PER DIARY A-1 1.11.99 TO 10.10.2000 RS. 2257270 NET INTEREST INCOME RS.78009480 IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 41 - 10. WHEN THE MATTER WAS CARRIED BEFORE LEARNED CIT( A), IT WAS OBSERVED THAT THE AO HAD WRONGLY INCLUDED THE INTER EST OF POST SEARCH PERIOD. LEARNED CIT(A) HAS NOTED THAT THE IN TEREST INCOME WAS REQUIRED TO BE ENHANCED AND FOR WHICH A NOTICE OF ENHANCEMENT WAS ALSO GIVEN TO THE ASSESSEE. HOWEVER , LEARNED CIT(A) HAS ALSO OBSERVED THAT OUT OF THE CORRECT IN TEREST OF RS.8,29,09,450/- THE INTEREST IN THE NAME OF SRI MA NOJ VADODARIA OF RS.6,10,86,200/- AND INTEREST IN THE NAME OF ONE SRI JIGNESH V. DESAI OF RS.14,92,700/- REQUIRED TO BE EXCLUDED FRO M THE HANDS OF THE ASSESSEE. ACCORDING TO LEARNED CIT(A), THE SAID INTEREST WAS RELATED TO THE LAND TRANSACTION AT THALTEJ. HOWEVER , LEARNED CIT(A) HAS REJECTED AN ANOTHER SUBMISSION OF THE ASSESSEE TO REDUCE THE INTEREST PERTAINED TO RAJUBHAI DESAI, A. T. DESAI, B.M. MANGUKAYA ON THE GROUND THAT THE SAID CLAIM WAS NOT SUPPORTED BY DOCUMENTARY EVIDENCE. IN HIS OPINION THOSE PERSONS WERE NOT RELATED TO THE LAND DEAL. IN SHORT OUT OF TOTAL AMO UNT OF INTEREST; AS COMPUTED BY LEARNED CIT(A) OF RS.8,29,09,450/-; A R ELIEF OF RS.6,28,95,780/- WAS GRANTED. LEARNED CIT(A) HAS FU RTHER GRANTED RELIEF IN RESPECT OF INTEREST CALCULATION OF AND TH EREAFTER CONFIRMED THE ADDITION TO THE EXTENT OF RS.1,79,06,430/- AS F OLLOWS: C OMING TO THE ADDITION OF RS. 7,80,09,480/- PERTAINI NG TO INTEREST ON SARAFI TRANSACTIONS. AT THE OUTSET, A.O. HAS CONSID ERED GROSS INTEREST OF RS.8,02,66,750/- FOR THE PURPOSE OF ADDITION AS AGA INST THE CORRECT INTEREST OF RS. 8,35,98,000/- AS PER THE WORKING AN NEXED TO THE ASSESSMENT ORDER. SINCE THE SAID INTEREST INCLUDES THE INTEREST OF THE POST SEARCH PERIOD OF RS. 6,88,550/-, THE SAME IS E XCLUDED, LEAVING CORRECT INTEREST INCOME OF RS.8,29,09,450/-. THUS, THE INTEREST INCOME IS ENHANCED BY RS.26,42,700/- FOR WHICH NOTICE OF E NHANCEMENT WAS ALSO GIVEN TO THE APPELLANT. FROM THIS INTEREST OF RS.8,29,09,450/-, INTEREST IN THE NAME OF MANOJ VADODARIA OF RS.6,10, 86,200/-, IN THE NAME OF JIGNESH V. DESAI OF RS.14,92,700/-, TOTAL A MOUNTING TO RS.6,25,78,900/- REQUIRES TO BE EXCLUDED AS THE SAM E PERTAINS TO LAND AT THALTEJ, IN VIEW OF DETAILED FINDING GIVEN BY ME HEREIN ABOVE, AS IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 42 - INTEREST IN THESE ACCOUNTS IS PERTINENT TO HAWALA O F THE LAND, WHICH IS DIRECTLY RELATABLE TO THE LAND AND SUPPORTED BY VAR IOUS LOOSE PAPERS AS RELIED UPON B THE APPELLANT IN HIS SUBMISSION. THE SUBMISSION MADE BY THE APPELLANT FOR THE DEDUCTION IN RESPECT OF RAJUB HI JOSHI, A.T. DESAI, B.M. MANGUKIYA IS REJECTED AS NOT SUPPORTED BY DOCU MENTARY EVIDENCES AND THESE PERSONS ARE IN NO WAY RELATED T O THE LAND DEAL. THE APPELLANT WILL FURTHER GET A RELIEF OF RS. 3,16 ,880/- BEING MISTAKE IN CALCULATION OF THE INTEREST AS POINTED OUT IN HI S SUBMISSION WHICH SHOWS THAT THE SAME HAS BEEN TAXED TWICE. THEREFORE , OUT OF THE TOTAL AMOUNT OF INTEREST OF RS. 8,29,09,450/-, AN AMOUNT OF RS. 6,28,95,780/- IS REDUCED LEAVING INTEREST INCOME OF RS. 2,00,13,6 70/-. FROM THIS INTEREST, A.O. HAS ALLOWED DEDUCTION FOR THE INTERE ST PAID OF RS.22,57,270/- BUT AS PER THE SUBMISSION OF THE APP ELLANT, THE SAME IS RS.21,07,240/-, EXCLUDING THE INTEREST EXPENSES IN THE NAME OF JIGNESH V. DESAI. THUS, THE NET INTEREST INCOME WHICH IS RE QUIRED TO BE TAXED IS RS.1,79,06,430/-. THE VARIOUS SEPARATE CONTENTION R AISED BY THE APPELLANT PERTAINING TO THE BASIS, DEDUCTION FOR BA D DEBTS, ETC. IS REJECTED IN ABSENCE OF DOCUMENTARY EVIDENCES AND AS DISCUSSED EARLIER. THUS, OUT OF THE INTEREST INCOME CONSIDERE D BY THE AO OF RS.7,80,09,480/-, SAME IS DIRECTED TO BE TAKEN AT R S.1,79,06,430/- 11. ON HEARING BOTH THE SIDES AND IN THE LIGHT OF V IEW TAKEN HEREIN ABOVE, WE HAVE PRONOUNCED THAT THE ASSESSEE IS ENGAGED IN UNACCOUNTED FINANCE BUSINESS, THEREFORE, THE INTERE ST INCOME THEREON IS ALSO TO BE TAXED IN THE HANDS OF THE ASS ESSEE. IN CONSEQUENCE THEREUPON, WE HEREBY REVERSE THE FINDIN GS OF LEARNED CIT(A). HOWEVER, LEARNED CIT(A) HAS NOTED THAT SOME OF THE INTEREST WAS WRONGLY CALCULATED BY THE AO WHICH DID NOT PERTAINED TO THE BLOCK PERIOD AND UPTO THAT EXTENT WE HEREBY ENDORSE THE FACTUAL FINDING OF LEARNED CIT(A). IN THE RESULT, S UBJECT TO THE ABOVE REMARK, THIS GROUND OF THE REVENUE IS ALSO AL LOWED. 12. GROUND NO.3. IS REPRODUCED BELOW: THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECT ING TO DELETE THE ADDITION OF RS.47,23,398/- MADE ON ACCOUNT OF UNACC OUNTED INVESTMENT IN LAND AT KHARAJ, BEARING SURVEY NO.589 . IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 43 - 12.1 AN EVIDENCE IN THE SHAPE OF AGREEMENT TO PURCH ASE LAND AT SEVERAL NO.589 SITUATED AT KHORAJ WAS FOUND FROM TH E RESIDENCE OF SRI ARVIND A. SHAH. AS PER THE BANA CHITTI SEIZED DURING THE COURSE OF SEARCH THE LAND WAS FOUND TO BE PURCHASED FROM SRI RAMABHAI HARIBHAI PATEL AND THREE OTHERS. THE TERMS OF THE PURCHASE WERE NARRATED BY THE AO AS UNDER: CONCLUSION ON THE BASIS OF THE EVIDENCE NARRATED IN DETAIL IN THE SHOW CAUSE DT. 14.10.20002 AND ON THE BASIS OF THE ABOVE REBUTTAL OF ASSESSEES SUBMISSIONS THE FOLLOWING WORKING OF THE UNDISCLOSE D INVESTMENT OF THE ASSESSEE AS DONE IN THE SHOW CAUSE DT.14.10.2002 IS TAKEN TO BE CORRECT. CALCULATION OF ACTUAL INVESTMENT IN LAND AT SURVEY NO.589 THE AREA IN SQ MTS MENTIONED IN THE LEASE AGREEMENT IN A-34 CONVERTED INTO SQUARE YARDS BY APPLYING THE CONVERS ION FACTOR AS UNER: 1 SQ MT = 1.2 SQ YD 5800 SQ MT = 5800*1.2 SQ YD = 6960 SQ YD 2700 SQ YD = 1 BIGHA AS PER THE AGREEMENT 1 SQ YD = 1/2700 BIGHA 6960 SQ YD = 6960/2700 BIGHA = 2.58 BIGHA VALUE OF LAND @ RS.18.31 LAKHS PER BIGHA = 2.58*183 10000 = RS.4723398 (ADDITION: RS.47,23,398) 13. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST AP PELLATE AUTHORITY, IT WAS HELD AS UNDER: I HAVE CONSIDERED THE FACTS AND THE RIVAL SUBMISSIO NS. ASSESSING OFFICER HIMSELF HAS OBSERVED ON PAGE 21 OF THE ASS ESSMENT ORDER WHILE MAKING THIS ADDITION THAT AS PER THE LOOS PAPER FOU ND AN AMOUNT O FRS.6 LACS HAS BEEN PAID ON 1/7/2000 AND THE BALANC E AMOUNT IS TO BE PAID BY 3/4/2001. THEREFORE, IN THE BLOCK PERIOD, W HICH HAS BEEN ENDED ON 20/10/2000, ONLY AN AMOUNT OF RS.6 LACS HA S BEEN PAID. FURTHER, THE APPELLANT HAS SUBMITTED THAT THE SAID AMOUNT OF RS.6 LACS HAS BEEN PAID BY JIVRAJ DESAI (HUF) AND IN SUPPORT THEREOF, APPELLANT HAS FURNISHED COPY OF LEDGER ACCOUNT OF KHORAJ LAND AS APPEARING IN BOOKS OF ACCOUNTS IN JIVRAJ V. DESAI (HUF) WHO IS S EPARATELY ASSESSED TO INCOME TAX. COPY OF BALANCE SHEET OF JIVRAJ V. D ESAI (HUF) FOR THE YEAR 31/3/2001 HAS ALSO BEEN FILED, WHEREIN IN THE BALANCE SHEET AN AMOUNT OF RS.6,00,100/- HAS BEEN SHOWN AS INVESTMEN T IN LAND AT IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 44 - SURVEY NO.589, KHORAJ. ALL THESE EVIDENCES ARE PLAC ED ON PAGE 79 TO 82 OF THE PAPER BOOK FILED BEFORE ME, WHICH HAS ALS O BEEN FILED BEFORE THE AO AS DISCUSSED ON PAGE 24 OF THE ASSESSMENT OR DER. THEREFORE, THE ACTION OF THE ASSESSING OFFICER IN CONSIDERING THE ENTIRE VALUE OF THE LAND FOR THE PURPOSE OF ADDITION IS IMPROPER AN D MOREOVER, SINCE ONLY AN AMOUNT OF RS.6 LACS HAS BEEN PAID BEFORE TH E SEARCH, THAT TOO BY THE HUF AND THEREFORE, THE SOURCE OF THE SAID AM OUNT OF RS.6 LACS REQUIRES TO BE LOOKED INTO, IN THE CASE OF JIVRAJ V . DESAI (HUF). THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFIC ER OF RS.47,23,398/- IS DELETED. 14. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE VIEW THAT THIS ISSUE IS REQUIRED TO BE RESTORED BACK TO THE FILE OF AO FOR DE NOVO ADJUDICATION, MAINLY BECAUSE OF THE REASON THAT THE EXACT INVESTMENT UP TO THE END OF THE BLOCK PERIOD WAS REQUIRED TO BE TAXED IN THE HANDS OF THE ASSESSEE. WE ARE NOT C ONVINCED WITH THAT OBSERVATION OF LEARNED CIT(A) THAT SOME BALANC E AMOUNT WAS TO BE PAID BEYOND THE BLOCK PERIOD, HENCE; NO AMOUN T WAS REQUIRED TO BE TAXED WITHIN THE BLOCK PERIOD. THE ACTUAL INV ESTMENT MADE WITH IN THE BLOCK-PERIOD IS REQUIRED TO BE TAXED IN THE CORRECT HANDS. WE ARE ALSO NOT CONVINCED WITH THE OBSERVATI ON OF THE LEARNED CIT(A) THAT REST OF THE AMOUNT WAS REQUIRED TO BE TAXED IN THE HANDS OF THE HUF, UNLESS AND UNTIL THE STATUS O F THE HUF AND THE INVESTMENT MADE THEREIN HAS DULY BEEN DISCLOSED BY THE ASSESSEE. THE AO IS, THEREFORE, DIRECTED TO EXAMINE THE NATURE OF INVESTMENT DISCLOSED, IF ANY, IN THE HANDS OF THE H UF AND IF FOUND CORRECT THEN THE RELIEF ACCORDING TO LAW DESERVES T O BE ALLOWED. IN THE RESULT, THIS GROUND OF THE REVENUE IS ALLOWED O NLY FOR STATISTICAL PURPOSE. 15. GROUND NO.4 IS REPRODUCED BELOW: IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 45 - THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTI NG TO DELETE THE ADDITIONS OF RS.1,83,28,041/- AND RS.18,22,197/- MA DE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN LAND AT SOLA AND KHARAJ R ESPECTIVELY. 15.1 CERTAIN EVIDENCES WERE UNEARTHED DURING THE SE ARCH OPERATION AND ON THAT BASIS A SHOW CAUSE WAS ISSUED IN RESPECT OF INVESTMENT IN LAND IN VISHRUTH SOCIETY AND INVESTME NT IN LAND IN SOLA VILLAGE. THE OBSERVATION OF THE AO IN THIS CON NECTION WAS AS UNDER: A-62 SEIZED FROM VISHRUT SOCIETY EVIDENCES INVESTME NT IN LAND AT SURVEY NO.293/1, 293/2, 292/1 AND 292/2 IN SOLA VIL LAGE, AHMEDABAD. THE TOTAL LAND VALUE AS PER THE DOCUMENT IS RS.52 L ACS AND IN THIS SHRI MANOJ HAS SURRENDERED HIS RIGHTS IN THESE PLOTS AS PER THE RELEASE DEED SEIZED BY THE DEPARTMENT FOR THE CONSIDERATION OF R S.25,000 FOR EACH PLOT. FROM THE PERUSAL OF THE SAME IT IS CLEAR THAT INTER EST OF 50% IS THE LAND WAS SURRENDERED TO YOU BY REPORTING PAYMENT OF RS.2 5,000/- ONLY. WHEREAS IN ACTUAL TERMS THE SURRENDERED INTEREST SH OULD ALSO BE VALUED AT YOUR OWN 50% INTEREST IN THE LAND. THUS B ENEFIT OF 50% INTEREST IN LAND HAS BEEN RECEIVED BY YOU WITHOUT D ISCLOSING THE TRUE PAYMENTS MADE FOR THE SAME. HENCE YOU ARE REQUIRED TO SHOW CAUSE AS TO WHY RS.2288064 BE NOT BE TREATED TO BE YOUR UNDI SCLOSED INVESTMENT IN PLOT NO.293/1. 15.2 THEN AO HAS REFERRED ANNEXURE A-66, I.E., A LE TTER DATED 24.8.2000 BY ONE SRI RAJESH DESAI TO THE CHAIRMAN O F CO- OPERATIVE BANK FOR EXTENDING TRADE LOAN FACILITIES. THE AO HAD REPRODUCED THE CONTENTS OF THE SAID LETTER. ACCORDI NG TO THE SAID DOCUMENT THE A.O.S ALLEGATION WAS THAT THE MARKET VALUE WAS AS UNDER: LAND IN MOUJE KHORAJ, GANDHINAGAR, 594/2 13130 S Q. YARD = RS.90,00,00 0 LAND IN MOUJE SOLA, AHMEDABAD, S.NO. 292/2, 4477SQ. YD = RS.75,00,000 LAND IN MOUJE VASTRAPUR, S.NO.198/2 T.P.S. 31,11 20 SQ YD =RS.65,00,000 15.3 AS PER AO, THE MARKET VALUE OF THE LAND WAS VE RY HIGH AS COMPARED TO THE DOCUMENT PRICE. AS PER AO UNDISCLOS ED IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 46 - INVESTMENT WAS MADE IN SOLA LAND & OTHER LAND. THE DOCUMENT PRICE OF THE PLOT NO.292/2 WAS STATED BE OF RS.7,83 ,475/-, THEREFORE, AS PER AO THE SUPPRESSION IN THE INVESTM ENT WAS AS UNDER: TRUE VALUE = RS.75,00,000 DOCUMENT VALUE RS.783475 TRUE VALUE AS A PERCENTAGE OF DOCUMENT VALUE=75000 00 X 100 ----------------- =957% 783475 HENCE THE VALUE OF THE OTHER 3 PLOTS IN SOLA IS CAL CULATED AS UNDER: DOCUMENT PRICE TRUE MARKET VALUE UNDISCLOSED INVESTMENT PLOT NO.292/1, RS.1058925 RS.10133912 RS.9 074987 PLOT NO.292/2, RS.783475 RS.7497855 RS.671 4390 PLOT NO.293/1, RS.2138628 RS.20466669 RS.183 28041 PLOT NO.293/2 RS.444850 RS.4257214 RS.3812364 15.4 ABOUT LAND AT KHORAJ NO.594/2 THERE IS A MENTI ON OF ANNEXURE A-66, I.E., A LETTER DATED 24.9.2002 ON WH ICH THERE WAS A MENTION OF RS.90 LACS WHEREAS AS PER THE SALE DEED DATED 11.2.1999 VALUE OF THE LAND WAS OF RS.4,92,000/- 15.5 ASSESSEES REPLY WAS THAT THE PRICE WAS AN EST IMATED PRICE REFERRED FOR THE PURPOSE OF EXTENDING THE CREDIT FA CILITY FROM THE BANK. IT WAS NOT THE PURCHASE COST. HOWEVER, THE AO WAS NOT CONVINCED AND TAXED AN AMOUNT OF RS.1,83,28,041/- I N THE HANDS OF THE ASSESSEE. 15.6 THE ADDITION WAS MADE IN RESPECT OF SOLA LAND OF RS.1,83,28,041/- AND IN RESPECT OF KHORAJ LAND ADDI TION OF IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 47 - RS.18,22,197/-. THOSE ADDITIONS WERE CHALLENGED BEF ORE LEARNED CIT(A) WHO HAS HELD AS UNDER: I HAVE CONSIDERED THE FACTS AND THE RIVAL SUBMISSIO NS. SO FAR AS ADDITION PERTAINING TO LAND AT SOLA IS CONCERNED, T HE OBSERVATION AAS WELL AS THE DISCUSSION MADE BY THE ASSESSING OFFICE R IN THE ASSESSMENT ORDER IS IDENTICAL TO THAT IN THE CASE OF RAMESH J. DESAI AS FOUR DIFFERENT LANDS WERE PURCHASED BY FOUR FAMILY MEMBE RS. I HAVE ALREADY PASSED ORDER IN THE CASE OF RAMESH J. DESAI, WHEREI N IN MY ORDER DATED 23.12.2003, THE ADDITION HAS BEEN DELETED WIT H A DETAILED FINDING AND THEREFORE, FOLLOWING THE FINDING GIVEN BY ME IN THE SAID CASE, THE ADDITION OF RS.1,83,28,041/- PERTAINING T O LAND AT SOLA IS DELETED. SIMILARLY, THE ADDITION PERTAINING TO LAND AT KHORAJ OF RS.18,22,197/- IS ALSO IDENTICAL TO THAT IN THE CAS E OF RAMESH J. DESAI, WHEREIN THE SIMILAR AMOUNT HAS BEEN ADDED BY THE AO ON THE SIMILAR WORKING AND THEREFORE, FOLLOWING THE FINDING GIVEN BY ME IN MY APPELLATE ORDER DATED 23.12.2003 IN THE CASE OF RA MESH J. DESAI, ADDITION OF RS.18,22,197/- IS ALSO DELETED. 16. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE HAVE NOTED THAT LEARNED CIT(A) HAD GRANTED RELIEF BY REF ERRING HER DECISION TAKEN IN THE CASE OF SRI RAMESH J. DESAI. NOW BEFORE US A CONSOLIDATED ORDER OF ITAT C BENCH AHMEDABAD DATE D 27.06.2008 IS PLACED; WHEREIN IN APPEAL IT(SS)A NOS .54, 55 & 56/AHD/2004 FOR THE BLOCK PERIOD 91-92 TO 2001-02 I N THE CASE OF SRI REMESH J. DESAI, SRI RAJNI J. DESAI AND SRI RAJ ESH J. DESAI IT WAS HELD THAT A LETTER DATED 24.08.2000 WAS WRITTEN BY SRI RAJESH J. DESAI TO THE SARVODAY COMMERCIAL CO-OPERATIVE BANK, WHICH WAS APPLIED TO AVAIL THE LOAN FACILITY. IT WAS ALSO NOT ED BY THE RESPECTED CO-ORDINATE BENCH THAT THE INVESTMENT HAD ALREADY BEEN DISCLOSED IN REGULAR BOOKS HENCE OUT OF THE AMBITS OF BLOCK ASSESSMENT. SINCE ON THESE VERY FACTS THE RESPECTED CO-ORDINATE BENCH HAD TAKEN A VIEW AND CONFIRMED THE RELIEF GRA NTED BY LEARNED CIT(A), THEREFORE, ON THE SAME LINES WE HEREBY CONF IRM THE RELIEF IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 48 - GIVEN BY LEARNED CIT(A). HENCE, THIS GROUND OF THE REVENUE IS HEREBY DISMISSED. 17. GROUND NO.5 IS REPRODUCED BELOW: THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTI NG TO DELETE THE ADDITIONS OF RS.1,21,15,000/- MADE ON ACCOUNT OF UN ACCOUNTED SALE OF BENAMI FLATS ND BASEMENT IN SAVITA PARK, ISANPUR, A HMEDABAD. 17.1 AN EVIDENCE OF SALE OF BENAMI FLATS SITUATED I N SAVITA PARK TO ONE SRI CHAAGAN KAKA WERE FOUND. THOSE DOCUMENTS WERE FOUND FROM THE RESIDENCE OF THE SAID ACCOUNTANT IN RESPECT OF SALE OF FLATS AND BASEMENTS OF SAVIT PARK. ACCORDING TO EVIDENCES, THE TOTAL PAYMENT DUE FROM SRI CHAAGAN KAKA WAS RS.1,41 ,00,000/- AS PER THE ACCOUNT MAINTAINED IN THE DIARY. IN THE SAI D ACCOUNT THERE WAS DETAIL OF THE BALANCE PAYMENT AS WELL NOTED. TH E AO HAS, THEREFORE, MADE A CONCLUSION THAT IN THE LIGHT OF T HE DETAILS OF THE PAYMENT RECORDED THE SALE OF THE FLAT WAS DULY CONF IRMED AND SALE WAS NOT MERELY A DRAFT BUT THE FLATS WERE INDEED SO LD TO CHAAGAN KAKA BY THE ASSESSEE FOR A SUM OF RS.1,21,15,000/-. CERTAIN OTHER EVIDENCES HAVE ALSO BEEN DISCUSSED BY THE AO TO DEM ONSTRATE THAT THE FLATS WERE UNDISCLOSED INVESTMENT OF THE ASSESS EE ACCORDINGLY THE BENAMI PROPERTIES WERE TAXED IN THE HANDS OF TH E ASSESSEE. 18. WHEN THE MATTER WAS CARRIED BEFORE FIRST APPELL ATE AUTHORITY, IT WAS HELD AS UNDER: I HAVE CONSIDERED THE FACTS AND THE RIVAL SUBMISSIO NS. AS OBSERVED BY ME HEREINABOVE, IN THE BEGINNING OF THIS ADDITION, IT IS ABSOLUTELY CLEAR THAT IMPUGNED SCHEME HAS BEEN CONSTRUCTED BY M/S.AM AR CONSTRUCTION CO. WHO IS SEPARATELY ASSESSED TO INCO ME TAX, WHICH IS A PARTNERSHIP FIRM, IN WHICH RAMESH J. DESAI IS ONE O F THE PARTNER. THEEFORE, AT THE OUTSET, THE ISSUE PERTAINING TO TH E SALE OF THE FLATS AND BASEMENT IS REQUIRED TO BE CONSIDERED NIT HE CASE O F M/S AMAR IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 49 - CONSTRUCTION CO. AS THERE ARE NEITHER EVIDENCES FOU ND AT THE TIME OF SEARCH, NOR ANY MATERIAL HAS BEEN BROUGHT ON RECORD BY ASSESSING OFFICER INDICATING THAT EITHER THE SAID FIRMS IS BO GUS OR THE PAYMENT HAS BEEN RECEIVED BY THE APPELLANT. MOREOVER, ASSES SING OFFICER HAS REFERRED ABOUT CERTAIN INQUIRIES CONDUCTED BY INCOM E TAX INSPECTOR PERTAINING TO THE FLAT NO.705 IN PARTH EMPIRE BUILD ING, AND THIS ISSUE HAS BEEN DISCUSSED BY ME IN DETAILS IN MY APPELLANT ORDER DATED 23.12.2003 IN THE CASE OF RAJESH J. DESAI WHEREIN I T HAS BEEN OBSERVED THAT THE REPORT OF THE INSPECTOR WAS FOUND TO BE INCORRECT AND THEREFORE NO RELIANCE CAN BE PLACED ON SUCH REPORT. FOLLOWING THE SAID FINDING AND IN VIEW OF EVIDENCES FURNISHED IN THAT CASE, THE FINDING OF THE AO THAT THESE PROPERTIES ARE BENAMI PROPERTIES WERE CANCELLED BY ME. THEREFORE, IN VIEW OF THE ABOVE FACTS, THE ADDI TION OF RS.1,21,15,000/- IS DELETED FROM THE HANDS OF THE A PPELLANT AND SAME IS REQUIRED TO BE CONSIDERED IN THE CASE OF M/S. AMAR CONSTRUCTION CO. WHICH IS ASSESSED AT PAN NO.AAEFA 7386D AS PROVIDED TO ME BY THE APPELLANT. EVEN FROM THE DISCUSSION MADE BY THE AO, IT IS NOT CLEAR AS TO WHERE THE PROTECTIVE ADDITIONS WERE MADE AND THE REFORE, THE ADDITION MADE IN THE HANDS OF APPELLANT IS DELETED WITH THE DIRECTION THAT THE SAME SHOULD BE CONSIDERED IN THE HANDS OF THE FIRM. 19. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE VIEW THAT LEARNED CIT(A) HAD INCORRECTLY APPREC IATED SOME OF THE VITAL EVIDENCE. IN FACT, THE EVIDENCES AS COLLE CTED DURING THE SEARCH GOT CORROBORATED WITH THE ACCOUNT MAINTAINED IN THE SAID DIARY A-1 PAGE 106 ACCOUNT OF SRI CHHAGAN KAKA. T HE OBSERVATION OF THE AO WAS AS UNDER: IN DIARY A-1 ON PAGE 106 THE ACCOUNT OF CHHAGAN KAK A IS MAINTAINED. IN THIS ON THE CREDIT SIDE NOTING OF RS .1885000 DT. 1.2.2000 IS MADE. THE NARRATION OF THE NOTING READS AS UNDER: 1885000 DT. 1.2.2000 RS.14100000 RS.121150 00 FURTHER ON TOP LEFT HAND SIDE OF THIS PAGE THE FOLL OWING CALCULATION IS MADE. 12115000 + 700000 + 1885000 = 14100000 THIS EVIDENCE THAT TOTAL PAYMENT DUE TO SHRI CHHAGA N KAKA WAS OF RS.1,41,00,000 OF WHICH RS.1,21,15,000 WAS MADE BY WAY OF SALE OF FLATS IN SAVITA FLATS AND REMAINING AMOUNT OF RS.18 .85 LACS WAS CREDITED IN HIS ACCOUNTS. IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 50 - B) THE PAYMENT DETAILS REGARDING THE BALANCE PAYMEN TS ARE ALSO NOTED IN A-1, PAGE 106 AS UNDER:- 27.1.2000 CASH 700000 5.2.2000 CASH 300000 14.2.2000 CASH 500000 28.3.2000 CASH 100000 THESE PAYMENTS MADE SUBSEQUENT TO THE SALE OF FLATS CONFIRMS THAT THE SALE AGREEMENT IS NOT MERELY A DRAFT AGREEMENT AND THE FLATS VALUED AT RS.12115000 WERE INDEED SOLD TO SHRI CHHAGAN KAKA B Y JIVRAJBHAI DESAI. FURTHER TILL DATE YOU HAVE NOT BROUGHT FORWA RD ANY DETAILS REGARDING THE IDENTITY OF EITHER CHHAGAN KAKA OR OF SHRI KANUBHAI C. PATEL SO THAT YOUR SUBMISSION THAT THE SALE AGREEME NT DID NOT GO THROUGH COULD BE VERIFIED FROM THEM. C) IN THAT ACCOUNT MAINTAINED UNDER THE HEADING IS ANPUR SITE A/C. IN DIARY A-1, ON PAGE 36 THIS SALE IS SHOWN ON THE CRE DIT SIDE AS UNDER:- RS.12115000 DT.1.2.2000 CHHAGAN KAKA ISANPUR F LATS. ON BEING ASKED ABOUT THE NATURE OF ISANPUR SITE ACC OUNT SRI ARVIND A. SHAH IN HIS STATEMENT DATED 19.9.2002 SUBMITTED THA T THIS ACCOUNT PERTAINS TO THE SAVITA PARK SOCIETY BUILT BY SHRI J IVRAJBHAI AND THE ENTRIES ON THE CREDIT SIDE IN THIS ACCOUNT RELATES TO THE EXTRA WORK DONE ON THE FLATS. FURTHER THE ENTRY OF RS.12115000 IS R ELATED TO THE ACCOUNT OF SHRI JIGNESH V. DESAI AND PERTAINS TO THE THALTE J LAND. THIS ISANPUR SITE ACCOUNT HAS BEEN MAINTAINED TILL 20.10.2000 AN D THE LAST CREDIT ENTRY IS DT.25.7.2000 AND TILL THAT DATE THE CREDIT ENTRY OF RS.12115000 HAS NOT BEEN REVERSED. THIS ONCE AGAIN EMPHASIZES T HAT THE SALE OF FLATS AS PER THE AGREEMENT ON PAGE-18 A-3 DID GO TH ROUGH AND IT IS NOT A MERE DRAFT DEED. FURTHER SHRI ARVIND DESAI IN HIS STATEMENT DATED 19.9.2002 HAS CLARIFIED THAT THE ACCOUNTS MAINTAINE D IN THE DIARY A-1 WERE MAINTAINED UNDER YOUR SUPERVISION AND FREQUENT LY THE ACCOUNTS IN THE DIARY WERE EXAMINED BY YOU. FURTHER TRIAL BA LANCE SUMMARY PREPARED ON THE BASIS OF DIARY A-1 DT. 4.9.2000, 9. 10.2000, 1.6.2000 AND 29.6.2000 HAVE ALSO BEEN SEIZED BY THE DEPARTME NT. AS PER SUBMISSION OF ARVIND A. SHAH THESE WERE PREPARED BY HIM FOR YOUR PERUSAL SO THAT YOU COULD EXERCISE CONTROL OVER THE BUSINESS AND SUPERVISE THE MAINTENANCE OF ACCOUNTS. THUS IT IS V ERY CLEAR THAT YOU WERE AWARE ABOUT THE CREDIT ENTRY MADE IN THE DIARY AND ITS EXISTENCE TILL THE DATE OF SEARCH PROVES THAT THE SALE OF FLA TS DID GO THROUGH. 19.1 THE ASSESSEE HAD NOT FURNISHED THE DETAILS AS WERE ENQUIRED DURING ASSESSMENT PROCEEDINGS. THE ALLEGATION OF TH E REVENUE DEPARTMENT IS THAT THE IMPUGNED FLATS WERE SOLD TO SRI CHHAGAN IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 51 - KAKA AS PER PAGE 18 OF ANNEXURE A-3. A REGISTERED V ALUER SRI MUKUND C. SHAH WAS ALSO CALLED. A FIELD INQUIRY WAS CONDUCTED BY THE INSPECTOR OF THE REVENUE DEPARTMENT. AS PER THE RECORDS; THE SAVITA PARK IS THE SCHEME OF VIRBHAGAT CO-OP ERATIVE HOUSING SOCIETY AT ISANPUR. AS PER ANNEXURE A-3 PA GE 18 THERE WAS A LIST OF FLATS PROPOSED TO BE SOLD TO A PART B Y ENTERING INTO A DRAFT AGREEMENT. BUT AS PER ASSESSEE THAT DEAL COUL D NOT BE MATERIALIZED. IT WAS THE ONUS ON THE ASSESSEE TO SU BMIT THE EVIDENCE AND TO CORROBORATE THE IMPUGNED CLAIM. THE CLAIM OF THE ASSESSEE THAT THE ADDITION IS REQUIRED TO BE CONSID ERED IN THE HANDS OF M/S. AMAR CONSTRUCTION WAS A NEW STAND BEFORE LE ARNED CIT(A). UNDER THE FITNESS OF CIRCUMSTANCES AND CONS IDERING THE TOTALITY OF THE FACTS WE DEEM IT PROPER TO RESTORE THIS ISSUE BACK TO AO TO EXAMINE AFRESH THE CORRECT FACTUAL POSITION A FTER HAVING A FIELD ENQUIRY AND GET THE CORRECT INFORMATION ABOUT THE OWNERSHIP OF THE PROPERTY. SINCE, THE GROUND IS RESTORED BACK FOR DE NOVO CONSIDERATION HENCE MAY BE TREATED AS ALLOWED FOR S TATISTICAL PURPOSE ONLY. 20. GROUND NO.6 IS REPRODUCED BELOW: THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECT ING TO DELETE THE ADDITIONS OF RS.2,50,000/- MADE ON ACCOUNT OF UNEXPLAINED INV ESTMENT IN SHAIL GANGA TENAMENTS. 20.1 AN EVIDENCE ANNEXURE A-6 WAS FOUND IN RESPECT OF SHAIL GANGA TENEMENTS FOR INVESTMENT OF RS.2.5 LACS ON 2 9.9.2000. THE FOLLOWING FAMILY MEMBERS HAVE MADE THE INVESTMENT O F RS.2,50,000/- EACH ON 29.9.2000: (I) JIVRAJ V. DESAI TENAMENT NO.119 (II) RAMESH J. DESAI TENAMENT NO.127 IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 52 - (III) RAJESH J. DESAI TENAMENT NO.125 (IV) RAJNIBHAI J. DESAI TENAMENT NO.126 20.2 THE ASSESSEE HAD CONTESTED THAT THE SAID INVES TMENT WAS DULY REFLECTED IN THE REGULAR BOOKS AS PER THE BALA NCE SHEET AS ON 31.03.2001. 20.3 WHEN THE MATTER WAS CARRIED BEFORE LEARNED CIT (A), IT WAS HELD THAT THE FACTS BEING IDENTICAL WITH THE CASE O F RAMESH J. DESAI AND THE RELIEF HAD ALREADY BEEN GRANTED HENCE, IDEN TICALLY THE ADDITION WAS DELETED FROM THE HANDS OF THE ASSESSEE . 20.4 BEFORE US, A CONSOLIDATED ORDER OF ITAT C BE NCH DATED 27.06.2008 PRONOUNCED IN THE CASES OF SRI RAMESH J. DESAI, RAJESH J. DESAI AND RAJNI J. DESAI (ALREADY CITED SUPRA) W HEREIN VIDE PARA (20) IT WAS HELD AS UNDER: WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF THE TAX AUTHORITIES. NO COGENT MATERIAL OR EVIDENCE WAS BROUGHT TO OUR KNOW LEDGE BY THE LEARNED DR WHICH MAY PROVE THAT THE PAYMENT MADE BY THE ASSESSEE WAS NOT OUT OF REGULAR BOOKS OF ACCOUNT. THE CIT(A) HAS GIVEN A CLEAR CUT FINDING THAT THE INVESTMENTS MADE BY THE ASSESS EE ARE FOUND RECORDED IN THE BOOKS OF ACCOUNT AND THE ASSESSEE H AS DULY EXPLAINED THE SOURCE OF SUCH INVESTMENTS AS AN AMOUNT RECEIVE D FROM PARTNERSHIP FIRM M/S. MASTER DEVELOPERS. SINCE THE INVESTMENTS WERE DULY FOUND OUT OF THE BOOKS OF ACCOUNT, THEREFORE, WE ARE OF THE VIEW THAT SUCH INVESTMENTS CANNOT BE ADDED IN THE BLOCK ASSESSMENT. BLOCK ASSESSMENT CANNOT BE SUBSTITUTED BY REGULAR ASSESSM ENT. THE ADDITION IN THE BLOCK ASSESSMENT CAN BE MADE ONLY IN RESPECT OF UNDISCLOSED INCOME AS DEFINED U/S. 158(B) OF THE ACT. THE INVES TMENTS RECORDED IN THE REGULAR BOOKS OF ACCOUNT CANNOT BE TREATED TO B E THE UNDISCLOSED INCOME AND SUCH ADDITION IS OUTSIDE THE SCOPE OF CH APTER XIV-B. WE ACCORDINGLY CONFIRM THE ORDER OF THE CIT(A) IN DELE TING THE ADDITION OF RS.2,50,000/ IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 53 - 20.5 ONCE A VIEW HAD ALREADY BEEN TAKEN BY THE RESP ECTED CO- ORDINATE BENCH AND HELD THAT THE IMPUGNED INVESTMEN T HAD ALREADY BEEN DISCLOSED IN THE REGULAR BASIS SO NOT TO BE TA XED IN BLOCK PROCEEDINGS, THEREFORE, RESPECTFULLY FOLLOWING THE SAME, WE HEREBY UPHOLD THE VIEW OF LEARNED CIT(A) AND DISMISS THIS GROUND OF THE REVENUE. 21. GROUND NO.7 IS REPRODUCED BELOW: THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECT ING TO RESTRICT THE ADDITIONS OF RS.24,48,000/- MADE ON ACCOUNT OF UNAC COUNTED PAYMENTS MADE FOR MANAV MANDIR PLOT TO RS.1,49,000/-. 21.1 AS PER THE DOCUMENT SEIZED FOR VISHRUT SOCIETY , IT WAS FOUND THAT THE ALLEGED PAYMENT FOR PURCHASE OF LAND WAS MADE AS PER THE FOLLOWING DETAILS: I) PAGE 251 PAYMENT @ 562 RS. PER SQ. YD. FOR 4000 SQ. YDS. TO OBTAIN THE POWER OF ATTORNEY FOR THIS PLOT. TOTAL P AYMENT BEING RS.22,48,000/- II) ON PAGE 250 FRONT & BACK SIDE 248, 247 & 246 DE TAILS REGARDING THE PAYMENTS MADE FOR THESE LANDS ARE NOTED. III) PAGE-245 EVIDENCES THAT POWER OF ATTORNEY REGA RDING WHOLE OF THIS LAND HAS BEEN VESTED ON YOU. 21.2 AS PER THE ACCOUNTS FILED THE VALUE OF THE LAN DS WAS SHOWN AT RS.10 LACS ONLY; HOWEVER; AS PER THE SEIZED DOCUMEN T ITS VALUE AS PER AO WAS 22,48,000/-. THE AO HAD COMPUTED THE ADD ITION AS FOLLOWS: NOTINGS ON PAGE-251 OF ANNEX. A-6 REGARDING VALUE OF PLOT @ RS.562 PER SQ. YD . : RS.22,48,000 LESS VALUE OF PLOT IN BALANCE SHEET OF ASSESSEE :RS.10, 00,000 UNDISCLOSED INVESTMENT :RS.12,48,000 PAYMENTS MADE TO USHMA ADVG. AS PER IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 54 - A-7, PAGE-46 :RS.12,00,000 :RS.24,48,000 (ADDITION: RS.24,48,000) 22. WHEN THE MATTER WAS CARRIED BEFORE THE LEARNED CIT(A), IT WAS HELD AS UNDER: I HAVE CONSIDERED THE FACTS AND RIVAL CONTENTIONS. THE ADDITION OF RS.22,48,000/- IS BASED ON NOTINGS ON PAGE 251 OF A -6 AND PAGE 46 OF A-7. THE FIRST ADDITION IS PERTAINING TO NOTING ON PAGE 251 OF ANNEXURE A-6 FOR AN AMOUNT OF RS.22,48,000/-. ASSESSING OFFI CER HAS OBSERVED ON PAGE 43 THAT OUT OF THE TOTAL PAYMENT FOUND NOTE D AS LOOSE PAPERS OF RS/22,48,000/-, RS. 10 LACS HAS BEEN SHOWN AND T HEREFORE, THE BALANCE AMOUNT OF RS.12,48,000/- HAS BEEN ADDED BY THE ASSESSING OFFICER. REFERRING TO THE REPLY WHICH HAS BEEN REPR ODUCED BY THE ASSESSING OFFICER ON PAGE 45 & 46, IT HAS BEEN CONT ENDED THAT ONLY 70% OF THE SAID LAND HAS BEEN PURCHASED BY THE APPE LLANT AND HIS GROUP AND ACCORDINGLY, THE AMOUNT COMES TO RS.15,73 ,000/- AS AGAINST WHICH IT HAS BEEN CLAIMED THAT TOTAL PAYMENT MADE B Y THE FAMILY MEMBER IS RS.20,69,000/- AND THEREFORE, IT WAS ARGU ED THAT NO ADDITION IS REQUIRED TO BE MADE. I AM NOT CONVINCED WITH THE ARGUMENT OF 70% AS NO DOCUMENTARY EVIDENCE HAS BEEN BROUGHT ON RECORD. THEREFORE, CONSIDERING THE TOTAL PAYMENT OF RS.22,4 8,000/-, OUT OF WHICH AN AMOUNT OF RS.10 LACS PAID BY THE APPELLANT CREDIT OF WHICH HAS BEEN GIVEN BY THE ASSESSING OFFICER, THE BALANC E WORKS OUT TO RS. 12,48,000/-, OUT OF THIS AN AMOUNT OF RS.10,99,000/ - HAS BEEN INVESTED BY THE FOUR FAMILY MEMBERS. NECESSARY EVIDENCES IN PROOF OF THIS BEING COPY OF THE LAND ACCOUNT, BALANCE SHEET WHERE THE I MPUGNED ACCOUNT HAS BEEN SHOWN, HAVE BEEN FILED WHICH ARE PLACED ON PAGE 89 TO 93 OF THE PAPER BOOK. EVEN BEFORE HE ASSESSING OFFICER TH IS CONTENTION HAS BEEN RAISED THAT THE TOTAL PAYMENT MADE BY THE FAMI LY IS RS.20,69,000/- WHICH HAS NOT BEEN CONTROVERTED BY T HE ASSESSING OFFICER. THEREFORE, OUT OF THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.12,48,000/-, INVESTMENT MADE BY THE FOUR FAMILY MEMBERS OF RS.10,99,000/- AS PER DETAILS GIVEN IN THE SUBMISSI ON AS REPRODUCED HEREINABOVE REQUIRES TO BE CONSIDERED IN THE CASE O F THOSE FOUR FAMILY MEMBERS AND THEREFORE, BALANCE AMOUNT OF RS.1,49,00 0/- IS CONSIDERED AS THE INVESTMENT MADE BY THE APPELLANT OUTSIDE BOO KS AND CONFIRMED. DURING THE COURSE OF APPEAL, AN ALTERNATE SUBMISSIO N HAS BEEN RAISED THAT IF ANY ADDITION IS CONFIRMED ON THIS ACCOUNT, SAME IS NOT SEPARATELY REQUIRED TO BE ADDED IN VIEW OF SEPARATE ADDITION ON ACCOUNT OF NOTINGS IN DIARY A-1 PERTAINING TO LOANS AND INTEREST INCOME. THIS ARGUMENT IS REJECTED IN ABSENCE OF ANY CO-RELATION. COMING TO THE OTHER ADDITION OF RS.12 LACS BASED ON PAGE 46 OF ANNEXURE A-7. THE APPELLANT VIDE REPLY DATED 24/10/ 2002 AS IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 55 - REPRODUCED BY THE ASSESSING OFFICER ON PAGE 46 HAS SUBMITTED THAT THE SAID LOOSE PAPER SHOWS THE DETAILS OF PAYMENT MADE BY USMA ADVERTISEMENT TO THE ORIGINAL OWNERS OF THE LAND FO R SETTLING LEGAL DISPUTE RELATING TO THE SAID LAND, AND FURTHER SUBM ITTED THAT APPELLANT HAS NO CONNECTION WHATSOEVER WITH THE SAID PAYMENT. COMPLETE ADDRESS OF USMA ADVERTISING HAS BEEN ALSO PROVIDED TO THE ASSESSING OFFICER AND REQUEST FOR THE ISSUE OF SUMMONS U/S.13 1 WAS MADE. CONSIDERING THIS FACT, SINCE NO PAYMENT HAS BEEN MA DE BY THE APPELLANT AS NO EVIDENCES HAS BEEN BROUGHT ON RECOR D BY THE ASSESSING OFFICER AND WHEN ASSESSING OFFICER HIMSEL F HAS OBSERVED IN THE EARLIER PART WHILE DEALING WITH THIS ISSUE THAT AS PER OTHER LOOSE PAPERS, THE TOTAL PAYMENT MADE IS ONLY RS.22,48,000 /-, THE SEPARATE ADDITION OF THE IMPUGNED AMOUNT IN THE HANDS OF APP ELLANT IS INCORRECT AS THE SAME REQUIRES TO BE CONSIDERED IN THE CASE O F USHMA ADVERTISING AND THEREFORE, THE SEPARATE ADDITION OF RS.12 LACS FOR THE SAID LAND IS DELETED. THUS OUT OF THESE ADDITIONS R S.1,49,000/- IS CONFIRMED AND THE BALANCE IS DELETED. 23. NOW THE REVENUE HAS CHALLENGED THE AFOREMENTION ED PART RELIEF GIVEN BY LEARNED CIT(A). AFTER HEARING BOTH THE SIDES, WE ARE OF THE CONSIDERED OPINION THAT IN THE LIGHT OF THE STATEMENT RECORDED U/S. 132(4) AND THE MANNER IN WHICH THE VA LUE OF INVESTMENT WAS PARTIALLY DISCLOSED IN REGULAR BOOKS OF ACCOUNTS, THE LEARNED CIT(A) HAD CORRECTLY APPRECIATED THOSE VITAL FACTS; HENCE THE PART RELIEF IS HEREBY CONFIRMED AND THIS GROUND OF THE REVENUE IS DISMISSED. 24. GROUND NO.8 IS REPRODUCED BELOW: THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTI NG TO RESTRICT THE ADDITION OF RS.50,00,000/- ON ACCOUNT OF UNEXPLAINE D INVESTMENT MADE IN LAND AT WADAJ, BEARING SURVEY NO.412/2, TO RS.1, 17,000/- 24.1 AS PER AO THERE WAS UNDISCLOSED INVESTMENT IN LAND BEARING SURVEY NO.412/2 AT WADAJ; AS PER SEIZED BANAKHAT A GREEMENT RECOVERED FROM VISHRUT SOCIETY PREMISES MARKED AS A NNEXURE A- 109 OF THE SEIZED MATERIAL. AS PER THE BANAKHAT AGR EEMENT A SALE CONSIDERATION OF RS.50 LACS WAS AGREED UPON. AS PER BANAKHAT A IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 56 - SUM OF RS.5 LACS HAD ALREADY BEEN PAID BY THE ASSES SEE AND SIX OTHER PERSONS. SUBSEQUENTLY, A SUM OF RS.2 LACS WAS PAID VIDE A SUPPLEMENTARY AGREEMENT. HOWEVER, THE AO HAD HELD T HAT INSTEAD OF RS.7 LACS THE APPELLANT HAD PAID A SUM OF RS.50 LACS AND ACCORDINGLY TAXED. 25. WHEN THE MATTER CARRIED BEFORE LEARNED CIT(A), IT WAS CONTENDED THAT THERE WAS LAND CEILING PROBLEMS AND ALSO SOME DISPUTE, HENCE, THE TRANSACTION WAS INCOMPLETE. THE MAIN EXPLANATION OF THE ASSESSEE WAS AS UNDER: FROM THE PERUSAL OF THE SAID BANAKHAT COPY OF WHICH HAS ALREADY BEEN FILED IN THE PAPER BOOK, YOUR HONOUR WILL FIND THAT THE SAID BANAKHAT WAS EXECUTED ON 21/10/1995, WHICH IS A UNR EGISTERED BANAKHAT WHEREIN THE TOTAL VALUE OF RS.50,00,000/- HAS BEEN AGREED BUT ONLY A PAYMENT OF RS.5,00,000/- WAS MENTIONED. IT IS ALSO MENTIONED IN CLAUSE NO.4 THAT THE SAID LAND IS UNDE R LAND CEILING ACT AND THEREFORE, NECESSARY FORMALITIES ARE REQUIRED T O BE COMPLETED. IN CLAUSE NO.5 IT IS ALSO MENTIONED THAT IN THE SAID LAND ONE CASE UNDER GANOT IS UNDERGOING AND IF THE JUDGMENT IN FAVOUR , THE SAID LAND TITLE WILL BE CLEAR AND MARKETABLE. IN CLAUSE NO.6, IT IS FURTHER MENTIONED THAT POSSESSION SHALL BE GIVEN AT THE TIM E OF REGISTERED SALE DEED. THEREFORE, IT IS ABSOLUTELY CLEAR THAT NO EVI DENCES WERE FOUND AT THE TIME OF SEARCH INDICATING PAYMENT EXCEEDING RS. 5,00,000/-. HOWEVER, THE APPELLANT HAS ADMITTED THAT A TOTAL OF RS.7,00,000/- HAS BEEN PAID IN ALL BY THE 6 OWNERS AND THEREFORE, THE APPELLANTS SHARE WAS ONLY RS.1,17,000/-, WHICH HAS ALREADY BEEN DISC LOSED BY THE APPELLANT IN VDIS AND THEREFORE, NO ADDITION IS REQ UIRED TO BE MADE. 25.1 AFTER APPRECIATING THOSE EVIDENCES, LEARNED CI T(A) HAS HELD AS UNDER: I HAVE CONSIDERED THE FACTS AND GONE THROUGH THE B ANAKHAT BEING LOOSE PAGE 98 TO 106 OF ANNEXURE A-109 FOUND FROM T HE RESIDENCE OF APPELLANT. THE SAID BANAKHAT IS EXECUTED ON 21.10.1 995 AND THERE ARE 21 SELLERS AND 6 BUYERS WHICH INCLUDES APPELLANT IN TER ALIA. THE TOTAL VALUE OF THE LAND MENTIONED IS RS.50 LACS AND AS PE R PARA 2 AN AMOUNT OF RS.5 LACS HAS BEEN PAID AND 50% AMOUNT IS TO BE PAID WITHIN A PERIOD OF 6 MONTHS AND ANOTHER 50% WITHIN A PERIOD OF 12 MONTHS. AS IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 57 - PER CLAUSE 5, SOME DISPUTE IS UNDERGOING PERTAINING TO THE SAID LAND AND UPON THE JUDGEMENT OF THE SAID DISPUTE, THE TIT LE OF THE LANDS BECOME CLEAR AND MARKETABLE. THE CONTENTION RAISED BEFORE THE ASSESSING OFFICER IS ALSO SIMILAR. NO EVIDENCES HAV E BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER THAT ANY FURTHER PA YMENT HAS BEEN MADE. THEREFORE, AT THE OUTSET, THE ONLY PAYMENT WH ICH CAN BE CONSIDERED FOR THE PURPOSE OF ADDITION IS RS.5 LACS , AS FOUND NOTED IN THE VERY SAME BANAKHAT. SINCE APPELLANT HIMSELF HAS ADMITTED THAT TOTAL PAYMENT IS OF RS.7 LACS AND 1/6 TH THEREOF RS.1,17,000/- WHICH, HAS BEEN PAID BY THE APPELLANT AND THEREFORE, THIS AMOU NT IS REQUIRED TO BE CONSIDERED ONLY AS AGAINST RS.50 LACS CONSIDERED BY THE ASSESSING OFFICER FOR THE PURPOSE OF ADDITION. COMING TO THE SOURCE OF RS.1,17,000/- WHICH HAS BEEN CLAIMED AS HAVING BEEN DISCLOSED IN VDIS. I HAVE CAREFULLY GONE THROUGH THE DECLARATION MADE BY THE APPELLANT FOR VDIS AND THE RELEVANT PAPERS WHICH AR E PLACED ON PAGE 109 TO 118 OF THE PAPER BOOK AND FROM THE PERUSAL O F THE SAME, IT IS ABSOLUTELY CLEAR THAT NO AMOUNT HAS BEEN DISCLOSED BY THE APPELLANT PERTAINING TO LAND AT WADAJ AND THEREFORE, THE CONT ENTION OF THE APPELLANT THAT IMPUGNED AMOUNT OF RS.1,17,000/- HAS BEEN DISCLOSED IN VDIS IS FOUND TO BE INCORRECT. THUS, THE ADDITION O F RS.1,17,000/- IS CONFIRMED OUT OF THE TOTAL ADDITION MADE BY THE AO OF RS.50 LACS. THE BENEFIT FOR THE SET OFF IS ALSO NOT AVAILABLE TO TH E APPELLANT AS PAYMENT HAS BEEN MADE ON 21.10.1995, WHEREAS NO INCOME HAS BEEN ACCRUED TO THE APPELLANT TILL THIS DATE AS PER DIARY ANNEXURE A-1, AND THEREFORE, THE ALTERNATE CONTENTION RAISED BY THE APPELLANT IS ALSO REJECTED. 26. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES AND ON DUE CONSIDERATION OF THE EVIDENCES; WE ARE OF THE VIEW THAT SINCE IN THE CLAUSES OF THE BANAKHAT THERE WAS MENTION OF PAYMEN T OF RS.5 LACS AND THAT THERE WAS A MENTION OF THE DISPUTE AS ALSO THE PROBLEM OF LAND CEILING HENCE DEAL WAS NOT FINALIZED RATHER ST ATED TO BE CANCELLED LATER ON; HENCE THERE WAS NO INFIRMITY IN THE PART RELIEF GRANTED BY LEARNED CIT(A). THIS GROUND OF THE REVEN UE IS THEREFORE DISMISSED. 27. GROUND NO.9 IS REPRODUCED BELOW: THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTI NG TO DELETE THE ADDITION OF RS.18,99,303/- MADE ON ACCOUNT OF UNEXP LAINED EXPENSES ON NIRAT PARK BUNGALOW BY HOLDING THAT A PART OF TH E EXPENSES WAS INCURRED BY CHEQUE BY MASTER DEVELOPERS AND THE REM AINING PART OF IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 58 - THE EXPENSES WAS MET BY THE UNACCOUNTED INTEREST IN COME OF THE ASSESSEE UPHELD BY HIM. 27.1 FROM THE RESIDENCE OF THE SAID ACCOUNTANT CERT AIN PAPERS WERE FOUND (ANNEXURE A-4, PAGES 21 TO 23) WHICH WER E RELATED TO EXPENSES INCURRED FOR BUILDING MENTIONED AS NIRAT PARK BUNGALOW. THE EXPENDITURE OF RS.18,99,303/- AS NOT ED ON THOSE PAPERS WAS HELD AS UNDISCLOSED EXPENSES TOWARDS FUR NITURE FIXTURE ETC. FOR THE BUNGALOW. 27.2 BEFORE LEARNED CIT(A), THE EXPLANATION OF THE ASSESSEE WAS THAT AS PER THE DOCUMENTS A SUM OF RS.6,42,303/- WA S SPENT THROUGH CHEQUE AS RECORDED IN M/S. MASTER DEVELOPER S. REST WAS PAID IN CASH AS AVAILABLE FOR THE PERIOD OCTOBER TO DECEMBER, 1999. LEARNED CIT(A) HAS APPRECIATED THOSE ARGUMENT S AND HELD AS UNDER: I HAVE CONSIDERED THE FACTS AND THE RIVAL SUBMISSIO NS. I HAVE ALSO GONE THROUGH THE LOOSE PAGE 22 HAVING THE WORKING O F RS.18,99,303/- WHICH INCLUDES CERTAIN PAYMENTS BY CHEQUE AND THERE FORE, AMOUNT OF RS.6,42,303/- PAID BY CHEQUE BY M/S. MASTER DEVELOP ERS REQUIRES TO BE CONSIDERED IN THE CASE OF M/S. MASTER DEVELOPERS IN THE RELEVANT REGULAR ASSESSMENT. ASSESSING OFFICER MAY ALSO LOOK INTO NATURE OF THESE PAYMENTS, WHETHER THE SAME IS FOR THE PURPOSE OF BUSINESS OR NOT AND ACCORDINGLY DECIDE THE ISSUE. THE REMAINING AMO UNT OF RS.12,57,000/- THROUGH NO DATES ARE AVAILABLE IN TH E SAID LOOSE PAPERS, BUT LOOKING TO THE MANNER IN WHICH NOTINGS ARE MADE , IT IS CLEAR THAT IT HAS BEEN SPENT DURING THE PERIOD AUGUST TO DECEMBER 1999 AND DURING THIS PERIOD, SUFFICIENT INTEREST INCOME WHIC H HAS BEEN CONSIDERED BY ME AS UNACCOUNTED HAS BEEN EARNED AND THEREFORE, NO SEPARATE ADDITION IS REQUIRED TO BE MADE AND THUS A DDITION OF RS.18,99,303/- IS DELETED. 28. HAVING HEARD THE SUBMISSIONS, WE HEREBY AFFIRM THE FINDINGS OF LEARNED CIT(A) SPECIALLY WHEN THE UNCON TROVERTED FACTUAL POSITION WAS THAT THE PART OF THE EXPENDITU RE WAS THROUGH IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 59 - CHEQUE, WHICH WAS FOUND RECORDED IN THE BOOKS OF M/ S. MASTER DEVELOPERS. THEREFORE, THERE WAS NO FALLACY IF IT W AS DIRECTED TO EXAMINE THE MATTER IN THE REGULAR ASSESSMENT OF M/S . MASTER DEVELOPERS. AS FAR AS THE REST CASH EXPENDITURE IS CONCERNED; SINCE IT RELATED TO THE BLOCK-PERIOD FOR WHICH UNACCOUNTE D INTEREST IS ASSESSED; HENCE LEARNED CIT(A) HAS CORRECTLY GIVEN THE ADVANTAGE UPTO THE EXTENT. WE HEREBY AFFIRM THESE FINDINGS AN D DISMISS THIS GROUND OF THE REVENUE. 29. GROUND NO.10 IS REPRODUCED BELOW: THE CIT(A) HAS ERRED IN LAW AND ON FACTS HOLDING TH AT NO SEPARATE ADDITION OF RS.18,07,564/- ON ACCOUNT OF UNEXPLAINE D EXPENSES NOTED ON PAGES 24 AND 25 OF ANNEXURE A-4, WAS REQUIRED TO BE MADE AS IT IS COVERED BY THE ADDITIONS MADE ON THE BASIS OF THE N OTINGS IN DIARY A-1. 29.1 THIS ADDITION IS BASED UPON THE DETECTION OF C ERTAIN PAPERS (PAGES 24 TO 25 OF ANNEXURE A-4) FROM THE POSSESSIO N OF SRI ARVIND SHAH FOR WHICH NO SATISFACTORY EXPLANATION, AS PER AO, WAS OFFERED BY THE ASSESSEE. WHEN THE MATTER WAS CARRIE D BEFORE LEARNED CIT(A), IT WAS HELD AS UNDER: I HAVE CONSIDERED THE FATS AND CAREFULLY GONE THRO UGH THE RELEVANT LOOSE PAPERS WHICH IS PLACED ON PAGE 99 OF PAPER BO OK, ON THE BASIS OF WHICH ADDITION HAS BEEN MADE AND THE AMOUNTS WHICH HAS BEEN REPRODUCED BY THE ASSESSING OFFICER ON PAGE 51 OF T HE ASSESSMENT ORDER AND DURING THE COURSE OF APPEAL HEARING THE C ONTENTS OF THE LOOSE PAPER COULD NOT BE EXPLAINED. THEREFORE, I HA VE NO ALTERNATIVE BUT TO CONFIRM THE ADDITION AS MADE BY THE AO BUT S INCE I HAVE SEPARATELY CONFIRMED ADDITION ON THE BASIS OF NOTIN GS IN DIARY A-1, WHICH INCLUDES ADDITION FOR ADVANCES, INTEREST AS W ELL AS PEAK AND THEREFORE, CONSIDERING THE ALTERNATE ARGUMENT RAISE D BY THE APPELLANT NO SEPARATE ADDITION IS REQUIRED TO BE MADE AND THU S THE ADDITION IS DELETED. 30. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE VIEW THAT THE DIRECTIONS OF LEARNED CIT(A) DESE RVES TO BE IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 60 - MODIFIED. INSTEAD OF DIRECTING TO DELETE THE ADDITI ON; THE CORRECT DIRECTION SHOULD BE THAT THE ALLEGED EXPENSES, AS F OUND RECORDED IN THOSE SEIZED PAPERS, ARE TO BE ALLOWED TO BE SET-OF F AGAINST THE UNACCOUNTED INCOME NOW DETERMINED VIDE THIS ORDER A ND THE BALANCE, IF ANY, REMAINED UNADJUSTED, THEREUPON, SH ALL BE TAXED ACCORDINGLY. DUE TO THIS MODIFICATION THIS GROUND O F THE REVENUE DEPARTMENT IS PARTLY ALLOWED. 31. GROUND NO.11 IS REPRODUCED BELOW: THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTI NG TO DELETE THE ADDITION OF RS.4,21,500/- MADE ON ACCOUNT OF UNDISC LOSED RENTAL INCOME. 31.1 CONSEQUENT UPON THE SEARCH AS PER DIARY A-1, I T WAS FOUND THAT RENT INCOME FROM PALAKBHAI, SARDARJI, NIKHIL D ESAI AND CYBER CAF WAS NOTED THEREIN. IT WAS ALSO DETECTED THAT T HERE WAS RENT AGREEMENT FOR A ROOM AND BANK SIDE SPACE OF PARTH EMPIRE. THE RENT WAS FIXED AT RS.12,000/- ON 1.5.2000. ASSE SSEE STATED THAT IT WAS ONLY A DRAFT AGREEMENT; BUT AO HAS NOT ACCEP TED AND FURTHER CALCULATED THE RENT AT RS.88,000/- FOR THE SAID PER IOD. AGAINST THE ADDITION ASSESSEE HAD GONE IN APPEAL. 32. LEARNED CIT(A) HAS HELD THAT THE RENT OF RS.4,2 1,500/- WAS RELATED TO THE RAJESH DESAI & RAJNI DESAI AND DIREC TED TO ASSESS IN THE REGULAR ASSESSMENT IN THEIR RESPECTIVE ASSESSME NT. BALANCE RS.80,000/- WAS CONFIRMED IN THE HANDS OF THE ASSES SEE. THERE IS NO INFIRMITY IN THE SAID DECISION OF LEARNED CIT(A) ; HENCE HEREBY CONFIRMED AND THIS GROUND OF THE REVENUE IS THEREFO RE DISMISSED. IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 61 - 33. GROUND NO.12 IS REPRODUCED BELOW: THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTI NG TO DELETE THE ADDITION OF RS.32,11,000/- MADE ON ACCOUNT OF SALE OF SHOP IN PARTH EMPIRE. 33.1 THERE WAS AN AGREEMENT FOR SALE DETECTED FROM THE POSSESSION OF THE ACCOUNTANT (MARKED A-4 PAGE 67) A BOUT A SHOP AT PARTH ENTERPRISES FOR A SALE CONSIDERATION OF RS.32 ,11,000/-; WHICH WAS FOUND TO BE DULY SIGNED BY BOTH THE PARTIES. HO WEVER, THE BUYERS IDENTIFICATION WAS NOT DISCLOSED BY THE ASS ESSEE; HENCE, IN THE ABSENCE OF PROPER EXPLANATION IT WAS TAXED IN T HE HANDS OF THE ASSESSEE. 33.2 WHILE DELETING THE ADDITION THE REASONING GIVE N BY LEARNED CIT(A) WAS AS UNDER: I HAVE CAREFULLY GONE THROUGH THE LOOSE PAGE NO.67 OF A-4 WHICH IS PLACED ON PAGE 105 OF THE PAPER BOOK DATED 13.4.200 0 AND THE SAID NOTINGS CANNOT BE CONSIDERED AS THE AGREEMENT FOR S ALE AS OBSERVED BY THE ASSESSING OFFICER AND THEY ONLY REPRESENT SOME CORRESPONDENCE. THERE ARE NO EVIDENCES PERTAINING TO PURCHASES OR I NVESTMENT BY THE APPELLANT AND IN ABSENCE OF ANY CONCRETE FINDING AB OUT THESE ASPECTS, THE MERE NOTINGS WHICH HARDLY CONVEYS ANYTHING CANN OT BE CONSIDERED AS SALE OF THE SHOP AND THEREFORE, CONSIDERING THE SUBMISSION MADE BY THE APPELLANT BEFORE THE AO AS WELL AS BEFORE ME TH E ADDITION OF RS.32,11,000/- IS DELETED. 34. ON ACCOUNT OF THE FACTS THAT THE SHOP WAS STATE D TO BE UNDER THE OWNERSHIP OF ONE SRI VIJAYBHAI GUPTA AND THAT I N THE LIGHT OF THE CATEGORICAL FACTUAL FINDING OF LEARNED CIT(A) T HAT THE IMPUGNED PAPER WAS NOT IN THE NATURE OF SALE AGREEM ENT, WE HEREBY AFFIRM THOSE FINDINGS OF LEARNED CIT(A) AND DISMISS THIS GROUND OF THE REVENUE. IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 62 - 35. GROUND NO.13 IS REPRODUCED BELOW: THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DIREC TING TO DELETE A) THE ADDITION OF RS.10,00,000/- MADE ON ACCOUNT O F SHARAFI TRANSACTIONS WITH MALJIBHAI V. DESAI, BY HOLDING TH AT THE SAID ADDITION WAS COVERED BY THE INTEREST INCOME OF THE ASSESSEE, AND B) THE ADDITION OF RS.3,02,500/- MADE ON ACCOUNT OF LAND TRANSACTIONS. 35.1 A SIMULTANEOUSLY SEARCH WAS CONDUCTED ON THE B ROTHER OF THE ASSESSEE, NAMELY, SRI MALJIBHAI DESAI AT ANKLES HWAR AND EVIDENCE REGARDING SHARAFI TRANSACTION WAS FOUND, M ARKED AS ANNEXURE BS-1 PAGE NO.4, WHEREIN IT WAS WRITTEN JI VRAJBHAI AND THE DATE-WISE DETAIL OF TRANSFER THROUGH ANGADIA WA S ALSO WRITTEN. HENCE, AN ADDITION OF RS.10,00,000/- WAS MADE. LIKE WISE, FROM THE POSSESSION OF SRI MALJIBHAI DESAI AN EVIDENCE O F LAND PROPERTY WAS UNEARTHED, DETAILS AS UNDER: ANNEXURE A-1, SEIZED FROM THE RESIDENCE OF MALJIBHA I, AT 6, ASHOKNAGAR, MESHSANA THESE CONTAIN THE TRANSACTION BETWEEN SHRI MALJIBHAI & HIS FAMILY MEMBERS. ON THE FILE COVER, THERE IS A MENTION OF TRANSACTION WITH JIVRAJBHAI ON 01.05.1998 FOR RS . 4,50,000 IN WHICH RS. 1,47,500/- CASH HAS BEEN SHOWN IN THE EXPENDITU RE INCURRED BY STAFF, ADVOCATES, STAMP PAPER ETC. AND FOR BALANCE RS. 3,02,0500 THERE IS A MENTION OF ADJUSTMENT ENTRY TRANSFER TO ANKLES HWER ETC. THESE HAVE BEEN MENTIONED AGAIN ON PAGE NO. 96 OF THIS AN NEXURE. 35.2 BOTH THE ADDITION OF RS.10 LACS AND RS.3,02,500/- W AS CHALLENGED, HOWEVER, DELETED BY LEARNED CIT(A) AS F OLLOWS: I HAVE CONSIDERED THE FACTS AND THE OBSERVATION OF THE ASSESSING OFFICER AS MADE ON PAGE 56, FROM WHERE IT IS FOUND THAT ADDITION OF RS.10 LACS IS PERTAINING TO CERTAIN NOTINGS DATED 2 6/5/2000 AND 27/5/2000 BEING THE TRANSACTIONS WITH MALJIBHAI V. DESAI AND ASSESSING OFFICER HAS FURTHER OBSERVED THAT IN SUBM ISSION DATED 27/9/2002, THE SAID SHRI MALJIBHAI V. DESAI HAS CON FIRMED THAT THE TRANSACTION RELATE TO THE APPELLANT. THEREFORE, THE CONTENTION RAISED BY THE APPELLANT PERTAINING TO THE PRESUMPTION U/S.132 (4A) IS NOT RELEVANT AND THUS ADDITION IN PRINCIPAL IS REQUIRED TO BE CO NFIRMED. HOWEVER, THE TRANSACTIONS PERTAINS TO THE MONTH OF MAY 2000 AND BY THIS TIME, THERE IS SUFFICIENT INTEREST INCOME EARNED BY THE A PPELLANT AND THEREFORE, CONSIDERING THE SAME, NO SEPARATE ADDITI ON IS REQUIRED TO BY IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 63 - MADE. THE REMAINING ADDITION OF RS.3,02,500/- IS PE RTAINING TO INVESTMENT IN LAND WHICH HAS BEEN ACCEPTED BY MLJIB HAI V. DESAI AS PAID BY THE APPELLANT ON 1/5/98. EXPLAINING THE SAI D ADVANCE, THE APPELLANT HAS FILED BEFORE ME COPY OF THE BALANCE S HEET FOR THE YEAR 31/3/99 AND SUBSEQUENT YEARS, WHEREIN THIS AMOUNT O F RS.3,02,500/- HAS BEEN SHOWN AS BALANCE PERTAINING TO THIS INVEST MENT IS REQUIRES TO BE CONSIDERED IN THE REGULAR ASSESSMENT FOR ASSESSM ENT YEAR 1999- 2000 AS ADVANCE IS RECORDED IN THE BOOKS OF ACCOUNT S AND THEREFORE, ADDITION MADE IN THE BLOCK ASSESSMENT IS DELETED. 36. HAVING HEARD THE SUBMISSIONS, WE ARE OF THE VIE W THAT THE ADDITION OF RS.10 LACS WAS RIGHTLY CONFIRMED BY LEA RNED CIT(A). FURTHER THE DIRECTION OF GRANTING SET-OFF AGAINST T HE UNACCOUNTED INCOME DIRECTED TO BE ASSESSED IN THE HANDS OF THE ASSESSEE IS REQUIRED TO BE MODIFIED THAT THE IMPUGNED ADDITION OF RS.10 LACS CAN BE ADJUSTED TO THE EXTENT OF AVAILABLE AMOUNT A ND THE BALANCE OF THE ADDITION IF FOUND EXCESSIVE THEN TO BE TAXED ACCORDINGLY. REST OF THE VIEW IS HEREBY CONFIRMED. THIS GROUND O F THE REVENUE IS THEREFORE PARTLY ALLOWED. 37. GROUND NO.14 IS REPRODUCED BELOW: THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDIN G WITH REGARD TO THE ADDITION OF RS.6,02,567/- FOR A.Y. 20 00-01 MADE ON ACCOUNT OF THE PROVISIONS OF SECTION 158BB(1)(CA) O F THE IT ACT THAT THE INCOME ON WHICH ADVANCE TAX HAS BEEN PAID OR TAX HAS BEEN DEDUCTED AT SOURCE CANNOT BE TREATED AS UNDISC LOSED INCOME. 37.1 AS PER AO, IT WAS NOTED THAT THE ASSESSEE HAD FILED THE INCOME TAX RETURN FOR A.Y.2000-01 ON 27.03.2002 DEC LARING INCOME OF RS.6,02,565/- ALTHOUGH THE LAST DATE OF F ILING WAS 20.10.2000 THEREFORE TAXABLE AS PER THE PROVISION O F SECTION 158BB OF IT ACT. IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 64 - 37.2 SINCE THE DUE DATE OF FILING OF RETURN HAD EXP IRED AND THE RETURN WAS FILED ON 27.03.20002 I.E., AFTER THE SEA RCH OPERATION THEREFORE LEARNED CIT(A) HAS HELD AS UNDER:- I HAVE CONSIDERED THE ISSUE CAREFULLY. THE AO IS D IRECTED TO CONSIDER THE INCOME SHOWN IN THE RETURN OF INCOME F OR A.Y. 2000- 01, AS UNDISCLOSED INCOME AS RETURN WAS NOT FILED I N DUE TIME, SUBJECT TO THE CONDITION THAT INCOME COVERED BY ADV ANCE TAX AND T.D.S. SHOULD BE DEDUCTION AS IT CANNOT BE CONSIDER ED TO BE UNDISCLOSED INCOME. THE AO IS, THEREFORE, DIRECTED TO RECOMPUTED THE INCOME AND WORK OUT THE ADDITION COR RECTLY. 38. THE ABOVE FINDING OF LEARNED CIT(A) IS PARTLY C ONFIRMED BY US; BECAUSE WE ARE NOT IN AGREEMENT THAT INCOME COV ERED BY ADVANCE TAX AND TDS IS TO BE EXCLUDED. FOR THIS LEG AL QUESTION WE PLACE RELIANCE UPON THE DECISION OF HONBLE SUPR EME COURT IN THE CASE OF ACIT VS. M/S. A. R. ENTERPRISES IN CIVI L APPEAL NO.271 OF 2013, ORDER DATED 14.1.2013, WHEREIN IT H AS BEEN HELD THAT ADVANCE TAX AND TDS PAID/DEDUCTED IS AN ESTIMA TE WHICH DOES NOT GIVE CALCULATION OF EXACT INCOME AS DECLARED IN THE RETURN. AS PER SECTION 158BB(1) IF CURRENT YEARS RETURN HAS N OT BEEN FILED BEFORE THE DATE OF SEARCH AND DUE DATE OF RETURN EX PIRED THEN CURRENT YEARS INCOME IS ALSO PART OF UNDISCLOSED I NCOME. IN THIS CASE SEARCH AND SEIZURE WAS ON 20.10.2000 AND RETUR N FOR A.Y. 2000-01 WAS FILED ON 27.3.2002 WHICH WAS DUE ON OCT OBER, 2000. THE ASSESSEE HAS NOT PRESSED THE GROUND NO.21 IN CA SE OF ASSESSEES APPEAL. RESULTANTLY, THIS GROUND OF THE REVENUE ON THIS LEGAL ISSUE IS ALLOWED. IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 65 - B. IT(SS)A NO.106/AHD/2004, (ASSESSEES APPEAL) 39. THIS IS THE CROSS APPEAL FILED BY THE ASSESSEE, HENCE ARISING FROM THE ORDER OF LEARNED CIT(A)-I AHMEDABAD, ORDER DATED 19 TH OF JANUARY, 2004. SEVERAL GROUNDS ARE RAISED AS REPROD UCED BELOW: 1. THE IMPUGNED ORDER OF ASSESSMENT AND SO AS TO T HE ORDER OF THE CIT(A) ARE BAD IN LAW, AS THE ADDITIONS HAS BEEN MA DE AND CONFIRMED BY THE LOWER AUTHORITIES WITHOUT CONDUCTING PROPER ENQUIRIES AND THEREFORE, THE SAME ARE AGAINST THE PRINCIPLES OF N ATURAL JUSTICE AND THEREFORE, EITHER BOTH THE ORDERS ARE REQUIRED TO B E SET ASIDE OR THE RELEVANT ADDITIONS REQUIRES TO BE DELETED. 2. THE LEARNED A.O. AS WELL AS CIT(A) HAS ERRED IN CONFIRMING CERTAIN ADDITIONS BASED ON NOTINGS IN THE DIARY A-L, WITHOU T GIVING AN OPPORTUNITY OF CROSS EXAMINATION AND THEREFORE, KEE PING IN VIEW THE JUDGMENT OF APEX COURT IN THE CASE OF TIN BOX COMPA NY VS. CIT (2001) 249 ITR 216, THE ADDITIONS BASED ON SUCH NOT INGS/STATEMENT OF 3 RD PARTIES, WHICH HAS NOT BEEN CONFRONTED TO THE APPE LLANT, REQUIRES TO BE DELETED. 3. THE LEARNED A.O. AS WELL AS THE LEARNED CIT(A) H AS ERRED IN GIVING A FINDING THAT THE NOTINGS IN DIARY A-1 ARE BELONGI NG TO THE APPELLANT AND THEREFORE, THE ADDITIONS BASED ON SAID DIARY RE QUIRES TO BE DELETED, IN VIEW OF THE FACTS AND SUBMISSION. 4. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE A.O. WHILE MAKING ADDITION ON THE BASIS OF DIARY A-1,ON THE BASIS OF TRIAL BALANCE DAWN BY THE A.O. AS AT 1/11/1999. SINCE THE SAID TRIAL BALANCE AS AT 1/11/1999 INCLUDES BALANCE OF OTHER DATES, TH E SAME OUGHT TO HAVE BEEN EXCLUDED, RESULTING INTO NO ADDITION ON A CCOUNT OF SAID DIARY. THEREFORE, THE IMPUGNED ADDITION BASED ON SAID DIARY REQUIRES TO BE DELETED. 5. THE LEARNED CIT(A) HAS ERRED IN CONFIRMED THE AC TION OF THE A.O. WHILE CONFIRMING PART ADDITION ON ACCOUNT OF DIARY A-1, IGNORING THE FACT THAT CREDITS ARE LOWER THAN THE DEBITS AND THE REFORE, NO ADDITION IS REQUIRED TO BE MADE, AS A RESULT THE ENTIRE ADDITIO N CONFIRMED BY THE CIT(A) REQUIRES TO BE DELETED. 6. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDIT ION OF RS.52,29,000/- ON THE BASIS OF NOTINGS IN DIARY A-1 , ON THE GROUND THAT THE SAME ARE SHARAFI TRANSACTIONS OF THE APPELLANT, AS ADDED BY THE A.O. IN VIEW OF THE FACTS, DETAILS AND VARIOUS EVID ENCES, THE ENTIRE ADDITION OF RS.52,29,000/- MADE IN CASE OF THE APPE LLANT REQUIRES TO BE DELETED. IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 66 - 7. THE LEARNED CIT(A) HAS ERRED IN ENHANCING THE AD DITION PERTAINING TO NOTINGS IN DIARY A-1, BY AN AMOUNT OF RS.77,47,5 00/-. SINCE THE SAID AMOUNT WAS NOT ADDED BY THE A.O., THE LEARNED CIT(A ) HAS ERRED IN ENHANCING THE SAID ADDITION AND MOREOVER, IN VIEW O F THE FACTS, DETAILS AND EVIDENCES FURNISHED, THE SAID ADDITION MADE BY THE CIT(A) OF RS.77,47,500/- REQUIRES TO BE DELETED. 8. THE LEARNED CIT(A) HAS ALSO ERRED IN NOT GIVING CREDIT OF RS.61,78,300/- AGAINST THE AMOUNT OF ADDITION WHICH HAS BEEN ENHANCED BY RS.77,47,500/-. SINCE THE NATURE OF BOT H THE ISSUE IS IDENTICAL, THE LEARNED CIT(A) OUGHT TO HAVE ALLOWED RELIEF OF RS.61,78,300/- FROM THE TOTAL ADDITION CONFIRMED. 9. THE LEARNED CIT(A) HAS ALSO ERRED IN NOT ALLOWIN G DEDUCTION ON ACCOUNT OF CERTAIN BAD DEBTS AS CLAIMED, ON THE BAS IS OF NOTINGS IN DIARY A-1, ON THE GROUND THAT IF AT ALL THE ADDITIO N IS CONFIRMED ON THE BASIS OF SAID NOTINGS, THE DEDUCTION FOR THE BAD DE BTS OUGHT TO HAVE BEEN ALLOWED. 10. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING AN A MOUNT OF RS.2,00,13,670/-, CONSIDERING THE SAME AS GROSS INT EREST INCOME ON THE BASIS OF NOTINGS IN DIARY A-1. SINCE NO SUCH INCOME HAS BEEN EARNED BY THE APPELLANT, THE RESULTANT ADDITION REQUIRES T O BE DELETED. AS A RESULT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING N ET INTEREST INCOME OF RS.1,79,06,430/-, AFTER ALLOWING DEDUCTION FOR I NTEREST PAID. IN VIEW OF THE FACTS AND SUBMISSION, THE SAID ADDITION REQU IRES TO BE DELETED. 11. THE LEARNED CIT(A) HAS ERRED IN NOT ALLOWING DE DUCTION IN RESPECT OF CERTAIN PARTIES, WHICH ARE NOT RELATED TO THE AP PELLANT BUT PERTAINS TO LAND DEAL, NOT PERTAINING TO THE APPELLANT AND T HEREFORE, DEDUCTION OUGHT TO HAVE BEEN ALLOWED PERTAINING TO SUCH PARTI ES, AS CLAIMED DURING THE COURSE OF APPEAL HEARING. 12. THE LEARNED CIT(A) HAS ALSO ERRED IN CONFIRMING ADDITION OF RS.1,84,08,700/-, ON ACCOUNT OF NEGATIVE PEAK AS AD DED BY THE A.O. SINCE THERE CANNOT BE ANY ADDITION ON ACCOUNT OF NE GATIVE PEAK, THE SAME REQUIRES TO BE DELETED. FURTHER, THE ADDITION IS BASED ON SURMISES AND CONJECTURE, IN CORRECT WORKING AND THEREFORE, T HE SAME REQUIRES TO BE DELETED. 13. THE LEARNED CIT(A) HAS ALSO ERRED IN NOT ALLOWI NG CREDIT FOR CASH WHICH WAS AVAILABLE IN CASE OF M/S. MASTER DEVELOPE R, AS FOUND NOTED IN VARIOUS LOOSE PAPERS AT THE TIME OF SEARCH AND A S SUPPORTED BY VARIOUS EVIDENCES. SINCE THE SAID CASH BALANCE OF T HE REGULAR BOOKS HAVING BEEN UTILIZED IN THE SAID BUSINESS, THE DEDU CTION FOR THE SAID CASH OUGHT TO HAVE BEEN ALLOWED, WHILE WORKING NEGA TIVE PEAK. IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 67 - 14. THE LEARNED CIT(A) HAS ALSO ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF SAID DIARY A-1 IN CASE OF THE APPELLANT, THOUGH IT WAS CLAIMED THAT THE SAME PERTAINS TO M/S. MASTER DEVEL OPER, A PARTNERSHIP FIRM OF THE GROUP. IN VIEW OF EVIDENCES FURNISHED DURING THE COURSE OF APPEAL HEARING AND EXAMINED BY THE A. O. IN HIS REMAND REPORT, ADDITION REQUIRES TO BE DELETED FROM THE HA NDS OF THE APPELLANT AND THE SAME REQUIRES TO BE CONSIDERED IN CASE OF M /S. MASTER DEVELOPER. 15. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDI TION OF RS.1,49,000/- OUT OF THE ADDITION MADE BY THE AO OF RS.22,48,000/- BEING UNACCOUNTED PAYMENT OF MANAV MANDIR PLOT. IN VIEW OF THE FACTS AND SUBMISSION, THE ADDITION CONFIRMED BY THE CIT(A) OF RS.1,49,000/- ALSO REQUIRES TO BE DELETED. 16. THE LEARNED CIT(A) HAS ALSO ERRED IN CONFIRMING THE ADDITION OF RS.1,17,000/- OUT OF THE ADDITION MADE BY THE AO OF RS.50.00 LACS PERTAINING TO LAND AT SURVEY NO.412/2 WADAJ. IN VIE W OF THE FACTS AND SUBMISSION, THE ADDITION CONFIRMED BY THE CIT(A) OF RS.1,17,000/- ALSO REQUIRES TO BE DELETED. THE LEARNED CIT(A) HAS ALSO OTHERWISE ERRED IN NOT GIVING SET OFF OF THE INCOME PERTAINING TO SUCH INVESTMENT. 17. THE LEARNED CIT(A) HAS ERRED IN GIVING A FINDIN G THAT THERE IS A UNEXPLAINED INVESTMENT OF RS.18,99,303/- IN HOUSE A T NIRAT PARK BUNGLOW. HOWEVER, NO SEPARATE ADDITION HAS BEEN MAD E ON THE GROUND THAT THE SAME HAS BEEN INCURRED OUT OF INCOM E ALREADY ADDED BY THE A.O. THERE BEING NO UNEXPLAINED INVESTMENT, THE SAID FINDING OF THE CIT(A) PERTAINING TO UNEXPLAINED INVESTMENT REQ UIRES TO BE REVERSED. 18. THE LEARNED CIT(A) HAS ALSO ERRED IN GIVING A F INDING OF UNEXPLAINED AMOUNT OF RS.18,07,564/- ON THE BASIS O F CERTAIN NOTINGS. THERE BEING NO SUCH UNEXPLAINED AMOUNT, THE SAID FI NDING REQUIRES TO BE REVERSED. 19. THE LEARNED CIT(A) HAS ALSO ERRED IN CONFIRMING ADDITION OF RS.88,000/- BEING UNEXPLAINED RENTAL INCOME. IN VIE W OF THE FACTS AND DETAILS, THE ADDITION OF RS.88,000/- REQUIRES TO BE DELETED. 20. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING UNEX PLAINED AMOUNT OF RS.10.00 LACS WITH SHRI MALJIBHAI. THERE BEING N O SUCH ADVANCES, THE SAID FINDING REQUIRES TO BE REVERED. 21. THE LEARNED CIT(A) HAS ALSO ERRED IN GIVING A F INDING THAT OUT OF THE REGULAR INCOME OF A.Y. 2000-01, THE INCOME TO T HE EXTENT OF ADVANCE TAX AND TDS IS REQUIRED TO BE CONSIDERED AS REGULAR AND THE BALANCE AS UNDISCLOSED INCOME. IN VIEW OF THE FACTS AND LEGAL POSITION, THE ENTIRE INCOME OF A.Y. 2000-01 REQUIRES TO BE CO NSIDERED AS A IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 68 - REGULAR INCOME AND PART ADDITION TO THE UNDISCLOSED INCOME REQUIRES TO BE DELETED. 22. THE LEARNED AO HAS ERRED IN LEVYING SURCHARGE O N THE TAX ON UNDISCLOSED INCOME. IN VIEW OF THE LEGAL POSITION, NO SURCHARGE IS REQUIRED TO BE LEVIED ON THE TAX ON UNDISCLOSED INC OME IN THE CASE OF APPELLANT. THERE IS NO FINDING ON THIS ISSUE BY THE CIT(A) AS THE SAID ISSUE WAS NOT RAISED BEFORE HIM, HOWEVER, IN VIEW O F LEGAL POSITION, NO SURCHARGE IS REQUIRED TO BE LEVIED . 40. LEARNED AR MR. G.C. PIPARA, AT THE OUTSET HAS I NFORMED THAT THE ASSESSEE IS NOT WILLING TO PRESS GROUND NOS.1, 2, 3, 9, 15, 17 TO 21, HENCE, NO ADJUDICATION IS REQUIRED. THESE GROUN DS BEING NOT PRESSED, HENCE, HEREBY DISMISSED BEING NOT CONTESTE D BY THE ASSESSEE. 41. APROPOS TO GROUND NOS.4 AND 5, IT IS WORTH TO M ENTION THAT THE RELATED FACTS HAVE ALREADY BEEN DISCUSSED ABOVE WHILE DECIDING THE APPEAL OF THE REVENUE. A DIARY WAS RECOVERED AN D ON THE BASIS OF THE ENTRIES FOUND RECORDED IN THE SAID DIARY A T RIAL BALANCE WAS DRAWN. THAT TRIAL BALANCE WAS TAKEN INTO ACCOUNT BY THE AO, ESPECIALLY WHEN NO DEFECT WAS POINTED OUT BY THE AS SESSEE. EVEN FOR THE BLOCK PERIOD IF ON THE OPENING DAY IT WAS F OUND THAT THERE WERE UNDISCLOSED INVESTMENT THEN THOSE UNDISCLOSED INVESTMENT ARE REQUIRED TO BE TAXED IN THE HANDS OF THE ASSESS EE FOR THE SAID BLOCK PERIOD. WE HAVE ALSO GIVEN A FINDING THAT ON ACCOUNT OF THE NATURE OF THE ENTRIES MADE IN THE DIARY, THE IMPUGN ED DIARY IN FACT BELONGED TO THE ASSESSEE. AS FAR AS THE ARGUMENT TH AT THE CREDITS WERE LOWER THAN THE DEBITS IS CONCERNED, WE HAVE CL OSELY EXAMINED THIS ASPECT AS WELL. THE AO HAS REPRODUCED A STATEM ENT OF SRI ARVIND A. SHAH ON PAGE 8 OF THE ASSESSMENT ORDER WH EREIN HE HAS ACCEPTED THAT THE DEBITS SIDE FIGURES REPRESENTED T HE AMOUNT GIVEN IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 69 - TO THE PARTIES BY THE ASSESSEE. THEREFORE, THE AMOU NTS WHICH WERE ADVANCED AS LOAN WAS FOUND EXCESSIVE THAN THE AMOUN TS REPRESENTING THE CREDIT SIDE, WHICH WERE THE AMOUNT S RECEIVED FROM THE PARTIES. THEREFORE, IN THE FINANCE BUSINESS THE CREDIT SIDES WERE GENERALLY LOWER BECAUSE THE PARTIES HAVE NOT REFUND ED OR RETURNED THE LOAN AMOUNT AND HENCE THE DEBIT SIDE ENTRIES RE PRESENTED THE HIGHER FIGURE BECAUSE THE ADVANCES GIVEN BY THE ASS ESSEE AS A LOAN TO VARIOUS PARTIES HAD REPRESENTED THE HIGHER FIGUR E. UNDER THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE , WE FIND NO FORCE IN GROUND NOS.4 AND 5 OF THE ASSESSEE HENCE THE SAM E ARE HEREBY DISMISSED. 42. APROPOS TO GROUND NO.6, IN THE LIGHT OF THE DIS CUSSION MADE HEREINABOVE SINCE THE SAME WAS NOTHING BUT CONNECTE D WITH SHARAFI TRANSACTION OF THE ASSESSEE, HENCE, IN VIEW OUR DEC ISION TAKEN WHILE DECIDING REVENUES GROUND NO.1, WE HEREBY REJECT TH IS GROUND OF THE ASSESSEE. IN THE RESULT, GROUND NO.6 OF THE ASS ESSEE IS HEREBY DISMISSED. 43. APROPOS TO GROUND NOS.7 AND 8, WE HAVE NOTED TH AT THE RELEVANT OBSERVATION BY LEARNED CIT(A) WAS AT PAGE 74 AND THAT PORTION IS REPRODUCED BELOW: IN RESPECT OF OTHER PERSONS PERUSAL OF DIARY SHOWS THAT THEY ARE CLEARLY SHARAFI TRANSACTIONS OF THE APPELLANT. FROM THE PERUSAL OF THE WORKING OF THE ADDITION AS ANNEXED TO THE ASSESSMEN T ORDER, IT IS SEEN THAT OUT OF THE TOTAL DEBITS AO HAS GIVEN DEDUCTION FOR THE CREDIT BALANCES AND ACCORDINGLY, THE NET DEBIT OF RS.27,32 ,38,000/- HAS BEEN ADDED. THE CREDIT INCLUDES AN AMOUNT OF RS.77,47,50 0/- IN THE NAME OF THE BUYER OF THE LAND IN QUESTION. THIS ACCOUNT IS PERTAINING TO THE LAND AT THALTEJ AND SINCE I HAVE DELETED THREE ADDITIONS IN THE NAME OF MANOJ VADODARIS, JIGNESH DESAI AND VIKAS SHAH HAVIN G DEBIT BALANCE IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 70 - WHICH HAS BEEN CONSIDERED FOR THE PURPOSE OF ADDITI ON BY THE ASSESSING OFFICER, ON THE GROUND THAT THE SAME PERT AINS TO LAND AT THALTEJ AND THEREFORE, FOLLOWING THE SAID REASONING , THE CREDIT BALANCE IN THE NAME OF BUYER OF RS.77,47,500/- BEING ALSO P ERTAINING TO LAND AT THALTEJ, REQUIRES TO BE WITHDRAWN. SINCE THIS AMOUN T OF RS.77,47,500/- HAS NOT BEEN ADDED BY THE ASSESSING OFFICER AS HE H AS GIVEN CREDIT FOR THE SAME, A NOTICE OF ENHANCEMENT OF THE INCOME BY RS.77,47,500/- HAS BEEN GIVEN TO THE AUTHORISED REPRESENTATIVE OF THE APPELLANT TO WHICH THE APPELLANT IN HIS WRITTEN SUBMISSION DATED 9/01/ 2004 HAS AGREED FOR THE SAME BUT HAS RAISED A CONTENTION THAT THERE IS A SIMILAR ADDITION OF RS.61,78,300/- IN THE NAME OF SHRI CHHAGANBHAI DESA I, WHICH REQUIRES TO BE DELETED AS THE SAID DEBIT BALANCE IN THE NAME OF SRI CHHAGANBHAI DESAI IS PERTAINING TO THE LAND AT THAL TEJ AND THERE ARE NO SHARAFI TRANSACTIONS IN THE SAID ACCOUNT. IT WAS FURTHER SUBMITTED THAT NO DOCUMENTARY EVIDENCES WERE FOUND AT THE TIM E OF SEARCH FROM SHRI ARVIND A SHAH PERTAINING TO THE BUYER AND SHRI CHHAGANBHAI DESAI AND THEREFORE, NO SUBMISSIONS WERE MADE IN DE TAIL PERTAINING TO ADDITION OF RS.61,78,300/- IN THE NAME OF SRI CHHAG ANBHAI DESAI. I HAVE LOOKED INTO THE LEDGER ACCOUNT OF SHRI CHHAGAN BHAI DESAI AS APPEARING IN THE SAID DIARY AND FROM THE PERUSAL OF THE SAME. IT IS FOUND THAT EXCEPT OPENING BALANCE THERE IS NO CREDI T AND FURTHER DEBITS ARE ONLY ON ACCOUNT OF INTEREST AND EVEN THE RATE O F INTEREST I.E., 2.5% PER MONTH IS WRITTEN ON THAT PAGE WHICH SHOWS THAT THE ACCOUNT IS A LOAN ACCOUNT AND SUBMISSION THAT SHRI CHHAGANBHAI D ESAI IS THE OCCUPIER OF THE SAID LAND HAVING OWNERSHIP IS POTEN TLY INCORRECT. IT IS SEEN THAT ON VARIOUS SHARAFI TRANSACTIONS IN THE DI ARY SPECIFIC RATES OF INTEREST VARYING BETWEEN 2.10% TO 4.5% ARE MENTIONE D AND IN THE ACCOUNT OF SHRI CHHAGANBHAI DESAI RATE OF 2.5% IS C LEARLY WRITTEN AND INTEREST HAS ALSO BEEN WORKED OUT AT THE SAME RATE EVERY MONTH. THIS SHOWS THAT THE SUBMISSIONS ARE WRONG AND THERE IS N O EVIDENCE TO SHOW THAT HE WAS PART OWNER OF LAND. THUS NO DEDUCT ION OF THIS AMOUNT CAN BE ALLOWED. THE APPELLANT HAS CLAIMED CERTAIN D EDUCTION FOR THE BALANCES OTHER THAN 1/11/99, WHICH IS REJECTED AS T HE APPELLANT HAS NOT FURNISHED THE SAID LEDGER ON A DOUBLE ENTRY BASIS. THE CLAIM OF THE APPELLANT PERTAINING TO BAD DEBTS IN RESPECT OF PIY USHBHAI THAKRSHI AND OTHER PARTIES IS ALSO REJECTED AS NO EVIDENCES COULD BE BROUGHT ON RECORD IN SUPPORT OF HIS CLAIM. BESIDES THIS I FIND THAT NAME OF THESE ACCOUNTS HAVE BEEN WRITTEN OFF AS BAD DEBTS IN THE SEIZED DOCUMENTS OR ANY WHERE AND I ALSO FIND THAT IN MANY ACCOUNTS EVE N INTEREST AFTER THE DATE OF SEARCH HAS BEEN WORKED OUT. THIS SHOWS THAT THESE WERE NOT BAD DEBTS EVEN TILL THE DATE OF SEARCH. IN THE REMA ND REPORT DATED 09/01/2004 THE LEARNED ADDL. CIT HAS RAISED THE CON TENTION REGARDING PRESUMPTIONS U/S. 132(4A) AND STRESSED THAT ADDITIO N REQUIRES TO BE CONFIRMED IN THE HANDS OF THE APPELLANT. IN THIS RE SPECT, THE APPELLANT HAS ALSO MADE A SUBMISSION RELYING UPON CERTAIN JUD GMENTS, WHICH HAS ALSO BEEN REPRODUCED BY ME HEREINABOVE. HOWEVER , IT MAY BE SEEN THAT IN SECTION 132(4A) THE WORDS MAY BE PRESUMED HAVE BEEN EMPLOYED. IT IS, THEREFORE, CLEAR THAT THE MAKING O F THE PRESUMPTION IN IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 71 - SUCH CASES DEPENDS UPON THE PARTICULAR FACT OF THE CASE. THE OFFICER OR AUTHORITY IS NOT JUSTIFIED TO MAKE SUCH PRESUMPTION IN ALL CASES WITHOUT JUDICIAL APPLICATION OF MIND TO THE FACTS OF THE PA RTICULAR CASE. EVEN IF SUCH PRESUMPTION IS MADE, THE SAME IS REBUTTABLE AN D THE PERSON IS FREE TO LEAD EVIDENCE TO REBUT SUCH PRESUMPTION. IN SUCH A CASE, THE AUTHORITY HAS TO CONSIDER THE EVIDENCE AND THE FACT S JUDICIALLY. IN THIS RESPECT, RELIANCE IS ALSO PLACED ON THE JUDGMENTS O F RAJASTHAN HIGH COURT IN THE CASE OF ADDL. CIT VS. THAHRAYAMAL BALC HAND 124 ITR 111, 117 (RAJ.). WHAT AMOUNT OF EVIDENCE WILL REBUT SUCH A PRESUMPTION IN A GIVEN SET OF FACTS DOES NOT ADMIT OF ANY RIGID RULE. THE EVIDENCE MAY BE DIRECT OR CIRCUMSTANTIAL OR BOT H AND A MERE STATEMENT OF THE ASSESSEE MAY BE ENOUGH IN SOME CAS ES. THEREFORE, IN THE FACTS OF THE CASE THE PRESUMPTIONS HAS BEEN REB UTTED PARTLY WITH CONCRETE DOCUMENTARY EVIDENCES SO FAR AS THE LAND D EAL IS CONCERNED AND MOREOVER, SINCE THE SAID DIARY HAS FOUND FROM T HE RESIDENCE OF SHRI ARVIND A. SHAH, THE SAID PRESUMPTIONS CANNOT B E APPLIED IN TOTO IN CASE OF THE APPELLANT AND THIS. I HAVE NO HESITA TION IN DELETING THE ADDITION WITH RESPECT TO ABOVE REFERRED 3 PARTIES A ND ENHANCING THE ADDITION BY RS.77,47,500/- PERTAINING TO THE CREDIT AS DISCUSSED. 44. WE ARE NOT IN AGREEMENT WITH THE AFORESAID FIND ING OF LEARNED CIT(A), ESPECIALLY, UNDER THE CIRCUMSTANCES WHEN WE HAVE TAKEN A VIEW THAT THE TRANSACTION IN QUESTION WERE NOTHING BUT THE SHARAFI TRANSACTION. ACCORDING TO US, ANY CREDIT BA LANCE IN AN ACCOUNT REPRESENTED THE RETURN OF LOAN BY THE BORRO WER; THEREFORE, WE ARE OF THE VIEW THAT THE IMPUGNED ENHANCEMENT WA S NOT REQUIRED. WE, THEREFORE, HOLD THAT GROUND NOS.7 AND 8 OF THE ASSESSEE DESERVES TO BE ALLOWED BECAUSE OF THE REAS ON THAT LEARNED CIT(A) HAS CONSIDERED THE TRANSACTIONS IN THE NAME OF THOSE PARTIES AS LAND TRANSACTION. WE HAVE TAKEN A CONSCIENTIOUS DECISION THAT THOSE TRANSACTIONS WERE THE TRANSACTIONS OF THE ASS ESSEE. IN THE RESULT, THESE TWO GROUNDS ARE HEREBY ALLOWED. 45. APROPOS TO GROUND NO.10, IT IS WORTH TO MENTION THAT WHILE DECIDING REVENUES GROUND NO.2 SUPRA WE HAVE AFFIRM ED THE FINDING OF LEARNED CIT(A) AS FAR AS THE EARNING OF THE INTEREST OUT IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 72 - OF SHARAFI BUSINESS IS CONCERNED. HOWEVER, WE HAVE RESTORED THE ISSUE BACK TO HIM FOR THE LIMITED PURPOSE THAT THE RELIEF GRANTED THEREIN IS REQUIRED TO BE RECONSIDERED. ON THE SAME LINES, WE HEREBY DIRECT TO RE-COMPUTE THE CORRECT INTEREST IN COME AND REQUISITE RELIEF MAY BE GRANTED. IN THE RESULT, THI S GROUND OF THE ASSESSEE MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 46. ABOUT GROUND NO.11 OF THE ASSESSEE, WE ARE OF T HE VIEW THAT LEARNED CIT(A) HAS ALREADY TAKEN A VIEW IN FAVOUR O F THE ASSESSEE IN RESPECT OF FEW PARTIES THAT THOSE WERE PERTAINED TO THE LAND DEALING AND NOT PERTAINED TO FINANCE BUSINESS. THER EFORE, IN THE LIGHT OF THE SAID DECISION OF LEARNED CIT(A) THE AS SESSEE OUGHT NOT TO HAVE ANY GRIEVANCE. BUT STILL THE ASSESSEE HAS R AISED THIS GROUND. ALTHOUGH, WE HAVE NOT APPROVED THE SAID VERDICT OF LEARNED CIT(A) IN RESPECT OF THOSE FEW PARTIES AND HELD THA T THE TRANSACTION WAS CONNECTED WITH THE FINANCE BUSINESS OF THE ASSE SSEE, THEREFORE, WE ARE OF THE VIEW THAT THIS GROUND OF THE ASSESSEE IS UNWARRANTED. RATHER, WE HEREBY HELD THAT THIS GROUND HAS WRONGLY BEEN TAKEN BY THE ASSESSEE, HENCE, THE SAME IS HEREBY REJECTED. I N THE RESULT, THIS GROUND IS DISMISSED. 47. REGARDING GROUND NO.12, WE HAVE NOTED THAT THE AO HAD GIVEN A WORKING OF THE NEGATIVE CASH PEAK; HOWEVER, THE ASSESSEE HAD NOT SUBMITTED ANY SUCH WORKING OR EXPLANATION. THE ONLY ARGUMENT OF THE ASSESSEE WAS THAT THERE WAS NO CASH DEFICIT AND THAT THE CASH WAS WITHDRAWN FROM THE ACCOUNTS OF M/ S. MASTER IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 73 - DEVELOPERS. HOWEVER, LEARNED CIT(A) HAS CONSIDERED THOSE ARGUMENTS AND THEREAFTER CAME TO THE CONCLUSION AS UNDER: I FIND THAT THE APPELLANT HAS MADE THIS AVERMENT WI THOUT ANY BASIS OR EVIDENCE. NO WORKING AS TO HOW ASSESSING OFFICER WO RKING WAS WRONG HAS BEEN GIVEN. I ALSO FIND THAT THIS PEAK HAS BEEN WORKED OUT AFTER GIVING CREDIT FOR THE BALANCES AVAILABLE WITH THE A PPELLANT AFTER MAKING ADDITIONS AS ON 1.11.1999 AND EVEN THAT BALA NCE IS SUBSTANTIALLY REDUCED IN VIEW OF RELIEF ALLOWED EAR LIER. I ALSO FIND THAT CREDIT FOR WITHDRAWALS OF BANK HAS ALREADY BEEN GIV EN UPTO RS.2.10 CRORES BY THE ASSESSING OFFICE WHILE MAKING ADDITIO N OF RS.27.32 CRORES. HENCE NO FURTHER CLAIM CAN BE ALLOWED AS CR EDIT OF RS.2.10 CRORES (MEHSANA ACCOUNT) HAS ALREADY BEEN GIVEN. IF IT IS THE CLAIM OF THE APPELLANT THAT THE WORKING WAS WRONG, THEN IT W AS FOR HIM TO PROVE IT WITH EVIDENCE AND HIS OWN WORKING. AS THE APPELL ANT HAS NOT COME WITH ANY DETAILS OF EXPLANATION WHATSOEVER, THIS AD DITION HAS GOT TO BE CONFIRMED AS NEGATIVE CASH PEAK WOULD APPEAR ON LIA BILITY SIDE OF THE BALANCE SHEET FOR WHICH NO EXPLANATION AT ALL HAS B EEN GIVEN BY THE APPELLANT. IT IS SEEN THAT INVESTMENT IN SHARAFI BU SINESS AND THE PEAK AS WORKED OUT IN ALL TOTALS TO ABOUT RS.3.14 CRORES AN D INTEREST EARNED FOR ABOUT 1 YEARS WORK OUT TO RS.1.79 CRORES. CONSIDE RING THE RATE OF INTEREST AS PER THE DIARY WHICH VARIES BETWEEN 2 TO 4.5% PER MONTH, THE CAPITAL INVESTED WOULD EVEN OTHERWISE WORK OUT TO MORE THAN 5 CRORES, AND EVEN IF CREDIT FOR BANK LOAN, AS HAS AL READY BEEN GIVEN WHILE WORKING OUT, THEN NET ADDITION OF RS.27.32 CR ORES BY THE ASSESSING OFFICER, REQUIREMENT OF OWN FUNDS CANNOT BE LESS THAN RS.3.14 CRORES. CONSIDERING ALL THESE ASPECTS ALSO, ADDITION ON ACCOUNT OF PEAK IS CONFIRMED. 48. HAVING HEARD THE SUBMISSION OF BOTH THE SIDES, WE HAVE NOTED THAT DUE CREDIT FOR THE WITHDRAWAL FROM THE B ANK HAD DULY GIVEN BY LEARNED CIT(A). WE HAVE ALSO HELD THAT THE ASSESSEE HAS ENTERED INTO CASH FINANCING; HENCE, FOR THE PURPOSE OF PROVIDING CASH FINANCE THE ASSESSEE WAS IN REQUIREMENT OF THE CASH BALANCE. THE DEFICIT OF CASH THUS INDICATED THAT THE SAME WA S NOTHING BUT AN INVESTMENT OUT OF UNDISCLOSED INCOME. EVEN, WE HAVE NOTED THAT LEARNED CIT(A) IN THE ABOVE REPRODUCED PARAGRAPH HA S ADVANCED A REASONING THAT THE ASSESSEE WAS IN REQUIREMENT OF O WN FUNDS; HENCE, THE NEGATIVE CASH PEAK WAS RIGHTLY TAXED BY THE AO IN THE IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 74 - HANDS OF THE ASSESSEE. THE AFORESAID FINDING OF THE LEARNED CIT(A) IS HEREBY CONFIRMED AND THIS GROUND OF THE ASSESSEE IS HEREBY DISMISSED. 49. IN RESPECT OF GROUND NOS.13 AND 14, THE ASSESSE E HAS CONTESTED THAT THE CONTENTS OF THE DIARY ARE REQUIR ED TO BE CONSIDERED AND TAXED IN THE CASE OF M/S. MASTER DEV ELOPERS. IN THIS CONNECTION, LEARNED CIT(A) HAS OPINED AS UNDER: DURING THE COURSE OF APPEAL AN ARGUMENT HAS BEEN R AISED BY THE APPELLANT THAT ANY ADDITION ON ACCOUNT OF DIARY IS REQUIRED TO BE CONSIDERED IN CASE OF M/S. MASTER DEVELOPERS AND NO T IN CASE OF THE APPELLANT. IT HAS BEEN THE CLAIM OF THE APPELLANT T HAT ENTIRE FINANCING ACTIVITIES HAS BEEN CARRIED OUT BY M/S MASTER DEVEL OPERS, WHICH IS A PARTNERSHIP FIRM AND IN SUPPORT OF THIS THE RELIANC E HAS BEEN PLACED ON THE RETURN OF INCOME FILED BY M/S. MASTER DEVELOPER S FOR ASSESSMENT YEAR 2000-2001 WHEREIN INTEREST ON FINANCING BUSINE SS HAS BEEN SHOWN. SIMILARLY, RELIANCE HAS ALSO BEEN PLACED ON THE RETURN OF INCOME FOR ASSESSMENT YEAR 2001-2002. IT IS ALSO SU BMITTED THAT THE BANK LOAN TAKEN BY M/S. MASTER DEVELOPERS HAS BEEN UTILIZED FOR THE BUSINESS OF FINANCING. MY ATTENTION WAS ALSO DRAWN TO VARIOUS NOTICES ISSUED BY THE ASSESSING OFFICER WHICH HAS JOINTLY B EEN ADDRESSED AND THE ENTIRE LOOSE PAPERS WERE CLAIMED AS BELONGING T O M/S. MASTER DEVELOPERS. THE CLAIM OF THE APPELLANT IS REJECTED AS NONE OF THE LOOSE PAPERS FOUND AT THE TIME OF SEARCH, THE NAME OF M/S MASTER DEVELOPERS IS MENTIONED AND FURTHER, SHRI ARVIND SH AH APPELLANTS ACCOUNTANT IN HIS STATEMENT RECORDED DURING THE COU RSE OF SEARCH, FROM WHOM THE IMPUGNED DIARY WAS FOUND, HAS CLEARLY STATED THAT THE TRANSACTIONS NOTED IN THE SAID DIARY ARE PERTAINING TO THE APPELLANT. EVEN THE APPELLANT IN HIS STATEMENT HAD ADMITTED TH AT SHARAFI TRANSACTIONS PERTAINED TO HIM FOR WHICH DETAILS WIL L BE SUBMITTED BY HIM. A DETAILED FINDING IN THIS REGARD HAS ALSO BEE N GIVEN IN THE APPEAL OF MASTER DEVELOPERS AND IN ORDER DATED 16.1.2004 I T HAS BEEN HELD THAT ENTRIES PERTAIN TO THE APPELLANT. HENCE THIS A RGUMENT IS BASELESS AND IS REJECTED. 50. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED OPINION THAT WHILE FRAMING AN ASSESS MENT FOR THE BLOCK PERIOD, THE AO IS REQUIRED TO CONCENTRATE ON THE INCRIMINATING MATERIAL UNEARTH DURING THE COURSE OF SEARCH IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 75 - OPERATION. SINCE THERE WAS NO SUCH MATERIAL FOUND A T THE TIME OF SEARCH THAT THE ENTRIES WRITTEN IN THE DIARY WERE C ONNECTED WITH M/S. MASTER DEVELOPERS THEN IN SUCH A SITUATION THE ARGUMENT OF THE ASSESSEE HAS NO FORCE. IN THIS CONNECTION CERTA IN REASONING WERE RIGHTLY GIVEN BY LEARNED CIT(A), AS SEEN IN THE ABO VE PARAGRAPH, HENCE; THE SAME IS HEREBY AFFIRMED AND THIS GROUND OF THE ASSESSEE IS DISMISSED. 51. IN RESPECT OF GROUND NO.16, AO HAD MADE AN ADDI TION OF RS.50 LACS IN RESPECT OF A LAND SITUATED AT WADAJ. THE ARGUMENT OF THE ASSESSEE WAS THAT THE ENTIRE AMOUNT WAS WRONGLY TAXED IN THE HANDS OF THE ASSESSEE BECAUSE IN ADDITION TO THE AS SESSEE THERE WERE OTHER BUYERS AS WELL. ONLY PART OF THE PAYMENT WAS MADE BY THE ASSESSEE. AFTER CONSIDERING THE EVIDENCES AND T HE EXPLANATION OF THE ASSESSEE, LEARNED CIT(A) HAS GRANTED PART RE LIEF AND SUSTAINED THE ADDITION UPTO THE EXTENT OF RS.1,17,0 00/- AS UNDER: I HAVE CONSIDERED THE FACTS AND GONE THROUGH THE B ANAKHAT BEING LOOSE PAGE 98 TO 106 OF ANNEXURE A-109 FOUND FROM T HE RESIDENCE OF APPELLANT. THE SAID BANAKHAT IS EXECUTED ON 21.10.1 995 AND THERE ARE 21 SELLERS AND 6 BUYERS WHICH INCLUDES APPELLANT IN TER ALIA. THE TOTAL VALUE OF THE LAND MENTIONED IS RS.50 LACS AND AS PE R PARA 2 AN AMOUNT OF RS.5 LACS HAS BEEN PAID AND 50% AMOUNT IS TO BE PAID WITHIN A PERIOD OF 6 MONTHS AND ANOTHER 50% WITHIN A PERIOD OF 12 MONTHS. AS PER CLAUSE 5, SOME DISPUTE IS UNDERGOING PERTAINING TO THE SAID LAND AND UPON THE JUDGMENT OF THE SAID DISPUTE, THE TITL E OF THE LANDS BECOME CLEAR AND MARKETABLE. THE CONTENTION RAISED BEFORE THE ASSESSING OFFICER IS ALSO SIMILAR. NO EVIDENCES HAV E BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER THAT ANY FURTHER PA YMENT HAS BEEN MADE. THEREFORE, AT THE OUTSET, THE ONLY PAYMENT WH ICH CAN BE CONSIDERED FOR THE PURPOSE OF ADDITION IS RS.5 LACS , AS FOUND NOTED IN THE VERY SAME BANAKHAT. SINCE APPELLANT HIMSELF HAS ADMITTED THAT TOTAL PAYMENT IS OF RS.7 LACS AND 1/6 TH THEREOF RS.1,17,000/- WHICH, HAS BEEN PAID BY THE APPELLANT AND THEREFORE, THIS AMOU NT IS REQUIRED TO BE CONSIDERED ONLY AS AGAINST RS.50 LACS CONSIDERED BY THE ASSESSING OFFICER FOR THE PURPOSE OF ADDITION. COMING TO THE SOURCE OF RS.1,17,000/- WHICH HAS BEEN CLAIMED AS HAVING BEEN DISCLOSED IN IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 76 - VDIS. I HAVE CAREFULLY GONE THROUGH THE DECLARATION MADE BY THE APPELLANT FOR VDIS AND THE RELEVANT PAPERS WHICH AR E PLACED ON PAGE 109 TO 118 OF THE PAPER BOOK AND FROM THE PERUSAL O F THE SAME, IT IS ABSOLUTELY CLEAR THAT NO AMOUNT HAS BEEN DISCLOSED BY THE APPELLANT PERTAINING TO LAND AT WADAJ AND THEREFORE, THE CONT ENTION OF THE APPELLANT THAT IMPUGNED AMOUNT OF RS.1,17,000/- HAS BEEN DISCLOSED IN VDIS IS FOUND TO BE INCORRECT. THUS, THE ADDITION O F RS.1,17,000/- IS CONFIRMED OUT OF THE TOTAL ADDITION MADE BY THE AO OF RS.50 LACS. THE BENEFIT FOR THE SET OFF IS ALSO NOT AVAILABLE TO TH E APPELLANT AS PAYMENT HAS BEEN MADE ON 21.10.1995, WHEREAS NO INCOME HAS BEEN ACCRUED TO THE APPELLANT TILL THIS DATE AS PER DIARY ANNEXURE A-1, AND THEREFORE, THE ALTERNATE CONTENTION RAISED BY THE APPELLANT IS ALSO REJECTED. 52. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE HEREBY AFFIRM THE FACTUAL FINDING OF LEARNED CIT(A). WE HA VE NOTED THAT THE RELEVANT EVIDENCES HAVE RIGHTLY BEEN APPRECIATE D BY LEARNED CIT(A). FURTHER, A FINDING WAS RECORDED BY LEARNED CIT(A) THAT THE ASSESSEE HAD ADMITTED THAT OUT OF THE TOTAL PAY MENT OF RS.7 LACS THE ASSESSEES SHARE WAS ONLY 1/6 AMOUNTING TO RS.1 ,17,000/-. RATHER THIS GROUND HAS ALREADY BEEN DISCUSSED SUPRA WHILE DECIDING GROUND NO.8 OF THE REVENUE. THAT FINDING A PPEARS TO BE CORRECT HENCE, THE SAME IS HEREBY CONFIRMED AND THI S GROUND OF THE ASSESSEE IS DISMISSED. 53. APROPOS TO GROUND NO.22, THE SAME IS UNWARRANTE D BEING THE LEVY OF SURCHARGE IS SQUARELY COVERED BY THE SC DEC ISION IN CASE OF M/S. ALLIED MOTORS (P) LTD. VS. CIT (1997) 224 ITR 677 (SC) AND ALSO 297 ITR 322 (SC). THIS GROUND IS DISMISSED. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. 54. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE AS WELL AS OF THE ASSESSEE ARE PARTLY ALLOWED. IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 77 - C- ITA NO.2367/AHD/2005, FOR A.Y. 1999-2000 (REVENU ES APPEAL) 55. THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF LEARNED CIT(A)-I, AHMEDABAD, DATED 30.08.2005 AN D THE ONLY GROUND IS REPRODUCED BELOW: THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECT ING TO DELETE THE ADDITION OF RS.3,11,97,498/- MADE ON ACCOUNT OF UNA CCOUNTED INVESTMENT IN SHOPS & FLAT AT PARTH EMPIRE BUILDING . 56. THE FACTS IN BRIEF AS EMERGED FROM CORRESPONDIN G ASSESSMENT ORDER PASSED U/S.143(3) R.W.S 144/147, D ATED 14 TH MARCH, 2005 WERE THAT CERTAIN EVIDENCES WERE CLAIME D TO HAVE BEEN FOUND IN RESPECT OF THE PROPERTY IN PARTH EMPI RE BUILDING DURING THE COURSE OF SEARCH IN THE CASE OF MASTER GROUP. IT WAS NOTED BY THE AO THAT THERE WAS DECLARATION OF THE I NVESTMENT AND BECAUSE OF THAT REASON ADDITIONS WERE MADE CORRESPO NDINGLY IN THE HANDS OF ONE SRI RAJNI DESAI AND IN THE CASE OF SRI RAJESH DESAI IN THEIR RESPECTIVE BLOCK ASSESSMENT YEAR. SINCE THE A SSESSEE HAD ALSO MADE THE INVESTMENT IN THE SAME BUILDING, THEREFORE , THE ACTION WAS TAKEN AGAINST THE ASSESSEE AS WELL. THERE WAS A REFERENCE OF A VALUATION REPORT IN RESPECT OF THE IMPUGNED PROPERT Y. ON THE BASIS OF THE DETECTION OF THE IMPUGNED PROPERTY AND ON TH E BASIS THE SAID VALUATION REPORT THE AO HAS WORKED OUT THE UNEXPLAI NED INVESTMENT IN THOSE PROPERTIES AS LISTED IN THE ASS ESSMENT ORDER AT RS.3,11,97,498/-. 57. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST AP PELLATE AUTHORITY, IT WAS CONTESTED ON BEHALF OF THE ASSESS EE AS UNDER:- THE ADDITION IN THE CASE ON THE APPELLANT IS MADE M AINLY ON THE BASIS OF VALUATION REPORT FOUND DURING THE COURSE OF SEAR CH AND CONSIDERED IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 78 - IN THE BLOCK PERIOD ASSESSMENT. THE VALUATION REPOR T PERTAINS TO SHOP NO.21 AND 22 AT FIRST FLOOR OF PARTH EMPIRE IN THE NAME OF RANIBHAI J. DESAI BROTHER OF THE APPELLANT. THE PURPOSE OF THE SAID VALUATION IS PURELY TO ESTIMATE MARKET VALUE OF THE PROPERTY TO OBTAIN BANK LOAN ON THE BASIS OF SUCH VALUATION & IT DOES NOT CO-RELATE WITH COST OF ACQUISITION OF THE PROPERTY. THE ACTUAL COST OF ACQ UISITION OF THE PROPERTY SHOP NO.21 & 22 IS RS.731100/- ADDITION OF RS.4570585/- IS MADE AT THE ASSESSMENT ORDER FOR THE BLOCK PERIOD D UE TO ABOVE DIFFERENCE IN COST OF ACQUISITION & CURRENT MARKET VALUE. THE VALUE OF THE SAID PROPERTY HAS APPRECIATED DURING THE PERIOD AND IT DOES NOT MEAN THAT MONEY HAS BEEN PAID FOR THE SAID PROPERTY THEREAFTER. THE VALUE OF THE PROPERTY AS PER VALUATION REPORT IS RS .5915000/-. THE SAID VALUATION REPORT IS TAKEN A BASE FOR MAKING ADDITIO N IN THE PRESENT CASE. THE RATIO OF VALUE AS PER VALUATION REPORT AN D COST OF ACQUISITION AS PER BOOKS IS CONSIDERED TO DETERMINE VALUE OF TH E ASSET FOR THE PURPOSE OF ADDITION AS PER CHART SHOWN IN THE ASSES SMENT ORDER. VALUATION REPORT OF SHOP NO.21 & 22 AT PARTH EMPIRE IS TAKEN TO DETERMINE VALUE OF OTHER ASSETS WHICH IS NOT JUSTIF IED. NO VALUATION REPORT FOR THE PROPERTY IN RESPECT OF WHICH ADDITIO N HAS BEEN MADE IS FOUND. TO TAKE VALUATION OF OTHER ASSETS TO MAKE AD DITION FOR DIFFERENT ASSETS IS NOT JUSTIFIED. THE VALUE OF THE PROPERTY IS ESTIMATED ON HIGHER SIDE FOR THE SAKE OF OBTAINING LOAN FROM BANK AND I T CANNOT BE TAKEN AS BASE FOR SUCH HUGE ADDITION OF RS.31197498/-. THE A DDITION AS STATED ABOVE IS MADE ON SUCH ESTIMATED BASE AND IS WHOLLY ARBITRARY. IT IS MADE WITHOUT CONSIDERING THE REAL FACTS OF THE CASE AND IS BASED ON PRESUMPTION; CONJECTURE NOT SUPPORTED BY ANY EVIDEN CE SHOWING EXTRA INVESTMENT BY APPELLANT AND REQUIRES TO BE DELETED. 57.1 AFTER CONSIDERING THE FACTS OF THE CASE, LEARN ED CIT(A) HAS HELD AS UNDER: THE FACTS IN THE PRESENT CASE ARE SIMILAR TO THE F ACTS IN THE ABOVE CASE BEFORE LEARNED CIT(A)-I, AHMEDABAD. MERE VALUATION REPORT CANNOT BE THE BASIS OF ANY ADDITION ON ACCOUNT OF UNDISCLOSED INCOME ONLY DUE TO DIFFERENCE IN VALUATIONS. NO SPECIFIC VALUATION REP ORTS IN RESPECT OF ANY OF THE 10 PROPERTIES FOR WHICH THE IMPUGNED ADD ITIONS ARE UNDER APPEAL, HAVE BEEN BROUGHT ON RECORD BY THE AO. THE VALUATION REPORTS IN QUESTION ACTUALLY RELATED TO SHRI RAMESH J. DESA I AND SHRI RAJNIBHAI J. DESAI, SONS OF THE APPELLANT CIT(A) IN HIS ABOVE REFERRED ORDER HAS RELIED ON A NUMBER OF CASE LAWS ON THE IS SUE THAT MERE DIFFERENCE IN VALUATION CANNOT BE A BASIS FOR ANY ADDITION BY AO. RELIANCE IS ALSO PLACED UPON THE ITAT PUNE BENCH DE CISION IN PARAKH FOODS (64 ITD PAGE 396) AND ON RAJ. HIGH COURT IN 2 00 ITR 788, AS ALSO ITAT PUNE TRIBUNAL IN 66 TTJ (692), ON AHMEDAB AD ITAT IN THE CASE OF ITO VS. DREAMLAN ENTERPRISES IN (1995) 81 T AXMAN 143. THERE IS NO EVIDENCE REGARDING ANY PAYMENT OF ON MO NEY BROUGHT ON RECORD BY THE AO. HENCE, FOLLOWING AND ADOPTING THE REASONING OF THE IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 79 - CIT(A)-I AHMEDABAD IN ORDER NO. CIT(A)-I/CCI(1)/26/ 02-03 AND CIT(A)-1/CC. 1(1)/25/02-03, DATED 23/12/03 IN THE B LOCK ASSESSMENT, THE ADDITIONS MADE BY THE AO OF RS.3,11,97,498/- AR E DELETED. GROUNDS OF APPEAL NOS. 2, 3 & 4 ARE ALLOWED. 58. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MA TERIAL ON RECORD. FROM THE SIDE OF THE ASSESSEE, LEARNED AR H AS PLACED RELIANCE ON COMBINED ORDER OF ITAT C BENCH AHMEDA BAD IN THE CASES OF RAJNI J. DESAI, RAJESH J. DESAI, RAMESH J. DESAI, BEARING IT(SS) NO.51, 52, 53 ETC./AHD/2004 FOR THE BLOCK PE RIOD 1.4.1990 TO 20.8.2000, DATED 27 TH JUNE, 2008 WHEREIN IT WAS HELD AS UNDER: THE SECOND GROUND IN IT(SS)A NO.54/AHD/2004 RELATES TO DELETION OF THE ADDITION OF RS.8,41,060/- AND RS.17,87,170/- MA DE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN OFFICE NO.1 AND SHOP NO.2 0 IN BUILDING KNOWN AS PARTH EMPIRE. THE AO NOTED FROM THE VALU ATION REPORT (LETTER) DATED 1.9.2000 AND 5.4.2000 ADDRESSED TO M EHSANA NAGRIK SAHAKARI BANK, AHMEDABAD THAT THE VALUE OF OFFICE N O.1 IN PARTH EMPIRE AND SHOP NO.2 IN FIRST FLOOR WAS WORKED OUT BY THE APPROVED VALUER AT RS.25,00,000/- AND RS.30,00,000/- RESPECT IVELY. THE AO NOTED THAT THE ASSESSEE HAS SHOWN THE VALUE OF OFFI CE PREMISES IN HIS BALANCE SHEET AT RS. 16,58,940/- WHILE OF SHOP NO.2 0 AT RS.8,06,430/-. THE AO AFTER GIVEN COST INDEXATION EFFECT BY TAKING THE VALUE OF THE PROPERTY AS ON 1.4.2000 ESTIMATED THE COST OF ACQUI SITION AND MADE THE ADDITION FOR THE UNDISCLOSED INVESTMENT FOR THE OFF ICE NO.1 FOR RS.8,41,060/- AND FOR SHOP NO.20 AT RS.17,87,170/- . WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION A ND, PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF THE TAX AUTHORITIES. WE HAVE ALSO GONE THROUGH THE ORDER OF THIS TRIBUNAL I N THE CASE OF HOTEL RANGOLI CITED SUPRA. WE FIND THAT IN THAT CASE ALSO THE ADDITION HAS BEEN MADE ON THE BASIS OF VALUATION REPORT. THE TRI BUNAL VIDE ORDER DATED 29.02.2008 DELETED THE ADDITION BY OBSERVING AS UNDER: WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND, PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF THE TAX AUTHORITIES. WE HAVE ALSO GONE THROUGH VARIOUS DECI SIONS AS HAVE BEEN RELIED UPON BY THE ASSESSEE BEFORE THE CI T(A). WE FIND THAT THE ADDITION HAS BEEN MADE ON THE BASIS O F VALUATION REPORT. HOWEVER, THE VALUATION REPORT WAS FOR WORKI NG OUT THE MARKET VALUE AS ON 1.5.2002 AND NOT THE COST OF LA ND AND THAT THE VALUATION REPORT WAS OBTAINED FROM THE BAN K TO WHOM THE SAME WAS GIVEN FOR THE PURPOSE OF LOAN. WE FIND THAT THE CIT(A) HAS RIGHTLY OBSERVED THAT AS NO EVIDENCE WAS FOUND AT THE TIME OF SEARCH AND EXTRA INVESTMENT IS BASED ON VALUATION IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 80 - REPORT OF A DATE OBTAINED MUCH AFTER THE SEARCH IN THIS CASE, THE ADDITION IS EVEN OTHERWISE BEYOND THE SCOPE OF BLOC K ASSESSMENT. WE THEREFORE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER OF THE CIT(A). WE ACCORDINGLY CONFIRM THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS.10,62,016/-. THUS, THIS GROUND RAISED BY THE REVENUE STANDS DISMISSED. RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THIS TRIBUNAL, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER OF LE ARNED CIT(A) IN DELETING BOTH THE ADDITIONS AND ACCORDINGLY GROUND NO.2 OF THE REVENUES APPEAL STANDS DISMISSED. GROUND NO.4 IS SIMILAR TO GROUND NO.2 IN IT(SS)A NO .54/AHD/2004. BOTH THE LEARNED DR AND THE LEARNED AR WERE FAIR EN OUGH TO AGREE THAT THIS GROUND IS SIMILAR TO GROUND NO.2 IN IT(SS )A NO.54/AHD/2004 AND WHATEVER DECISION THIS TRIBUNAL MAY TAKE, THE S AME DECISION MAY BE TAKEN IN THIS CASE ALSO. WE HAVE DEALT WITH THE ISSUE VIDE PARA-8 OF OUR ORDER ABOVE AND DISMISSED THE GROUND RAISED BY THE REVENUE. FOR THE SAME REASONS WE CONFIRM THE ORDER OF THE CIT(A) IN THIS REGARD IN DELETING THE ADDITIONS OF RS.2,75,605/-, RS.5,02,16 4/- AND RS.45,70,585/- MADE ON ACCOUNT OF UNEXPLAINED INVES TMENT IN THE FLAT NO.806, SHOP NO.29 AND SHOP NOS.21 AND 22 RESPECTIV ELY. THUS, THIS GROUND NO.4 RAISED BY THE REVENUE STANDS DISMISSED. 59. IN THE ABSENCE OF ANY DIRECT EVIDENCE ABOUT THE ACTUAL UNEXPLAINED INVESTMENT IN THE PROPERTY AND THAT THE IMPUGNED ADDITION WAS MERELY BASED UPON A VALUATION REPORT W HICH WAS STATED TO BE MEANT FOR BANK LOAN PURPOSE, WE ARE IN CLINED TO AFFIRM THE FINDING OF LEARNED CIT(A). MOREOVER, WE HEREBY RESPECTFULLY FOLLOW THE DECISIONS AS CITED HEREINABOVE AND DISMI SS THIS GROUND OF THE REVENUE. 60. IN THE RESULT, THIS APPEAL OF THE REVENUE IS DI SMISSED. D. ITA NO.3437/AHD/2007 FOR A.Y. 2001-02 (ASSESSEE S APPEAL) 61. THIS IS AN APPEAL FILED BY THE ASSESSEE FOR A.Y . 2001-02 ARISING FROM THE ORDER OF LEARNED CIT(A)-IV AHMEDAB AD, DATED 8 TH MARCH, 2007 AND THE ONLY GROUND RAISED IS REPRODUCE D BELOW: IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 81 - THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.2,50,000/- MADE BY THE AO ON ACCOUNT OF UNDISCLOSED INVESTMENT IN SHAILGANGA TENEMENT WITHOUT PROPER CO NSIDERATION AND APPRECIATION OF THE FACTS AND COMPREHENSIVE EVIDENC ES FURNISHED AND AVAILABLE ON RECORD. IN VIEW OF THE FACTS, SUBMISSI ONS AND EVIDENCES FILED, THE IMPUGNED PROTECTIVE ADDITION OF RS.2,50, 000/- REQUIRES TO BE DELETED. 62. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDIN G ASSESSMENT ORDER PASSED U/S. 147, DATED 21.3.2006 WERE THAT TH E AO HAD NOTED THAT WHILE DECIDING THE APPEAL LEARNED CIT(A) VIDE ORDER DATED 23 RD DECEMBER, 2003 HAD DELETED AN ADDITION OF RS.2,50, 000/-, INVESTMENT IN SHAILGANGA TENEMENTS ON THE GROUND TH AT SAME WAS NOT TO BE TAXED IN THE BLOCK ASSESSMENT BUT REQUIRE D TO BE CONSIDERED IN THE REGULAR ASSESSMENT. DUE TO THE SA ID OBSERVATION OF LEARNED CIT(A), THE MATTER WAS PROCEEDED FOR THE YEAR UNDER CONSIDERATION IN THE CASE OF THE ASSESSEE. THE AO H AD MADE THE ADDITION PRIMARILY ON THE GROUND THAT CASH WITHDRAW AL HAS EXPLAINED BY THE ASSESSEE FROM THE BANK ACCOUNT OF MASTER DEVELOPER FOR THE PURPOSE OF INVESTMENT OF RS.2.5 L ACS IN SHAILGANGA PROPERTY WAS AN AFTERTHOUGHT. HE HAS CON CLUDED AS UNDER: THE DEPARTMENT HAS FILED AN APPEAL BEFORE HONBLE I TAT, AHMEDABAD AGAINST THE ORDER OF LD. CIT(A) WHICH WAS PASSED AGAINST THE BLOCK ASSESSMENT ORDER IN WHICH A GROUND OF APP EAL HAS BEEN TAKEN THAT THE DELETION OF RS.2,50,000 BY THE LD. C IT(A) IS INCORRECT. THEREFORE, IN THIS INCOME ESCAPING ASSESSMENT ORDER , A PROTECTIVE ADDITION OF RS.2,50,000/- IS MADE IN THE HANDS OF T HE ASSESSEE. IF A VIEW IS TAKEN BY HONBLE ITAT THAT THE ADDITION OF RS.2,50,000/- MADE AS UNDISCLOSED INVESTMENT IN THE HANDS OF THE ASSES SEE IN THE BLOCK ASSESSMENT ORDER IS NOT CORRECT ADDITION THEN THIS ADDITION WILL AUTOMATICALLY BECOME SUBSTANTIVE ADDITION IN THIS C ASE. 63. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST AP PELLATE AUTHORITY, THE ASSESSEE HAS EXPLAINED THE SOURCE AS UNDER: IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 82 - THE SAID AMOUNT OF RS.2,50,000/- IN CASH WAS PAID O UT OF THE CASH RECEIVED OF RS.2,90,000/- ON 04.07.2000 AGAINST THE SALE OF PLOT AT REVENUE SURVEY NO.1899 OF MEHSANA. THIS GAIN OF SAL E OF LAND HAS ALREADY BEEN SHOWN IN THE RETURN OF INCOME FOR A.Y. 2001-02 AND SINCE THE INVESTMENT HAS BEEN SHOWN IN THE BALANCE SHEET AS AT 31.3.2001 AND INVESTMENT BEING OUT OF REGULAR SOURCE OF INCOM E, THE QUESTION OF TREATING THE SAME AS UNDISCLOSED OR UNEXPLAINED INV ESTMENT DOES NOT ARISE, THE SOURCE OF INVESTMENT OF RS.2,50,000/- BE ING FULLY EXPLAINED. 64. HOWEVER, LEARNED CIT(A) WAS NOT CONVINCED AND A FFIRM THE ADDITION AFTER ASSIGNING FOLLOWING REASONS: I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF LD. COUNSEL AS WELL AS GONE THROUGH THE RECORDS. ON PERUSAL OF THE CIT(A) S ORDER DATED 19.01.2004 IN APPEAL NO.CIT(A)-1/CC.1(1)/24/02-03 I N APPELLANTS OWN CASE FOR THE BLOCK PERIOD FROM 1991-02 TO 2001- 02 VIDE PARA-9 ON PAGE 88 DECIDING SIXTH GROUND OF APPEAL, IT HAS BEEN NOTICED THAT THE ADDITION WAS DELETED WITH THE OBSERVATIONS THAT THIS ISSUE REQUIRES TO BE CONSIDERED IN THE REGULAR ASSESSMENT SINCE TH E APPELLANT HAD CLAIMED THAT THIS AMOUNT IN CASH WAS RECEIVED FROM THE PARTNERSHIP FIRM M/S. MASTER DEVELOPERS IN WHICH APPELLANT IS A PARTNER AND THEREFORE, THE ADDITION MADE IN THE BLOCK ASSESSMEN T WAS DELETED. THEREFORE THE CONTENTION OF LD. COUNSEL THAT ADDITI ON OF RS.2,50,000/- WAS DELETED ON MERITS IS NOT BORNE OUT FROM THE REC ORDS AND IS HEREBY REJECTED. FURTHER THE APPELLANT HAD ALSO ADMITTED I N HIS REPLY DATED 24.09.2002 THAT INVESTMENTS WERE MADE OUT OF THE BO OKS BY MAKING PAYMENT OF RS.2.50 LACS IN CASH ON 29.09.2000. ALSO THE APPELLANT HAD ADMITTED IN REPLY TO QUESTION NO.17 IN HIS STATEMEN T DATED 20.10.2000 GIVEN U/S. 132(4) DURING THE SEARCH PROCEEDINGS THA T THE CASH BOOK OF MASTER DEVELOPERS AND BOOKS OF ACCOUNTS OF ALL THE FAMILY MEMBERS WERE NOT WRITTEN FROM 01.04.2000. HENCE, THE APPELL ANT EXPRESSED HIS INABILITY TO EXPLAIN ABOUT THE CASH DEPOSIT AND WIT HDRAWALS IN THE BANK. KEEPING IN VIEW OF ABOVE FACTS AND CIRCUMSTAN CES OF THE CASE AND ALSO DELETING THE ADDITION IN THE BLOCK ASSESSM ENT PROCEEDINGS BY THE CIT(A)-I(SUPRA), THE ADDITION MADE IN REGULAR A SSESSMENT U/S. 147 IS HEREBY CONFIRMED ON SUBSTANTIVE BASIS AND A.O. I S DIRECTED ACCORDINGLY SINCE THE APPELLANT FAILED TO EXPLAIN T HE SOURCES OF INVESTMENT. THEREFORE, THE APPEAL IS DISMISSED. 65. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED OPINION THAT THIS ISSUE IS REQUIRED TO BE RECONSIDERED BY THE AO PRIMARILY BECAUSE OF THE REASON THAT MERE LY ON THE BASIS OF THE STATEMENT IT WAS HELD THAT THE IMPUGNED INVE STMENT WAS IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 83 - MADE OUT OF THE REGULAR BOOKS OF ACCOUNT. IN A SITU ATION WHEN A REGULAR BOOKS OF ACCOUNT ARE PRODUCED AND THE SAID INVESTMENT WAS DULY RECORDED IN THAT REGULAR BOOKS OF ACCOUNTS AND THOSE REGULAR BOOKS OF ACCOUNTS HAVE NOT BEEN REJECTED OR FOUND F ALSE BY THE REVENUE DEPARTMENT THEN THE REJECTIONS OF THE EXPLA NATION APPEARS TO BE UNJUSTIFIED. WE ARE, THEREFORE, OF THE VIEW T HAT THE AO MUST NOW RE-EXAMINE THE SOURCE OF THE INVESTMENT AS PER THE RECORDS OF THE ASSESSEE AND IF IT IS GENUINE THEN THE ASSESSME NT SHOULD BE MADE AS PER LAW. WITH THESE OBSERVATIONS, THIS GROU ND BEING RESTORED BACK FOR DE NOVO CONSIDERATION. THUS, TO B E TREATED AS ALLOWED FOR STATISTICAL PURPOSE. THIS APPEAL OF THE ASSESSEE MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSE. E- ITA NO.3438/AHD/2007 FOR A.Y. 2003-04 (ASSESSEE S APPEAL) 66. THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FROM THE ORDER OF LEARNED CIT(A)-IV, AHMEDABAD DATED 8 TH MARCH, 2007 AND THE ONLY GROUND IS REPRODUCED BELOW: THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS I N CONFIRMING THE ADDITION OF RS.2,45,622/- ON ACCOUNT OF DISALLOWANC E OF NOTIONAL INTEREST ON THE GROUND THAT THE LOANS HAVE BEEN TAK EN AT HIGHER RATES AND GIVEN AT LOWER RATES AND NOT FOR THE PURPOSE OF BUSINESS WITHOUT PROPER CONSIDERATION OF THE FACTS AND MERITS OF THE CASE AS WELL AS LEGAL POSITION PUT FORTH BY THE APPELLANT. IN VIEW OF THE FACTS, SUBMISSIONS AND EVIDENCES FILED AS WELL AS LEGAL PO SITION, THE IMPUGNED ADDITION OF RS.2,45,622/- REQUIRES TO BE D ELETED. 67. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDIN G ASSESSMENT ORDER PASSED U/S.143(3), DATED 29.03.2006 WERE THAT THE AO HAD NOTED THAT THE ASSESSEE HAD RECEIVED INTEREST INCOM E OF RS.38,08,269/- AND INCURRED INTEREST EXPENDITURE OF RS.20,95,947/- IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 84 - AND RS.22,30,116/-. FOR READY REFERENCE, THE OBSERV ATION OF THE AO IN THIS CONNECTION IS REPRODUCED BELOW: FROM THE ROI AND DETAILS FURNISHED BY THE ASSESSEE, IT HAS BEEN FOUND THAT HE HAS RECEIVED THE INTEREST INCOME OF R S.38,08,269/- AND INTEREST INCOME OF RS.9,84,872/- IN ITS PROPRIETARY CONCERNS ACCOUNT AND HE HAS INCURRED THE BANK INTEREST EXP. OF RS.20 ,95,947 IN ITS INDIVIDUAL ACCOUNT AND OF RS.22,30,116 AS BANK INTE REST AND RS.6,45,891 AS INTEREST PAYABLE ON ITS PROPRIETARY CONCERNS ACCOUNT. ASSESSEE HAS EARNED INCOME OF RS.2,58,000/- AS RENT FROM MANAV MANDIR PLOT, RS.32,500/- AS PARTNERS REMUNERATION INCOME AND RS.72,000/- AS RENT INCOME. THESE INCOMES REQUIRE N O FUNDS AND BEAR NO CHARGES AGAINST THEMSELVES. STILL THE ASSESSEE H AS FILED RETURNED INCOME OF RS.1,14,040/-. THEREFORE, IT IS CLEAR THA T EVEN THOSE RECEIPTS WHICH ARE NOT RELATED TO THE FINANCING ACTIVITY HAV E BEEN WIPED OUT DUE TO THE LOSS IN THE FINANCING ACTIVITY. EFFECTIVELY APPROXIMATE LOSS OF RS.1,78,813/- HAS BEEN CLAIMED FROM THE FINANCING A CTIVITY. THIS IS NOT POSSIBLE AT ALL SINCE THIS CANNOT HAPPEN IN THE BUS INESS OF FINANCE IF THE HIGHER INTEREST BEARING FUNDS ARE NOT LENT AT LOWER RATES OR WHEN THE FUNDS ARE BORROWED AT HIGHER RATES EVEN WHEN THE HU GE CASH BALANCE IS LYING IDLE IN THE CASH BOOKS. IT WAS ALSO FOUND THAT THE ASSESSEE HAS GIVEN THE GIFTS TO HIS FAMILY MEMBERS OF RS.11 LACS TO RAMESHBHAI J. DESAI, RAJESHBHAI J. DESAI, RAJNIBHAI J. DESAI, ALK ABEN R. DESAI, ASHABEN R. DESAI AND SAVITABEN R. DESAI ON 20.08.20 02 AND ANOTHER GIFT OF RS.27,00,000 WAS MADE TO ALKABEN R. DESAI O N 24.12.2002. ON ONE HAND THE ASSESSEE HAS TAKEN THE HUGE INTEREST B EARING FUNDS AND ON THE OTHER HE HAS GIVEN THE GIFTS TO HIS FAMILY M EMBERS. IN SUCH A SITUATION THE CLAIM OF INTEREST CANNOT BE ALLOWED T O HIM. 68. IT WAS NOTED BY THE AO THAT THE INTEREST RELATE S TO THE AMOUNT OF GIFT TO THE EXTENT TO BE DISALLOWED @ 18%, WHICH WAS COMPUTED AT RS.2,45,622/- AND TAXED IN THE HANDS OF THE ASSE SSEE. 69. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST AP PELLATE AUTHORITY, LEARNED CIT(A) HAS CONFIRMED THE ADDITIO N AS FOLLOWS: I HAVE CAREFULLY CONSIDERED THE CONTENTIONS AS WEL L GONE THROUGH THE RECORDS. ON PERUSAL OF ASSESSMENT ORDER IT HAS BEEN NOTICED THAT GIFTS WERE GIVEN TO CLOSELY RELATED PERSONS AFTER OBTAINI NG INTEREST FUNDS FROM AND OTHER PERSONS. IT MEANS THAT THE ASSESSEE HAD DIVERTED THE INTEREST BEARING FUNDS TO HIS FAMILY MEMBERS IN THE FORM OF THE GIFTS. THE GIFT OF RS.27,00,000/- GIVEN TO SMT. ALKABEN P. DESAI WAS DIRECTLY IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 85 - WITHDRAWN FROM O.D. ACCOUNT NO.38 OF SARVODYA COMME RCIAL CO- OPERATIVE BANK WHICH IS CHARGING INTEREST @ 18%. SI MILARLY, THE APPELLANT HAD RECEIVED TRANSFER OF RS.19,00,000/- F ROM M/S. MASTER DEVELOPERS ON 20.08.2002 IN THE SAVINGS BANK ACCOUN T NO.35 OF SARVODAYA COMMERCIAL CO-OPERATIVE BANK AND ON THE S AME DAY, THIS AMOUNT WAS GIVEN AS A GIFT TO VARIOUS FAMILY MEMBER S FROM THE SAME ACCOUNT WHEREAS THE APPELLANT HAD PAID INTEREST @18 % TO M/S. MASTER DEVELOPERS. HENCE, DIRECT NEXUS HAS BEEN ESTABLISHE D THAT INTEREST BEARING FUNDS WERE DIVERTED EITHER BY WAY OF GIFTS OR BY WAY OF ADVANCES. THEREFORE, THESE GIFTS TO THE CLOSELY REL ATED PERSONS CANNOT BE TERMED AS USED FOR THE BUSINESS PURPOSES. FURTHE R, IF EXCESS FUNDS ARE GIVEN AS A GIFT TO CLOSE FAMILY MEMBERS THEN FU NDS BORROWED COULD BE CONSIDERED AS NOT MADE FOR PURPOSE OF BUSINESS. IN THE PRESENT CASE, EVEN THOUGH THE APPELLANT MAY HAVE AHD ITS OW N FUNDS, THESE ARE FOUND TO HAVE BEEN GIVEN AS A GIFT TO THE CLOSELY R ELATED PERSONS WHICH ARE NOT FOR THE PURPOSE OF BUSINESS. HENCE, THESE F UNDS ARE NOT UTILIZED IN THE FORM OF GIFTS DURING THE COURSE OF BUSINESS. ALSO, SPECIFIC CONDITIONS LAID DOWN U/S.36(1)(III) FOR ALLOWING SU CH INTEREST ARE NOT FULFILLED. KEEPING IN VIEW OF ABOVE FACTS AND CIRCU MSTANCES OF THE CASE, THE CONTENTIONS OF LEARNED COUNSEL ARE HEREBY REJEC TED AND FIRST GROUND OF APPEAL IS DISMISSED. 70. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE HAVE NOTED THAT THE OBSERVATION OF LEARNED CIT(A) IN RES PECT OF THE DIRECT NEXUS TRANSFER OF BORROWER FUNDS FOR THE PUR POSE OF GIFT WERE NOT BORNE OUT OF THE ORDER OF THE AO. BEFORE US, LE ARNED AR HAS VEHEMENTLY CONTESTED THAT THOSE OBSERVATIONS OF LEA RNED CIT(A) WERE INCORRECT FACTUAL OBSERVATION. LEARNED AR HAS CONTESTED THAT THE LEARNED CIT(A) HAS MENTIONED WRONG FACTS. UNDER THIS SITUATION WHEN THE AO HAS NOT MADE OUT THE CASE ON THOSE FACTS WHICH WERE NOTED BY LEARNED CIT(A) AND THAT LEARNED AR IS ALLEGING THAT THE FACTS HAVE WRONGLY BEEN MENTIONED BY LEARNED CIT(A), WE DEEM IT PROPER TO RESTORE THIS ISSUE BAC K TO THE FILE OF THE AO TO BE DECIDED DE NOVO AFTER APPRECIATING THE CORRECT FACTS. SIDE BY SIDE, WE DIRECT THE ASSESSEE TO PLACE THE A CCOUNTS AND THE EVIDENCES BEFORE THE AO SO THAT THE CORRECT FACTUAL POSITION CAN BE IT(SS) NOS.99, 106/AHD/04 & ITA NOS.2376/AHD/05 & 3437 & 3438/AHD/07 JIVRAJ V. DESAI VS. ACIT AHMEDABAD. A.YS. 1999-00, 2001-02 & 2003- 04 - 86 - APPRECIATED BY THE AO. WITH THESE DIRECTIONS, THIS GROUND OF THE ASSESSEE MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSE. THIS APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSE. 71. TO SUM UP THE FINAL RESULT OF ALL THE APPEALS A RE AS UNDER: (I) IT(SS)A NO.99/AHD/2004 (REVENUES APPEAL) IS PARTLY ALLOWED. (II) IT(SS)A NO.106/AHD/2004 (ASSESSEES APPEAL) IS PARTLY ALLOWED. (III) ITA NO.2376/AHD/2005 (REVENUES APPEAL) IS DISMISSED. (IV) ITA NO.3437/AHD/2007 (REVENUES APPEAL) IS ALLOWED FOR STATISTICAL PURPOSE. (V) ITA NO.3438/AHD/2007 (REVENUES APPEAL) IS ALLOWED FOR STATISTICAL PURPOSE. SD/- SD/- (T.R. MEENA) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED /12/2013 PRABHAT KR. KESARWANI, SR. P.S. TRUE COPY TRUE COPY TRUE COPY TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD