The DCIT, Central Circle-1(1), Ahmedabad V. Shri Umang H. ThaKkar, Ahmedabad

ITA 2548/AHD/2008

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0673 (ITAT-AHMEDABAD)
• Duration Of Justice: 16 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-05-2024
• Assessment Year: 2005-2006
• Appeal Filed On: 08-07-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Rejection of books of accounts; Unexplained investment; Unexplained expenditure; Depreciation; Income from undisclosed sources; Loose papers; Document seized; Additional evidence; Valuation report; Documents seized; Bogus
• Section: 68; 69; 132; 133A; 69B; 250; 143(2); 13; 145(3); 20

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ायपी ‘A’ अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD एवं ! " #$! ! % BEFORE MRS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER $! ं / ITA No. 2150/Ahd/2008 िनधा榁रण वष榁/Assessment Year: 2005-06 Shri Umang Hiralal Thakkar, Dharmadev House, Shyamal Cross Road, Satellite, Ahmedabad – 380015 PAN : AAVPT 8621 R बनाम Vs. The Dy. Commissioner of Income-tax, Central Circle 1(1), Ahmedabad आयकर अपील सं / ITA No. 2548/Ahd/2008 #&' र ( / Assessment Year: 2005-06 The Dy. Commissioner of Income-tax, Central Circle 1(1), Ahmedabad बनाम Vs. Shri Umang Hiralal Thakkar, 305, Sahajanand Plaza, Bhatta Ch ar Rasta, Paldi, Ahmedabad PAN : AAVPT 8621 R अपीलाथ牸 अपीलाथ牸अपीलाथ牸 अपीलाथ牸/ (Appellant) 灹瀄 灹瀄 灹瀄 灹瀄 यथ牸 यथ牸यथ牸 यथ牸/ (Respondent) #&' ) क ओ से / Assessee by : Shri Bandish Soparkar, AR & Shri Parin Shah, AR +,-. क ओ से / Revenue by : Shri Akhilendra Pratap Yadav, CIT-DR सुनवाई सुनवाईसुनवाई सुनवाई क琉 क琉क琉 क琉 तारीख तारीखतारीख तारीख/Date of Hearing : 09.05.2024 घोषणा घोषणाघोषणा घोषणा क琉 क琉क琉 क琉 तारीख तारीखतारीख तारीख /Date of Pronouncement: 30.07.2024 आदेश आदेशआदेश आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER: These are cross appeals filed by the assessee and the Revenue against the order of the learned Commissioner of Income-tax (Appeals)-III, Ahmedabad (hereinafter referred to as "CIT(A)" for short) dated 28.04.2008 passed u/s 250(6) of the Income-tax Act, 1961, (hereinafter referred to as "the Act" for short) for the Assessment Year (AY) 2005-06. 2 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 2. The brief background of the case is that a search u/s 132 of the Act was conducted at the residential as well as business premises of the assessee, along with the Dharamdev Builders Group of cases on 09.02.2005. Consequent upon the search, proceedings under Chapter-XIV were initiated for AYs 1999-2000 to 2004-05 separately. For the impugned assessment year, i.e. AY 2005-06, the case was taken up for scrutiny assessment by issuing notice u/s 143(2) of the Act, and thereafter assessment was framed making addition on various counts; part of which were deleted by ld. CIT(A). Aggrieved by the order of the ld. CIT(A), both the assessee and Revenue have come up in appeal before us. 3. At the outset itself, it was pointed out that several issues raised in both the assessee’s appeal and the Department’s appeal stand covered by the order of the ITAT in the case of the assessee itself for AY 2004-05, passed in ITA Nos. 2149 and 2408/Ahd/2008 dated 06.10.2023, and also by the order of the ITAT in the case of the assessee for AYs 2001-02 to 2003-04, passed in ITA Nos. 2406/Ahd/2008 and others vide order dated 09.10.2022. Copies of both the orders were placed before us. Taking cognizance of the same, we shall now proceed to adjudicate the present appeals before us. 4. We shall first deal with the Revenue’s appeal in ITA No. 2548/Ahd/2008. 5. Ground No.1 raised by the Revenue reads as under:- “1. The CIT(A) has erred in law and on facts in admitting fresh evidences under Rule 46A without considering the objection of the Assessing Officer that none of the conditions mentioned under that rule were satisfied.” 5.1 The grievance of the Revenue in the above ground is against the action of the ld. CIT(A) in admitting the additional evidences filed by the assessee for adjudication of the issues before him. 3 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 5.2 The ld. Counsel for the assessee, at the outset, pointed out that identical issue has arisen in the case of the assessee for AY 2004-05 wherein also the ld. CIT(A) had admitted the additional evidences filed by the assessee which was challenged by the Department to the ITAT who in turn had dismissed the challenge of the Revenue, upholding the order of the ld. CIT(A) admitting the additional evidences. Our attention was drawn to page Nos. 7-9, paragraph Nos. 14-18, of the order of the ITAT in the case of the assessee for AY 2004-05. 5.3 We have gone through the order of the ITAT for AY 2004-5 and the findings of the ITAT at paragraph No. 18 upholding the admission of additional evidences by the ld. CIT(A) reads as under:- “18. We have heard both the parties, and we find no reason to interfere in the order of the ld.CIT(A) admitting the additional evidences. The difficulties faced by the assessee in producing the additional evidences, relating to the cash creditors, and evidence to prove the capital introduced in the various partnership concerns, as noted by the ld.CIT(A) have not been controverted by the ld.DR before us. Further, we agree with the ld.CIT(A) that the evidences were voluminous, pertained to seven assessment years, and related to issue which were of nine years’ old, and this, we agree, requires considerable time for collection. We completely agree with the ld.CIT(A) that in the interest of justice, this additional evidence needed to be admitted, since the evidences went to the root of the matter to establish the case of the assessee. Further, we have noted that the report was sought from the AO on the additional evidence, and therefore, as per the decision of Hon’ble jurisdictional High Court in the case of Kamalben Sureshchandra Bhatti (supra), admission of the additional evidence by the ld.CIT(A) in the light of these facts, cannot be interfered with.” 5.4 The ITAT, we have noted, concurred with the ld. CIT(A) that the additional evidences needed to be admitted, in the interest of justice, considering the difficulties faced by the assessee in producing the additional evidences relating to the cash creditors, capital introduced in the various partnership concerns and the period to which they related i.e. 7 assessment years which were very voluminous evidences requiring considerable time for collection. The ITAT also took note of the fact that the ld. CIT(A) has sought 4 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 report of the Assessing Officer also on the additional evidences; therefore, found no infirmity in the order of the ld. CIT(A) admitting the additional evidences. 5.5 The ld. DR was unable to point out any distinction in facts from the order of the ITAT in Assessment Year 2004-05 .The issue raised in Ground No. 1 of the Revenue therefore stands covered by the order of the ITAT in AY 2004- 05, following which we uphold the order of the ld. CIT(A) admitting the additional evidences . Ground No.1 raised by the Revenue is dismissed. 6. Ground No.2 raised by the Revenue reads as under:- “2 The CIT(A)has erred in law and on facts in deleting the addition of Rs.4,67,78,446/- and Rs.3,28,02,305/- made under Section 68 of the Act on account of unexplained capital and unexplained cash creditors respectively, without considering the actual position that the assessee failed to prove the identity and capacity of the depositors and the genuineness of the transaction with conclusive evidences.” 6.1 The issue in above ground relates to the addition made by the Assessing Officer to the income of the assessee on account of unexplained source of capital introduced by the assessee in its various proprietorship concerns amounting to Rs.4,67,78,446/- in the concerns listed at paragraph No.4.1 of the assessment order as under:- “In the books of Hotel Neelkanth - Rs. 2,33,258/- ,, Hotel Neeltop - Rs. 8,30,000/- ,, Sahajanand Enterprise - Rs. 21,15,000/- ,, Swaminarayan Enterprise- Rs. 41,00,000/- ,, Devnandan Bldrs - Rs.3,57,78,916/- ,, Umang H. Thakkar (Pers.)- Rs. 37,21,272/- ---------------------- Total : Rs.4,67,78,446/- ----------------------“ 5 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 And, unexplained credits relating to deposits accepted allegedly from various parties in the various proprietorship concerns of the assessee listed above amounting in all to Rs.3,28,02,305/-. The list of the depositors in the various proprietorship concerns of the assessee so treated as unexplained in terms of Section 68 of the Act by the Assessing Officer is reproduced at page No.10 of the assessment order; thus, resulting in a total addition of Rs.7,95,80,751/- u/s 68 of the Act, which was deleted in entirety by the ld. CIT(A). 6.2 At the outset itself, ld. Counsel for the assessee pointed out that identical issue came up before the ITAT in assessee’s appeal for AY 2004-05, wherein the ITAT upheld the order of the ld. CIT(A) deleting the entire additions so made. Our attention was drawn to paragraph Nos. 19-26 of the order in this regard. 6.3 We have gone through the order of the ITAT, as pointed out by the ld. Counsel for the assessee before us, and we have noted that in the AY 2004-05 also the issue of deletion of addition made by the Assessing Officer on account of unexplained source of capital introduced in various proprietorship concerns of the assessee and the deposits in the various proprietorship concerns of the assessee was challenged by the Revenue before the ITAT who noted at paragraph no.24 of its order that the ld. CIT(A) had rightly deleted them appreciating the additional evidences filed by the assessee proving the source of both the capital introduced, as also the cash creditors in the various proprietorship concerns of the assessee. The relevant paragraph No.24 of the order containing the findings of the ITAT in this regard are as under:- “24. We have gone through the orders of the authorities below, and we see no reasons to interfere in the order of the ld.CIT(A) deleting the entire addition made on account of capital introduced in various proprietorship concerns of the 6 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 assessee and other cash credits holding the source of all them to be proved by the assessee. We have noted that the ld.CIT(A) admitted the additional evidences filed by the assessee to prove source of both the capital introduced in various proprietorship concerns of the assessee, as also cash creditors. He noted that the assessee had filed copy of bank statement reflecting introduction of capital in various proprietorship concerns, as coming from the personal accounts of the assessee through bank channels. The AO was unable to refute this fact emerging from the bank statement of the assessee in the remand report. The ld.DR was unable to point out any infirmity in the same, and we have noted that only basis for the AO to make the addition was the lack of evidence to prove the source of capital introduced in the proprietorship concerns. Since the assessee duly filed evidence to prove the same, which were admitted by the ld.CIT(A) and examined by the AO, and no infirmity pointed out in the evidence, we have no hesitation in concurring with the ld.CIT(A) that the source of capital introduced in various proprietorship concerns of the assessee to the tune of Rs.50,86,380/- stood duly explained, and there was no case for making any addition under section 68 of the Act on this count.” 6.4 As is evident from the above, the ITAT noted that the Assessing Officer had made addition in the absence of any evidence filed by the assessee. The ld. CIT(A) had admitted the additional evidences filed by the assessee in this regard, and after appreciating the same and seeking a report from the Assessing Officer on the same in which no infirmity was pointed out by the Assessing Officer, he deleted the additions made. 6.5 In the present case also, we find from the order of the ld. CIT(A) that he admitted the additional evidences filed by the assessee relating to the source of capital and cash credits in the proprietorship concerns of the assessee, listing all documents filed by the assessee in each case at page Nos. 10 – 13 of its order in a tabular form. All the evidences were confronted to the Assessing Officer who, ld. CIT(A) noted, did not dispute the veracity or the authenticity of the evidence, and therefore on a holistic consideration of the issue, the ld. CIT(A) deleted the addition made u/s 68 of the Act. We have noted that the facts and circumstances relating to the impugned addition are identical to that in AY 2004-05 in the case of the assessee. 7 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 6.6 The ld. DR has been unable to point out any distinction in facts or even on law on this aspect before us. We, therefore, concur with the ld. Counsel for the assessee that the issue stands squarely covered by the order of the ITAT in the case of the assessee for AY 2004-05, following which we hold that the additions made u/s 68 of Rs.4,67,78,466/- pertaining to unexplained capital and Rs.3,28,02,305/- pertaining to unexplained cash credits have been rightly deleted by the ld. CIT(A) after appreciating all evidences filed by the assessee. Ground No.2 raised by the Revenue is, therefore, found to be devoid of any merit and is accordingly dismissed. 7. Ground No.3 raised by the Revenue reads as under:- “3. The CIT(A) has erred in law and on facts in deleting the addition made on account of unexplained jewellery at Rs.8,52,355/- and Rs. 2,57,824/- without considering the evidences brought on record by the Assessing Officer that the assessee failed to prove the source of jewellery found at residence as well as in the locker. The Ld.CIT(A) has further erred in accepting the assessee's argument that the jewellery weighing 496 grams was belonging to the maid servants without considering their status and source of acquisition.” 7.1 The facts relating to the issue are that, during search, the assessee was found to be in possession of jewellery which was found both at his residence and in the bank locker. 1141.2 gms of jewellery was found at the residence while in the locker 1336.5 gms jewellery was found. While the assessee attributed the jewellery found at residence as belonging to the family, received on various occasions of marriage and other celebrations over a period of time, the wife of the assessee stated 469.6 gms of jewellery to be belonging to 3 maid servants. As for the jewellery found in the locker, while the assessee attributed the jewellery to have been purchased during the year from withdrawals reflected in his books of accounts and even furnished purchase invoice of the same, the assessee’s wife again attributed part of the jewellery to be that of her maids. Considering the contrary stand taken by the assessee and his wife, and 8 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 after conducting inquiry on the purchase invoice submitted by the assessee substantiating his explanation of having purchased the jewellery during the year and finding the party to be non-existent, the Assessing Officer treated the entire jewellery seized from the locker valued at Rs.8,52,355/- as unexplained. As for the jewellery found at the residence, the quantum attributed by the wife of the assessee to the maid servants of 469.6 gms, valued at Rs.2,57,824/-, was treated as unexplained in the absence of any substantiation of the same. For the balance jewellery found at residence, the explanation of the assessee was accepted by the Assessing Officer. 7.2 The ld. CIT(A), however, treated 1150 gms of jewellery acceptable out of the total jewellery found with the assessee of 2477 gms (1141 gms+ 1336gms), in terms of Board’s instruction No. 1916 dated 11.05.1994 attributing 500 gms to wife, 100 gms to assessee and 250 gms for unmarried daughter and 100 gms each to two minors of the assessee. He also treated 496 gms of jewellery explained as belonging to the maids, dismissing the contradiction in the statement of the wife and the assessee as not being unusual since the husband, he found, was usually not aware and updated with the ever-changing status of the wife’s jewellery and her habit of safekeeping jewellery of others. As for the jewellery found in locker, he held that only 866.9 gms remained unexplained (2477gms -1150gms-496gms). This jewellery valued at Rs.5,99,531/- was treated by the ld. CIT(A) as unexplained finding merit in the findings of the Assessing Officer that the evidences filed by the assessee were of no-consequence since the inquiry by the Assessing Officer revealed the party from whom purchases were made to be not in existence and there was also no withdrawal of cash by the assessee for acquiring the jewellery. 7.3 The Revenue is in appeal before us against the deletion of addition made of unexplained investment in jewellery of 496 gms found at the 9 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 residence of the assessee which was attributed as belonging to the maid servants of the assessee and the jewellery attributed as belonging to the family over and above that allowed by the AO. 7.4 The findings of the ld. CIT(A) accepting the explanation of the spouse of the assessee of 496 gms of jewellery belonging to the maids and finding it not unusual for the assessee to have taken contradictory stand is at paragraph No.5.5 of the order as under:- “5.5 The contentions/details on record were carefully considered. It is seen that the quantum of the jewellery found at the residence i.e. 1141.2 gms was more or less in conformity with the judicial decisions/Board's guidelines and considering the status, community, customs of the assessee/family. As for the contradiction in the statement(s) of the wife and husband assessee, it is not unusual that the husband is not usually aware and updated with the ever- changing status of the wife's jewellery and her habit of safekeeping jewellery of others is a plausible explanation. Smt. Kanaklata in her initial statement did mention of having kept the jewellery of her maid servants for safety and in fact identified such jewellery in terms of items/weight totaling 469 gms, even at time of search as indicated from relevant the related annexure's of the relevant panchnama.” 7.5 The ld. DR relied on the order of the Assessing Officer contending that in view of the contradictory stand of the assessee and his spouse, this acceptance of explanation by the ld. CIT(A) attributing jewellery of 496 gms to the maid servants of the assessee was not tenable. 7.6 The ld. Counsel for the assessee, however, relied on the order of the ld. CIT(A). 7.7 We have heard both the parties. We do not find any merit in the contention of the ld. DR. The ld. CIT(A) has dismissed the basis of the Assessing Officer for treating 496 gms of jewellery found at the residence of the assessee as unexplained, being the contradictory stand taken by the 10 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 assessee and his spouse, with the assessee attributing the jewellery belonging to the family and his spouse attributing it to maid servants. The ld. CIT(A) has found this contradictory stand to be not unusual, noting that husbands are generally unaware of the status of the jewellery available with the wives and about their habits of safekeeping jewellery of others. The ld. CIT(A) has found the explanation to be plausible. We do not find any infirmity in this finding of the ld. CIT(A). We agree with the Ld.CIT(A) that it is not unusual for the ladies of the house to be generally aware of the status of the jewellery and being in the habit of safe keeping the jewellery of others and the men being generally unaware in respect of these matters. Also pertinent is the fact noted by the Ld.CIT(A) that the spouse of the assessee identified all the items of the jewellery belonging to the maid servants even at the time of search, which was indicated from the relevant panchnama. In view of the same, we see no reason to interfere in the order of the ld. CIT(A) treating the jewellery of 496 gms, valued at Rs.2.57 lakhs, as duly explained. The order of the ld. CIT(A) deleting the addition, therefore, of Rs.2.57 lakhs is confirmed. 7.8 As for the deletion of part of addition of jewellery found in the locker amounting to Rs.2,52,824/-attributing it as belonging to the family in line with the Board’s guidelines and judicial decisions in this regard considering the status, community, customs of the assessee/family. 7.9 The ld. DR was unable to controvert the applicability of Board’s guidelines and judicial decisions to the jewellery found in the locker to the tune of 574.3 gms. The order of the ld. CIT(A), therefore, deleting the addition of unexplained jewellery found in the locker to the tune of Rs.2,52,824/- is, therefore, confirmed. Ground of Appeal No.3 of the Revenue is accordingly dismissed. 11 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 8. Ground No.4 raised by the Revenue reads as under:- “4. The CIT(A) has erred in law and on facts in deleting the addition of Rs.4,48,988/- made on account of disallowance of interest for non business use of borrowed funds without considering the fact that borrowed funds were used for non business purposes.” 8.1 The issue raised in above ground relates to disallowance of interest expenses of Rs.4,48,988/- which was deleted by ld. CIT(A). 8.2 The facts relating to the issue being that the assessee was found to have claimed interest expenses in its various proprietorship concerns amounting to Rs.4,48,988/- as under:- (i) Umang H. Thakkar (Pers.) - Rs.2,67,849/- (ii) Sahjanand Enterprise - Rs.44,606/- (iii) Dharamdev Housing Corp. - Rs.1,36,533/- ------------------ Rs.4,48,988/- ------------------ 8.3 The assessee, at the same time, was also noted to have made interest free advances in its above proprietorship concerns. Therefore, attributing the usage of interest bearing funds to the advancement of interest free loans and finding the interest free advances to have no relation with the business of the assessee, the Assessing Officer disallowed the entire interest claim of the assessee. This disallowance was deleted by the ld. CIT(A) noting that the assessee had sufficient interest free capital available for making interest free advances which, the ld. CIT(A) noted, were made for business purpose also. 8.4 The ld. Counsel for the assessee, at the outset itself, stated that this issue was covered in favour of the assessee by the decision of the ITAT in the case of the assessee itself for AY 2004-05 wherein in was dealt with at paragraph Nos. 27-35 of the order. The relevant portion of the order was pointed out to 12 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 us wherein the ITAT had noted the fact of sufficiency of own funds for making the impugned advance and the proposition of law settled in this regard that no disallowance is called for where sufficient own interest free funds are available for making interest free advances, as laid down by the Hon’ble Apex Court in the case of CIT Vs. Reliance Industries Ltd., 410 ITR 466 (SC). 8.5 The ld. DR was unable to distinguish the decision of the ITAT in AY 2004-05 – both the facts and on law. In view of the same, we concur with the ld. Counsel for the assessee that the issue stands squarely covered by the order of the ITAT in the assessee’s own case for AY 2004-05, following which we hold that the disallowance made by the Assessing Officer of interest expenses amounting to Rs.4,48,988/- has been rightly deleted by the ld. CIT(A) after appreciating all evidences filed by the assessee. Ground No.4 raised by the Revenue is thus dismissed. 9. Ground No. 5 raised by the Revenue reads as under:- “5. The CIT(A) has erred in law and on facts in deleting the addition of Rs. 19,86,805/- made on account of undisclosed income from construction business of Sahjanand complex without considering the fact that proper profit on work in progress was not disclosed by the assessee particularly when the stock register for consumption of the material was not maintained.” 9.1 The facts relating to the issue are that the Assessing Officer noted from the Trading and Profit & Loss Account of Sahjanand Enterprise – a proprietorship concern of the assessee – that it had shown work-in-progress of Rs.3,23,76,176/- against which net profit of only Rs.6,03,289/- was shown. Noting the net profit so disclosed to be abnormally low and also noting the similar issue was involved in AY 2004-05 and the assessee had failed to submit the stock register to verify the genuineness of the net profit reflected on work- in-progress, the Assessing Officer rejected the books of accounts of the 13 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 assessee pertaining to Sahjanand Enterprise, and adopting the net profit rate of 8% on the work-in-progress, he computed the profits of the assessee in the said enterprise at Rs.25,90,094/- as against Rs.6,03,289/- disclosed by the assessee. The difference, i.e. Rs.19,88,805/- was accordingly added to the income of the assessee on account of undisclosed income from construction activities in the name of Sahjanand Enterprise. 9.2 The ld. CIT(A) held that the AO was not justified in rejecting the audited books of accounts of the assessee since he had failed to point out specific deficiencies which were fatal in deducing the profits correctly. He noted that the assessee was consistently following the same method of accounting and he also noted that the similar addition which was made in the AY 2004-05 on same set of facts was deleted in the appellate order passed for that year. Therefore, following the decision for AY 2004-05, the addition made in the impugned order by estimating the net profits was deleted by the ld. CIT(A). 9.3 At the outset itself, the ld. Counsel for the assessee pointed out that the order of the ld. CIT(A) in AY 2004-05 had been confirmed by the ITAT. Our attention was drawn to paragraph Nos. 44 to 49 of the order. The relevant findings of the ITAT at paragraph No.49 of its order are as under:- “49. We have heard rival contentions and gone through the orders of the authorities below, and have also gone through the documents referred to before us. We see no infirmity in the order of the ld.CIT(A) and concur with him that the AO misread and misinterpreted the facts and figures noted in the Trading and P&L account. As explained by the assessee, the Trading and Profit & Loss account reflected expenses incurred by the AO in its construction business, which resulted in completed stock as well as in-completed stock of building, the in-completed stock being reflected as WIP; the completed stock either sold and reflected as sales and remaining unsold reflected as stock, in its trading account. There is no anomaly absolutely in its facts and figures, and there was no reason absolutely for the AO to hold that the entire expenses incurred on construction needed to be reflected as WIP. The addition made, therefore, on account of undervaluation of the WIP, has been correctly held by the ld.CIT(A) 14 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 to be entirely baseless, and has been rightly deleted by the ld.CIT(A). Further, we agree with the ld.CIT(A) that despite going through the entire books of the accounts of the assessee, not a single anomaly was noted by the AO vis-à-vis purchases, expenses and even figure of sales and stock reflected by the assessee. There was no reason absolutely, therefore, rejecting the books of accounts of the assessee, and that too merely on the ground of non-maintenance of stock register. The estimation of GP, therefore was not in accordance with law, we agree with the ld.CIT(A). In any case, we have noted from the submission made by the assessee to the ld.CIT(A) that the assessee had reflected GP to the tune of 17.59% and while the AO applied the GP rate of 8%. On this score also, the entire exercise of the AO was baseless and has been rightly rejected by the ld.CIT(A). The addition made on account of undervaluation of WIP and by estimating the profits of the assessee in its construction business in M/s Sahajanand Enterprise, to the tune of Rs.55,41,922/-, we hold, has been rightly deleted by the ld.CIT(A).” 9.4 We have gone through the order of the ITAT and we find that the ITAT noted the basis with the ld. CIT(A) for finding anomaly in the books of accounts of the assessee to be entirely baseless and confirmed the order of the ld. CIT(A) noting that not a single anomaly was noted by the Assessing Officer in the financial figures reported. The ld. DR was unable to distinguish the decision of the ITAT in AY 2004-05 – both the facts and on law and, therefore, the issue raised in Ground No. 5 by the Revenue stands covered by the order of the ITAT in AY 2004-05, following which we uphold the order of the ld. CIT(A) deleting the addition of Rs. 19,86,805/- made by the Assessing Officer on account of undisclosed income from construction business of Sahjanand complex. Ground No.5 raised by the Revenue is accordingly dismissed. 10. Ground No.6 raised by the Revenue reads as under:- “The CIT(A) has erred in law and on facts in deleting the addition of Rs.2,08,11,956/- made on the basis of impounded books of accounts from Sahjanad Enterprise as Annexure B-12, B-13, B-16 and B-42 which reflected undisclosed receipt from the construction business, without considering the contents of the seized material as well as the fact that such receipts were not recorded in the regular books of accounts of the assessee.” 15 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 10.1 Brief facts relating to the issue are that during the course of search conducted on the Dharamdev Builders Group, a survey u/s 133A of the Act was also conducted at the site office of Sahjanand Enterprise – a proprietary concern of the assessee. At the time of survey, certain books of accounts and documents were found which were inventorised as Annexure-B and certified copies of items Annexure B-12, B-13, B-16 and B-42 were taken by survey team. The assessee was asked to explain incorporation of the transactions noted in these impounded documents in the books of accounts and to reconcile them with the books. The assessee submitted that these papers related to booking money received from the members of the scheme Sahjanand Avenue which was organized and developed by Sahjanand Enterprise. The assessee contended that all transactions noted therein were recorded in the regular books of accounts and demonstrated the same with few illustration to the Assessing Officer. The Assessing Officer, however, on closer scrutiny of the copies of accounts noted that all the transactions were not recorded in the books of the assessee. He scrutinized the copies of accounts of the different purchasers with the details of amounts received from them in the documents so noted and found that the assessee had suppressed sales to the extent of Rs.2,08,11,956/-. Annexure-B to the assessment order is the working of the suppression of sales so worked out by the Assessing Officer. The Assessing Officer had compared the details in the documents with the copies of accounts of the parties for two years, i.e. AYs 2004-05 and 2005-06, and found the receipts recorded in these two years to be short by the tune of Rs.2.08 crores. He, therefore, held that this amount had been realized by the assessee during the impugned year, but not disclosed in the books of accounts and accordingly added the same as undisclosed income of the assessee for the impugned year. 16 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 10.2 Before the ld. CIT(A), the assessee contended that, as a matter of fact, all these amounts had been recorded over a period of three years from AYs 2004-05 to 2006-07; details of which were filed to the ld. CIT(A). Confirmation/PAN of 10 members were also enclosed on a sample basis affirming their payments in subsequent years. The assessee, therefore, contended that the Assessing Officer had misjudged the issue and made addition on surmises and conjectures. The ld. CIT(A), on going through the facts as demonstrated by the ld. Counsel for the assessee, was convinced with the explanation of the assessee, noting that overall payment made by each members in respect of their property was much more than the amounts recorded against their name in the loose impounded documents and the amounts noted in the impugned document were not over and above the total payments amounts received from buyers, and the amounts noted as not recorded by the Assessing Officer were in fact recorded in the books of accounts in subsequent assessment years. He accordingly held that the amount of Rs.2.08 cores did not constitute suppressed receipts and deleted the addition made by the Assessing Officer. His findings in this regard are at paragraph No. 16 of his order as under:- “16. The contentions/details on record were carefully considered. It is seen that the members of the Sahjanand Housing Scheme lad made payments, for acquiring flats, over a period of three years. The overall payment made by each members in respect of their property, was much more than the amounts recorded against their name(s) in the loose impounded papers. The amounts noted in the impugned papers, in these facts, were not over and above the total payment (spread in more than one assessment year) received from the buyers. Part of the amount(s) noted in the loose papers were received and recorded in books of accounts of subsequent years. Thus these amounts have been incorporated in subsequent assessment years and to don't constitute suppressed receipts as assumed by the A.O. 16.1 In pages 1 to 9 of the paper book filed for AY 2005-06 the appellant has given details of the block (flat No.) member, amounts received from the member between A.Y. 2004-05 to Α.Υ. 2005-07, the balance due, if any. Invariably the amount(s) received from the member(s) is much more than the amount 17 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 considered by the A.O. as suppressed receipts from the corresponding member(s). Thus the receipts as per books of account, from a member during the period relevant to A.Y. 2004-05 to 2006-07 was more than the amount considered by the A.O and so the question of suppression didn't arise. The A.O has not been able to make out a case of premium/on money payment by members also. Thus the receipts considered as suppressed, are already incorporated in the disclosed overall receipts. The addition made by the A.O. is therefore not sustainable and is deleted.” 10.3 Before us, ld. DR relied on the order of the Assessing Officer while the ld. Counsel for the assessee has relied upon the order of the ld. CIT(A). 10.4 We have heard the contentions of both the parties. We have noted that the Assessing Officer found suppressed receipts of the assessee to the tune of Rs.2.08 crores by comparing the recording of booking amounts received from various members of Sahajanand Avenue in the documents seized during survey at Sahajanand Enterprise, with the booking amounts recorded in the books of the assessee against each members for two years, i.e. AYs 2004-05 and 2005-06. Before the ld. CIT(A), the assessee, however, demonstrated that the amounts were received from the members over a period of three years and even filed confirmation from some members with regard to the same. The ld. CIT(A) has gone through all these details and given a finding of fact that the assessee has in fact recorded more receipts as compared to that noted in the documents seized during survey. The ld. DR was unable to refute the factual finding of the ld. CIT(A). We have no hesitation, therefore, in agreeing with the ld. CIT(A) that the Assessing Officer’s findings of suppressed sales by the assessee to the tune of Rs.2.08 crores was based on incomplete appreciation of facts. The order of the ld. CIT(A) deleting the addition made of Rs.2.08 crores is, therefore, upheld. Ground of appeal No. 6 of the Revenue is thus dismissed. 18 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 11. Ground No. 7 raised by the Revenue reads as under:- “The CIT(A) has erred in law and on facts in deleting the addition of Rs.84.50 lacs made on account of unexplained investment in purchase of land from Shri Vikas Shah and Others without considering the entries recorded on seized document as well as the statement of Shri Vikas A. Shah who was one of the parties to the impugned transaction.” 11.1 The above ground raised by the Revenue relates to the addition made to the income of the assessee on account of alleged investment in proprietorship concerns of which remained unexplained. The basis of making the addition was the documents found and the statement recorded of one Shri Vikas Shah. The Assessing Officer alleged that the assessee had purchased banakhat rights for Rs.32 lakhs, in the land at Survey No. 118 of Sheikhpur- Khanpur during the impugned year, source of which remained unexplained and also noted on the basis of documents seized from Shri Vikas Shah that the assessee had paid cash of Rs. 25,00,000/-, Rs.29,50,000/- and Rs. 10,00,000/- respectively to Shri Vikas Shah. He accordingly noted that the total transactions during the year with Shri Vikas Shah come to the tune of Rs.84,50,000/- for which no explanation was given by the assessee, and accordingly added the same to the income of the assessee. 11.2 The ld. CIT(A) deleted the addition noting that the Assessing Officer has made these additions based on statement of Shri Vikas Shah and documents found from him which were never confronted to the assessee, that the Assessing Officer had relied on the unconfronted/unvalidated statement of Shri Vikas Shah and partly on the statement of the office bearers and authorized signatory of the two societies which were also not confronted to the assessee. He also noted that apart from the documents seized from Shri Vikas Shah, no related documents found during search. The ld. CIT(A) also noted that Shri Vikas Shah, in its explanation, had admitted that he had 19 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 camouflaged his own receipts by using the name of ‘Amrish Kaka’. That his credibility was not reliable. The ld. CIT(A) also noted the documents did not contain the name of the assessee and even the initials in the documents had no nexus with the assessee’s name or even nick-name. He accordingly held that the addition was made merely on suspicion and, therefore, could not be upheld. 11.3 At the outset itself, ld. Counsel for the assessee pointed out that identical addition made in AY 2004-05 in the case of the assessee was deleted by the ld. CIT(A), which has been confirmed by the ITAT in further appeal. Our attention was drawn to paragraph Nos. 50 – 62 of the order of the ITAT in this regard. 11.4 The ld. DR has been unable to point out any distinction in facts or even on law on this aspect before us. We, therefore, concur with the ld. Counsel for the assessee that the issue stands squarely covered by the order of the ITAT in the case of the assessee for AY 2004-05, following which we hold that the addition of Rs.84.50 lacs made by the Assessing Officer on account of unexplained investment in purchase of land from Shri Vikas Shah has been rightly deleted by the ld. CIT(A) after appreciating all evidences/submissions filed by the assessee. Ground No.7 raised by the Revenue is, therefore, found to be devoid of any merit and is accordingly dismissed. Ground No. 7 raised by the Revenue is thus dismissed. 12. Ground No. 8 raised by the Revenue reads as under:- “8. The Ld.CIT(A) has erred in law and on facts in restricting the addition of Rs.17,23,126/- to Rs.14,90,312/- and Rs.8,44,032/- to Rs.5,61,655/- in respect of unexplained investment in Swaminarayan Residence and Hotel Nilkanth respectively without considering and appreciating the valuation report of the 20 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 District Valuation Officer and also without giving him opportunity of being heard.” 12.1 This issue relates to deletion of addition made by the Assessing Officer on account of unexplained investment in construction of Swaminarayan residence and Hotel Nilkanth of Rs.14,90,312/- and Rs. 5,61,655/- respectively made u/s 69 of the Act by the Assessing Officer. The addition was made basis the valuation report submitted by the DVO. The ld. Counsel for the assessee pointed out at the outset that identical addition made in AY 2004-05 was deleted by the ITAT. Our attention was drawn to paragraph Nos. 8 to 11 of the order of the ITAT in this regard, which reads as under;- “8. With respect to the residential house, it was pointed out that the DVO had determined the total value of the property at Rs.1,73,12,146/-, while the assessee had declared total investment in the same upto 31.3.2004 at Rs.77,02,238-. The AO took the cost of construction, as determined by the DVO and taking this as the basis for 31.3.2004, he determined the cost of construction as at the end of each preceding year, and in the same ratio. Accordingly, the cost of construction as per the valuation report as on 31.3.2004 for the impugned year i.e. Asst.Year 2004-05 was taken at Rs.4,17,830/-, and noting the cost of construction disclosed by the assessee for the year at Rs.1,85,894/-; the difference of Rs.2,31,936/- was added to the income of the assessee as unexplained investment in the residential house during the year. Similarly, in respect of investment made in Hotel Neelkanth, the DVO determined the cost of construction as on 31.3.2004 at Rs.28,49,084/- while the assessee showed cost of construction of Rs.4,82,349/-. The difference in the cost of construction of Rs.23,66,735/- was treated as undisclosed investment in this property in the absence of any information furnished by the assessee to justify its cost of construction in the property. 9. The ld.CIT(A) reduced the addition on account of unexplained investment in the residential house from Rs.2,31,936/- to Rs.2,00,599/- allowing adjustment to the DVO’s valuation on account of self-supervision/own purchases/variation in CPWD/local rates etc. at the rate of 15% as opposed to 7.5% granted by the DVO. With respect to Hotel Neelkantha, similar deduction of 15% was allowed in the estimated cost of construction; thus reducing unexplained investment made during the impugned year from Rs.23,66,736/- to Rs.18,25,521/- . 21 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 10. The argument of the ld.counsel for the assessee before us was that determination of cost of construction was referred to the DVO by the AO without rejecting the books of accounts of the assessee, which he pointed out has been categorically held by the Hon’ble Apex Court in the case of Sargam Cinema, 328 ITR 513 (SC) to be not in accordance with law. He further pointed out that identical reference made in the case of Sanjay H. Thakkar, brother of the assessee, was deleted by the ITAT, finding the same to be based on an invalid reference to DVO, on the basis of the decision of the Hon’ble Apex Court in the case of Sargam Cinema (supra). This decision of the ITAT he pointed out was confirmed by the Hon’ble jurisdictional High Court also. Our attention was drawn to the order of the ITAT in the case of Sanjay H. Thakkar, in IT(SS)A.No.849/Ahd/2010 dated 18.1.2016 and judgment of the Hon’ble High Court confirming the finding of the ITAT in Tax Appeal No.832 of 2016 dated 22.12.2016.Copies of both the orders were placed before us. 11. The ld.DR, though supported order of the ld.CIT(A) but was unable to controvert either the factual contention of the ld.counsel for the assessee that the reference for determination of cost of construction in the property of the assessee was made to the DVO without rejecting the books of accounts of the assessee; nor distinguish the decision of the Hon’ble Apex Court in the case of Sargam Cinema (supra) laying down the proposition of law that no reference to the DVO could be made without rejecting the books of accounts of the assessee. In view of the same, the decision rendered by the ITAT in the case of brother of the assessee, Shri Sanjay H. Thakkar which was confirmed by the Hon’ble jurisdictional High Court also, applies to the facts of the present case, following which, we hold that the addition made on account of unexplained investment in two properties of the assessee amounting to Rs.20,26,120/-, was not sustainable in law, since it was based on reference made to the DVO, which was illegal and not in accordance with law. In view of our above discussion, ground no.3 raised by the assessee is allowed.” 12.2 The ld. DR was unable to distinguish the decision of the ITAT in AY 2004-05. In view of the same, we concur with the ld. Counsel for the assessee that the issue stands squarely covered by the order of the ITAT in the assessee’s own case for AY 2004-05, following which we uphold the order of the ld. CIT(A) restricting the addition of Rs.17,23,126/- to Rs.14,90,312/- and Rs.8,44,032/- to Rs.5,61,655/- in respect of unexplained investment in 22 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 Swaminarayan Residence and Hotel Nilkanth respectively. Accordingly, ground No.8 raised by the Revenue is dismissed. Ground No.8 raised by the Revenue is dismissed. 13. Ground No. 9 raised by the Revenue reads as under:- “9. The CIT(A) has erred in law and on facts in deleting the addition of Rs.76,139/- made on the basis of a seized document paper no.50 of Annexure A-7 without considering the entries on the document as well as the findings of the Assessing Officer. 13.1 Ground No. 9 raises the issue of deletion of addition by the ld. CIT(A) of Rs.76,139/-. The impugned addition mas wade by the Assessing Officer on the basis of page No.50 of Annexure A-7 which was found at the office of the assessee at 3 rd Floor, Paldi and which comprised of 4 bills totaling Rs.76,139/- for extra work carried out in Tapan Society. The assessee contended to the Assessing Officer that these were not bills but were estimates noted by Site Supervisor for work desired by members and they pertained to one Jesubhai Barot of Tapan Tenement who was furnished this estimate by his contractor. That Jesubhai Barot had in turn sought opinion of the assessee on this estimate of the contractor. The assessee had contended that no work was carried out by the assessee in lieu of this document. The Assessing Officer did not find the assessee’s explanation convincing and, therefore, he added the amount of Rs.76,139/- to the income of the assessee as earned on account of extra work carried out. 13.2 The ld. CIT(A) noted that while the document specified extra work carried out in Tapan Society, the said society was neither organized/ constructed/developed nor maintained by the assessee. He found nothing in the document to indicate the name or the involvement of the assessee and further the assessee had filed confirmation before him of Jasubhai to the effect 23 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 that the document pertained to work which he got carried out by his society and which was given to the assessee for his approval as a known person. The ld. CIT(A) had sought the Assessing Officer’s report on the confirmation so given by the assessee and noted that the Assessing Officer did not refute the contents of the same. Taking note of all the above, he deleted the addition made to the income of the assessee. His findings in this regard are at paragraph No. 25(a) of his order as under:- “25 (a) there is no entry or indication in page 50/Annexure 4-7, to suggest or even indicate the name/involvement of the appellant. The Tapan Society was not organized/constructed/developed/maintained by the appellant. The AO didn't make querries with the society/its member Jasubhai, despite requests. The appellant was now filing confirmation by Jasubhai to the effect that the document pertained to work, he got carried out by his society and was given to Umang for his-approval/verification as a known person. The explanation/confirmation has not been refuted in the remand also. Hence addition made was frivolous. On careful consideration and perusal of the confirmation, it is seen that the appellant had discharged the primary onus and the explanation given was not disproved by the A.O. Shri Jasubhai was a resident of USA, since 27 years and got his house at Tapan Society renovated and submitted the details for verification of contractors rate in these facts, the addition made was not sustainable and is deleted.” 13.3 The ld. DR, before us, was unable to controvert the factual finding of the ld. CIT(A) that the notings in the document pertained to Tapan Society with which the assessee had nothing to do in any manner, nor the findings of the ld. CIT(A) that that there was no entry in the document to suggest the involvement of the assessee. It is only that the document was found at his office when searched. Further, the ld. DR has been unable to controvert the fact noted by the ld. CIT(A) that the confirmation filed by Jasubhai who acknowledged the document as pertaining to him for work carried out in his flat by his society and having nothing to do with the assessee, was not refuted by the Assessing Officer in the remand report. In view of the same, we see no 24 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 reason to interfere in the order of the ld. CIT(A) deleting the addition of Rs.76,139/- made to the income of the assessee as there was nothing in the document attributing it to the assessee in any way and this fact was even confirmed by the party whose name found mentioned in the document, i.e. Mr. Jesubhai Barot. The Assessing Officer having not refuted the contents of the confirmation filed by Mr. Jesubhai, we are of the view that his challenge the deletion of addition made by the ld. CIT(A) is not sustainable. Ground of appeal No.9 raised by the Revenue is, therefore, dismissed. Ground No. 9 of the Revenue’s appeal is dismissed. 14. Ground No. 10 raised by the Revenue reads as under:- 10. The CIT(A) has erred in law and on fact in deleting the addition of Rs.4,15,455/- made on the basis of seized document no.99, 232-236 of Annexure A-7 and seized document no.48 and 49 of Annexure A-9 without considering the nature of entries as well as the findings of the Assessing Officer. 14.1 Ground No. 10 raises the issue of deletion of addition of Rs. 4,15,455/- by the ld. CIA(A). The said addition was made on the basis of Annexure-A7, page No. 99, found in the office of the assessee. The reverse side of which showed receipt from members of Block A to F, totaling Rs.11.11 lakhs, of which Rs.6.95 lakhs were expended for registration/stamp paper notary charges and the balance was attributable as net profit of the assessee. The assessee explained the contents of the document to the Assessing Officer as pertaining to members of Neelkanth Park Scheme for expenditure incurred by them for registration and contended that the assessee had no role to play with affairs of the society members. The Assessing Officer did not find the reply of the assessee convincing and noting that the document was found with the assessee and he had not discharged his primary onus for explaining the same, he made addition of Rs.4,15,455/- to the income of the assessee. 25 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 14.2 The ld. CIT(A) noted that despite the assessee explaining that the document pertained to receipts from members of New Neelkanth Non- Trading Association and had sought time for obtaining confirmation from the members of the said association, the Assessing Officer neither waited for it nor made inquiry from this association. Further, confirmation from the association was filed to the ld. CIT(A) during appellate proceedings which were confronted to the Assessing Officer for his report on the same and the Assessing Officer did not dispute the same. The ld. CIT(A) noted that the association had clarified in the confirmation that the amount of Rs.11.11 lakhs had been collected from its members for registration and the balance Rs.4,15,455/- was kept to made future maintenance expenses. Considering the same, the ld. CIT(A) deleted the addition of Rs.4,15,455/-. His findings in this regard are at paragraph No. 25(b) of his order as under:- “25 (b) In respect of the addition of Rs.4,15,455/- on basis of document 99/Annexure A-7, it was argued that the entries therein pertained to the members of New Neelkanth Non Trading Association and then confirmation was being obtained. The A.O. however, didn't wait for it nor did he directly enquire from this NTC. It was for the A.O. to disprove the explanation giver. which he didn't do but acted on a conjecture. The confirmation has now been filed as additional evidence and has not been disputed by the A. O in his remand report. It has been clarified by the NTC that the amount of Rs.11.11 lakh was collected from members for registration and the balance of Rs.4,15,455/- was kept to meet future maintenance expenses. Etc On careful consideration of the details/explanation, the contentions of the appellant are found to be acceptable and have not been disproved. The addition made is not sustainable and therefore is deleted.” 14.3 Before us, the ld. DR was unable to controvert the finding of the ld. CIT(A) that the assessee had filed confirmation of the party to whom he had attributed the notings in Document Annexure A7, page no. 99, i.e. New Neelkanth Non-Trading Association and the Assessing Officer had not 26 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 refuted the contents of the same in the remand report sought from him. In view of the same, we see no reason to interfere in the order of the ld. CIT(A) deleting the addition of Rs.4,15,455/- made to the income of the assessee. Ground No. 10 of the Revenue’s appeal is dismissed. Ground No. 10 raised by the Revenue is dismissed. 15. Ground No.11 raised by the Revenue reads as under:- “11. The CIT(A) has erred in law and on fact in deleting the addition of Rs.1,14,298/- made on the basis of seized document no. 158 of Annexure X-2 without considering the nature of entries as well as the findings of the Assessing Officer.” 15.1 Ground No. 11 relates to the deletion of addition of Rs.1,14,298/- made to the income of the assessee on the basis of document Annexure X-2, page no. 158. The said document was found from the office of Ghanshyam Enterprise, Ring Road, Ahmedabad and the entries on the documents revealed that receipts of Rs.1,14,298/- for extra work of Flat No. A-201. The assessee contended that it was only an estimate given to the member and no such work was carried out. The Assessing Officer, however, was not convinced with the same stating that it was a practice of preparing bills as estimate and hence the amount of Rs.1,14,298/- was added to the income of the assessee. 15.2 The ld. CIT(A) noted that the assessee had already disclosed an amount of Rs.13.04 lakhs as received from Ghanshyam Enterprise for extra work done during the impugned year. He further noted that an addition of Rs.3, 54,273/- was also made on account of extra work done in Ghanshyam Enterprise basis Annexure X-1, Page No. 92/94/95, seized from the office of the assessee. He further noted that all details of the flat pertaining to which extra work was done i.e. flat No. A-201 was mentioned in the document itself, but the 27 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 Assessing Officer made no effort to confirm from the flat owner about the nature of the document whether it was an estimate or a bill. Considering all of the above, he deleted the addition made of Rs.1,14,298/-. His findings in this regard are at paragraph No. 25(d) of his order as under:- “25 (d) In respect of the addition of Rs.1.14.298/- on basis of page 158/Annexure X-2, it was pointed out that the citation given by the A.O. doesn't exist. Further the A.O. didn't act on the request to confirm facts directly from the member that it was only an estimate. If the explanation was doubted the A.O could have examined the member at the time of assessment/furnishing remand report. Even alternatively, it was incorporated in the receipts of Rs. 13.04 lakhs shown in concern M/s.Ghanshyam Builders in A.Y. 2005-06. On careful consideration of the details/contentions, it is seen that addition of Rs.3,54,273/- has already been sustained apart from the disclosed receipts. The explanation has not been disproved by the A. O. and in such a scenario, the suspicion of the A.O. of the prevailing practice of writing 'estimate' in lieu of 'Bill', remained a conjecture. On a holistic consideration, further addition of Rs.1,14,298/- is not warranted and is deleted.” 15.3 We have gone through the order of the ld. CIT(A) and we do not find any infirmity in the same. We find that ld. CIT(A) has taken a holistic view of the issue of income of the assessee earned in Ghanshyam Enterprise from extra work done in flats, noting that the assessee had already disclosed Rs.13.04 lakhs on account of the same and an addition of Rs.3,54,273/- was also made on the basis document found during search. All these facts are not disputed before us; also not disputed is the fact that the document clearly mentioned all details of the facts to which the extra work pertained, i.e. Flat No.A-201; and despite the assessee explaining that it was only an estimate, the Assessing Officer rejected it merely his own conjectures and surmises, stating that bills are generally written as estimate, when he ought to have made inquiry and then arrived at this finding. We, therefore, agree with the ld. CIT(A) that the addition in the impugned case has been made by the Assessing Officer merely on suspicion and therefore we concur with the ld. 28 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 CIT(A) that the same is not tenable in law. The order of the ld. CIT(A) deleting the addition of Rs.1,14,298/- is, therefore, confirmed. Ground of appeal No. 11 raised by the Revenue is dismissed. 16. Ground No. 12 raised by the Revenue is as follows:- “12. The CIT(A) has erred in law and on fact in deleting the addition of Rs.50,000/- out of Rs. 1,50,000/-made on the basis of seized document no.41 of Annexure A-9 without considering the nature of entries as well as the findings of the Assessing Officer.” 16.1 Ground No. 12 relates to the deletion of addition of Rs.50,000/-, basis Annexure A-9, page No. 41. The said document was found from the 3 rd Floor office of the assessee at Paldi and comprised of 3 payment vouchers – each of Rs.50,000/-, to one Mr. Raskik Patel. The assessee claimed the documents to be rough papers with jotting of “50”, which could not be, therefore, decoded as meaning Rs.50,000/- for each entry. He contended that the document to be dumb document, but the Assessing Officer was not convinced with the same noting that against one entry of ‘50’, “CHQ” was written while against other 2 entries “C” was written and he accordingly added Rs.1.5 lakhs to the income of the assessee. 16.2 Ld. CIT(A) agreed with the Assessing Officer that the document was not a dumb document and had been rightly interpreted by the Assessing Officer as representing transactions in cheque and cash against entries of “50” noted in the document. He further found that the entry against which “CHQ” was noted was accounted for in the books of the assessee for Rs.50,000/-. Therefore, he agreed with the Assessing Officer that the other two entries of “50” also represented Rs.50,000/-. The ld. CIT(A) accordingly deleted the entry pertaining to cheque, which was found accounted for in the books of the 29 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 assessee; while the entries alleged to be pertaining to cash were confirmed by him. The Revenue is aggrieved by the deletion of entries of Rs.50,000/- by the ld. CIT(A). 16.3 Before us, the ld. DR was unable to controvert the factual finding of the ld. CIT(A) that the entry of Rs.50,000/- in cheque was found accounted for in the books of the assessee. We see no reason, therefore, to interfere in the order of the ld. CIT(A) deleting the addition of Rs.50,000/-. The ground of appeal No. 12 of the Revenue’s appeal is thus dismissed. Ground of appeal No.12 raised by the Revenue is dismissed. 17. Ground of Appeal No. 13 of the Revenue is as follows:- “13. The CIT(A) has erred in law and on fact in deleting the addition of Rs.25,75,000/- made on the basis of seized document no.60 of Annexure A-9 without considering the nature of entries as well as the findings of the Assessing Officer.”” 17.1 Ground of appeal No. 13 relates to the deletion of addition of Rs.25,75,000/-, basis Annexure A-9, page No.60. The said document was found from the 3 rd floor office, Paldi of the assessee and pertained to payment to six different persons – totaling Rs.25.75 lakhs. The assessee explained to the Assessing Officer that these entries were of business expenditure explained duly reflected in the books of accounts of M/s. Saminarayan Enterprises, Sahjanand Enterprise and Neelkanth Enterprises. Copies of the accounts of all the different persons noted in the document were furnished. The Assessing Officer was not convinced with the explanation of the assessee since he found that the copies of the accounts of the parties were not reconciled with the entries in the seized document. Accordingly, he made addition of Rs.25.75 lakhs to the income of the assessee. 30 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 17.2 Before the ld. CIT(A), the assessee furnished explanation clarifying the doubts expressed by the Assessing Officer while holding that the figures mentioned in the document did not match with that mentioned in the accounts of the parties. The ld. CIT(A) took note of the explanation of the assessee and found that all entries were duly reconciled by the assessee. He further noted that the Assessing Officer had dismissed the assessee’s explanation noting that the payments were not noted on the date on which they were made which ideally should have been the case. The ld. CIT(A) held that these were unnecessary inferences drawn by the Assessing Officer and these were the personal whims and fancies of the Assessing Officer for rejecting the assessee’s explanation. He accordingly deleted the addition holding at paragraph No. 25(f) of his order as under:- “25 (f) In respect of the addition of Rs.25.75 lakhs on the basis of the seized document No.60 of Annexure A-9, it is seen that the appellant had filed detailed explanation vide reply dated 12/12/2006 and had furnished copies of account. The doubts expressed by the A.O. on page 37 of his order were clarified by the appellant as under: “From the perusal of the copy of account of Unique Enterprise the A.O observed that there was no single payment of Rs. 75000 to Unique Enterprise. The A.O. himself has mentioned that there is one payment of Rs.25000 & six payments of Rs.50000/-. However, the A.O. has lost sight of the fact that payment of Rs.25000 & Rs.50000 total Rs. 75000/-. As regards the Ashok Chantarwala, prop. Of Meghani Corporation the A.O. has stated that there is not a single payment of Rs.20 lacs nor can various payments be reconciled to Rs 20.00 lacs and hence the explanation of the appellant cannot be accepted. Now from the copy of account so furnished can be seen that the payments upto the date of search is about Rs.19.56 lacs which is more or less in agreement with the amount of Rs 20.00 lacs as stated in the loose paper. As regards the payment of Rs.1.00 lac to Akirma the A.O. has observed that the payment in question has been made subsequent to search and hence not acceptable. From the copy of account of account so furnished the advance payment was Rs.92700 and new bill was raised against the appellant of Rs.1.98 lacs. Thus, there was an outstanding of about Rs.1.05 lacs against which the payment has been made. Thus, all the entries were duly reconciled and the A.O. having made up his mind to 31 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 make the addition was not ready to appreciate the explanation and evidences furnished. Furthermore, how the A.O. has reached to the conclusion and drawn inferences that only if payments are to be made on a particular single date would they be noted in a paper is not known. Such theories so propounded by him can only be explained by him. These are the personal whims and fancies of the A.O. and not supported by any evidence or material on record. If the A.O. had slightest of doubts or suspicion he could have made direct enquiries with the parties concerned. It was not that the appellant had no co-operated with the A.O. during the assessment proceedings or refused to furnish their detailed address. The onus to establish that the payments so noted in the loose paper are other than those recorded in the books of accounts is on the A.O, which he has miserably failed to discharge. Merely, rejecting the explanation and without bringing any material on record to rebut the explanation furnished by the appellant cannot be the ground for making additions. In view of the above fact the addition made by the appellant deserves to be deleted.” On a holistic consideration of the contentions/details on record, it is apparent that the conclusion drawn by the A. O. was hurried and more on a surmise and misinterpretation of the facts. The addition made by him is therefore no sustainable and is deleted.” 17.3 The ld. DR, before us, was unable to controvert the factual finding of the ld. CIT(A) that all the entries in Annexure A-9, Page no. 60, were reconciled with the copies of accounts of the different parties for which they were recorded by the assessee. In view of the same alone, we see no reason to interfere in the order of the ld. CIT(A) deleting the addition made of Rs.25.75 lakhs. Ground of appeal No. 13 is dismissed. Ground No. 13 raised by the Revenue is dismissed. 18. Ground No.14 raised by the Revenue reads as under:- “14. The CIT(A) has erred in law and on fact in deleting the addition of Rs.60,00,000/- made on the basis of seized document No.36 of Annexure A-1 without considering the nature of entries as well as the findings of the Assessing Officer.” 32 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 18.1 The challenge in this ground is with respect to the deletion of addition of Rs.60 lakhs made by the Assessing Officer on the basis of the document, page 36 of Annexure-A1, seized from the residence of the assessee. The assessment order reveals that the Assessing Officer noticed from the said document that it pertained to cash payment received on different dates noted therein. The total amount of receipt, as per the Assessing Officer, worked out to Rs.63 lakhs. When the assessee was asked to explain the said document and its accounting treatment given in its books, the assessee contended that the document was primarily a rough note of the receipts of the flats booked by different concerns of the assessee and they were all duly entered in the books of accounts. To corroborate this assertion, copies of accounts of such parties were enclosed. It was also pointed out that the entries totaling to Rs.33 lakhs had been incorrectly totalled by the Assessing Officer as Rs.38 lakhs. Further, it was pointed out that for the entry of Rs.25 lakhs, no date, name or narration was written, and therefore was dumb entries. For the other entries, the assessee contended that they were all correlated with the books of accounts of the assessee. The Assessing Officer, however, found that the assessee had explained these amounts as received after the date of search, and therefore his claim that there were all accounted for in the books of accounts of the assessee was not tenable. The Assessing Officer found that the entries were not reconciled with the copies of the accounts of the parties, except in one case of Pushpaben G Patel for Rs.3 lakhs. Thus, Rs. 60 lakhs was held as undisclosed and added to the income of the assessee. 18.2 Before the ld. CIT(A), the assessee reiterated his contention that the notings in these documents were forecast of money to be received in future which amounts had actually been received in most of the cases by way of cheques and duly accounted for in the books of the assessee. This fact was 33 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 verified by the ld. CIT(A) and found to be correct. The AO’s report was also sought on this submission made by the assessee who, the ld. CIT(A) noted, had no adverse comments to make on the same. The assessee further contended that the amount of Rs.25 lakhs noted in the document had no notings against it and therefore was a dumb figure, probably noted to anticipate the receipt in future. This fact that there were no notings against Rs. 25 lakhs figure noted in the document is also not disputed. Considering the fact that the assessee’s explanation that all amounts noted in the documents except that Rs.25 lakhs were duly recorded in the books of the assessee as received primarily by way of cheque was verified by the Assessing Officer and no adverse comments were made by him and further the fact that the figure of Rs.25 lakhs was a dumb figure, the ld. CIT(A) held the addition made to be untenable and accordingly directed deletion of the same. The contention of the ld. Counsel for the assessee before the ld. CIT(A) is contained in paragraph No.26.2 and 26.3 of his order as under:- “26.2 Before me, it was submitted that even vide reply dated 17/7/2006, to the A.O., it was pointed out that the entries on page 36 were of amounts to be received from members who had made bookings in the scheme and pertained to Α.Υ. 2005-06. Even in the reply dated 12/12/2006, it was pointed out the rough notings were in respect of the booking amounts received in Neel Kanth Enterprise. Sahjanand Enterprise and Swaminarayan Enterprise and were duly accounted in the relevant books of account. Copies of account of the members of the scheme(s) of these concerns, namely Pushpaben, Kusumben, Geetanjali, Bhajansingh, Meenaben, Pradeep Sanghví, were also enclosed with the reply. la para (in) on page 4 of this reply dated 12/12/2006, (copy of letter filed with paper bock for A.Y. 2005-06) the individual entries in the impugned document(s) were reconciled with corresponding entries in relevant books of account. These receipts totaled Rs.33 lakhs and not Rs.38 lakhs erroneously taken by the A.O. The other entry of Rs.25 lakhs was a dumb figure against which no name/scheme/narration was noted. In fact, this entry was solitary, stand alone entry which possibly represented a proposed expenditure, requirement, etc. The A.C. has rejected the explanation/evidence filed by simply stating that the dates on which amounts are credited are post search date(s) i.e. after 9/2/2005. The A.O., has without any basis, presumed that the receipts 34 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 were received before search. In fact, the copy of account reveal the following situation. Sr. No. Name of member Name of firm Amount Remarks 1 Pushpaben Patel Sahjanand Enterprises 550000 An amount of Rs 560000 has been received on 10.02.05 by cheque and duly disclosed in the books of accounts This was the paper on which forecasts were made of the money to be received in near future from the members. In fact higher amount has been credited in the books of account 2 Sunilkumar Modh Sahjanand Enterprise 500000 An amount of Rs.500000 (400000- 100000) has been received on 12.02.05 & 15.02.05 by cheque and duly disclosed in the books of accounts. This was the paper on which forecasts were made of the money to be received in near future from the members and which has in fact been received. 3 Gitaben Prajpati Neelkanth Enterprise 300000 An amount of Rs.595000 (250000 +245000 + 100000) has been received on 19.02.05, 21.02.05 & 23.02.05 and duly disclosed in the books of accounts. This was the paper on which forecasts were made of the money to be received in near future from the members. In fact higher amount has been credited in the books of account. 4 Bhajansingh Gandhi (Sardarji) Sahjanand Enterprise 900000 Firstly, the amount in question is Rs.4.00 lacs and not 9.00 lacs as interpreted by the AO. The said fact can also be verified from the loose paper annexed. The total amount which has been received from him during the year under consideration is Rs.5.12 (0.80 + 3.30 + 1.00) lacs which is higher than Rs 4.00 lacs noted in the loose paper. 5 Pradeep Sanghvi Swaminarayan Enterprise 650000 An amount of Rs.650000 has been received on 14.02.05 by cheque and duly disclosed in the books of 35 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 accounts. As stated on this paper forecasts were made of the money 10 be received in near future from the members. 6 Meenaben Khatri Swaminarayan Enterprise 600000 An amount of Rs 625000 (5.25+0.50 +0.50) has been received on 08.02.05, 20.02.05 &22.02.05 respectively and duly disclosed m the books of accounts. As stated earlier, on this paper forecasts were made of the money to be received in near future from the members. In fact higher amount has been receive from him. 7 2500000 This is a dumb figure against which no name etc. has been mentioned. Such noting may have been made to anticipate the receipts in near future, amount to be deposited in the bank to honour the cheques issued, payments promised in near future etc. 26.3. It was further argued that the housing schemes of the aforementioned concern(s) were entitled to deduction u/s.801A/801B of the Act and it would defy logic to conceal such receipts. The appellant would therefore have no motive to conceal these receipts. In case the addition(s) were still to be sustained then corresponding relief u/s 801A/801B was also to be provided. Decisions reported in 140 Taxman 81(Del), 77 ITD 522 (Pune), 67 TTJ 602(CHD), 81 Taxman 164, were cited in support of this contention.” 18.3 The findings of the ld. CIT(A) deleting the addition are at paragraph No.26.4 of his order as under:- “25.4. The contentions/details on record/reply of appellant dated 12/12/2006 etc. were carefully perused. It is seen that the appellant had offered credible explanation in respect of the entries in the impugned document and had furnished relevant evidence in form of copies of account. The A.O has not made out a case that these receipts were over and above the agreed consideration and/or constituted undisclosed premium. The details filed during the assessment proceeding/additional evidence has not been examined / rebutted / disproved in either the assessment order or the remand report dated 23/4/2008, which is duly endorsed by the Addl. CIT, vide his letter No.9, dated 25/4/2008. 36 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 In these facts and circumstances and considering the aforementioned contentions, the addition of Rs.60 lakhs made, is rendered unsustainable: It is therefore deleted and the related ground of appeal is allowed.” 18.4 The ld. DR was unable to controvert the factual findings of the ld. CIT(A) that the factum of figures noted in the documents were recorded in the books of the assessee as received primarily by way of cheques which fact was examined by the Assessing Officer also in remand proceedings and no adverse comments were made by him. Therefore, with regard to amounts so found recorded in the books of the assessee, the Revenue, we find, has no case with the Assessing Officer having accepted the fact that the same were duly recorded in the books of assessee by way of banking entries. With respect to the amount of Rs.25 lakhs, it is not disputed that there was no description or narration of any sort against this figure while against the rest of the figures, there were name mentioned of different enterprises of the assessee and name of persons to whom the amounts were attributed. Therefore, the contention of the assessee was that this was a dumb figure accepted by the ld. CIT(A), we hold, is correct and his explanation thereof that the figure may have been noted in anticipation of receipts in future appears to be plausible. The order of the ld. CIT(A), therefore, deleting the entire addition made of Rs.60 lakhs on account of notings in document page 36 of Annexure-A1 is upheld. Ground of appeal No.14 of the Revenue is dismissed. 19. Ground No. 15 raised by the Revenue reads as under:- “15. The CIT(A) has erred in law and on fact in deleting the addition of Rs.46,89,254/- made on the basis of seized document No. 244 and 249 of Annexure A-1 without considering the nature of entries as well as the findings of the Assessing Officer.” 19.1 The issue disputed in the above ground arises from the addition made by the Assessing Officer basis page 42 of Annexure-A1 seized from Hotel 37 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 Neeltop, amounting to Rs.46,89,254/- which was deleted by the ld. CIT(A). As per the Assessing Officer, the document revealed receipts from the hotel business of various months, i.e. April 2004, May 2004, receipts between 24.01.2004 and 28.02.2004 and for the month of March 2004. The assessee was asked to explain the contents of the same, in response to which he stated that the document was a register maintained by employees as rough notings; that the receipts of April 2004 and May 2004 noted by the Assessing Officer was incorrect and as per the document itself the figures came to be far less than that noted by the Assessing Officer. It was pointed out while the Assessing Officer had noted the document to reveal receipts of April 2004 at Rs.7,59,000/-, the correct amount as per the document was Rs.1,87,000/-. Similarly, while as per the Assessing Officer the document revealed receipts of Rs.105,610/- for May 2004, the correct amount was Rs.1,16,500/-. The assessee further pointed out that the receipts, as per his books, for these two months was higher than that recorded in the impugned document being Rs.1,54,020/- and Rs.1,53,357/- respectively for the month of April and May 20004. The AO, however, held that the assessee was only feigning ignorance about the correctness of the total in the document since the entries were quite legible and were segregated amount-wise or date-wise. The Assessing Officer admitted that the receipts shown in the books for February and March 2004 was higher than the receipts for these months as noted in the impugned document; however, the receipts for April and May 2004 were grossly suppressed from the seized document. Noting that the total receipts for the year disclosed by the assessee was Rs.25,86,654/- which was suppressed, the Assessing Officer rejected the books of the assessee u/s 145(3) of the Act and estimated the receipt for the entire year at Rs.72.75 lakhs on the analogy for April and May 2004, and made a net addition of the balance i.e. Rs.46,89,254/- . 38 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 19.2 Before the ld. CIT(A), the assessee reiterated the contention made before the Assessing Officer that the Assessing Officer had incorrectly taken the figures disclosed in the documents at Rs.7.59 lakhs and Rs.1.05 lakhs for the month of April and May 2004 when the actual figures were Rs.1.87 lakhs and Rs.1.16 lakhs respectively. He further contended that since the Assessing Officer had proceeded on an incorrect presumption, his rejection of books of accounts and accordingly the estimation of receipts from the hotel business for the entire year was entirely off the mark and needed to be deleted. The Assessing Officer found the contentions of the ld. Counsel for the assessee to be true as far as the fact of incorrect total taken by the Assessing Officer from the document before him pertaining to the month of April and May, 2004. He found the totals pointed out by the assessee to be correct. Finding so, he held that the entire premise with the Assessing Officer for rejecting the books of the assessee and estimating the receipts for the year no longer survive and accordingly deleted the addition made of Rs.46,89,254/-. His findings in this regard are at paragraph No.27.4 of his order as under:- “27.4 On careful consideration of the details on record and perusal of the copy of the impugned document No.244 of Annexure A-1, the contentions of the appellant are borne out. The A.O. has taken incorrect totals, at a much higher figure. The correct totals came to be, as informed by the appellant, to the A.O. in his reply dated 12/12/2006. Therefore, there was no occasion for the AO to apply the analogy and estimate receipts on the basis of April and May, 2004. The estimated additions made by the A.O. is, therefore, not tenable, particularly, in absence of any evidence to this effect. It is therefore deleted. The related ground of appeal is allowed.” 19.3 The ld. DR was unable to controvert the factual findings of the ld. CIT(A) to the effect that the Assessing Officer had taken incorrect total depicted in the document pertaining to the month of April and May 2004 at Rs.7.59 lakhs and Rs.1.05 lakhs as opposed to the correct total of Rs.1.87 lakhs and Rs.1.16 lakhs respectively. In view of the same, we do not find any 39 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 infirmity in the order of the ld. CIT(A) holding that the Assessing Officer, therefore, had proceeded on an incorrect premise that the assessee had suppressed receipts of hotel business for the month of April and May 2004; and therefore his rejection of books of accounts u/s 145(3) of the Act and estimation of income for the entire year was not tenable in law or even on facts. Even otherwise, the document revealed data only for two months pertaining to the impugned year i.e. April and May 2004, and even for the sake of argument ,though it has been found to be incorrect by the ld. CIT(A), the figures noted in the seized document are taken to be correct, the Assessing Officer cannot resort to extrapolation of this data for the entire year in the absence of any material found during search pertaining to the rest of the months of the year. The addition, in any case, could have been made only with respect to the data found for the months in the document, i.e. April and May 2004, the exercise of extrapolation of this data by the Assessing Officer for the rest of the year, in any case, is not tenable. In view of same, we uphold the order of the ld. CIT(A). Ground of Appeal No.15 raised by the Revenue is dismissed. 20. Ground No.16 raised by the Revenue reads as under:- “16. The CIT(A) has erred in law and on fact in deleting the addition of Rs.99,94,203/- made on the basis of seized document of Annexure A-26 of 28 without considering the nature of entries as well as the findings of the Assessing Officer.” 20.1 The issue raised in the above ground relates to the addition made on the basis of certain books of accounts and loose papers inventorized as Annexure-A26, A27 & A28 found during the course of survey u/s 133A of the Act at the site of Neelkanth-II, Ahmedabad. The assessee contended that the contents of the documents impounded pertained to Neelkanth-II Project which was not the project carried out by the assessee, but by one Shri Rajubhai 40 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 Vaghela who was the proprietor of Shree Hari Builders in which the said project was being carried out. The Assessing Officer, however, rejected the contention of the assessee and held Shree Hari Builders/Shri Rajubhai Vaghela to be a dummy or benamidar of the assessee for the reason that though the assessee had full information about Shri Rajubhai Vaghela, but he did not furnish information establishing that the document impounded belong to him; also the Assessing Officer found that even after survey at the site of Shri Rajubhai Vaghela, he did not turn up to claim that the impounded material belonged to him. The Assessing Officer accordingly held that this clearly proved that Shri Rajubhai Vaghela was a dummy person or confidant of the assessee in whose name the assessee was carrying on the construction business in the name of Shree Hari Builders. Accordingly, analyzing the contents of the document, he found that it contained details of receipts during the year in cash and cheque amounting in all to Rs.99,94,203/- and considering the initial investment for land and for construction, he treated the entire receipts as his net profit from the scheme and added it to the income of the assessee. 20.2 Before the ld. CIT(A), the assessee contended that all the documents had been seized from a third party of which the appellant was neither a shareholder nor a director. The proprietor of Shree Hari Builders, he pointed out, is not the assessee. He further contended that the Assessing Officer did not make any direct inquiries then and also did not provide adequate opportunity to the assessee to furnish the requisite details. Accordingly, the assessee furnished additional evidence by way of balance-sheet of Shree Hari Builders, copy of return of income, confirmation of Shri Rajubhai Vaghela - which were all confronted to the Assessing Officer who did not refute nor give any adverse findings with respect to the additional evidences filed. The ld. CIT(A) also noted that Shree Hari Builders had disclosed Rs.1.25 crores as 41 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 receipts during the year as opposed to the amount attributed by the Assessing Officer to the project Neelkanth-II from the impounded document amounting to Rs.99.94 lakhs. Noting that Shree Hari Builders had accounted for more than the receipts noted in the impounded documents and considering the fact that Shree Hari Builders had disclosed all the amounts in its books of accounts and returned income from the project in its return of income filed, he deleted the entire addition made by the Assessing Officer. His findings in this regard are at paragraph No.28.2 of his order as under:- “28.2. The contentions were carefully considered. It is seen from the additional evidence filed that M/s Hari builders was a proprietorship concern and the impugned documents related to it. Moreover, the entries to this impugned documents were apparently incorporated in the relevant returns of income filed by that concern. As such, the addition could not have been made in the hands of the appellant. It is, therefore, deleted and the related ground of appeal, allowed.” 20.3 Before us, the ld. DR was unable to refute or controvert the factual findings of the ld. CIT(A) that the additional evidences filed by the assessee demonstrating the fact that the receipts revealed in the document seized from the site of Neelkanth-II were all accounted for in the books of Shree Hari Builders and profits thereon disclosed in the return of income filed for the said year and the fact that the assessee was not the proprietor of the said concern was not refuted by the Assessing Officer in his remand report. In view of this fact alone, we hold that the Assessing Officer is precluded from now challenging the deletion of addition made by the ld. CIT(A) after considering the remand report of the Assessing Officer on the additional evidences filed by the assessee. In view of the above, ground of appeal No. 16 raised by the Revenue is also dismissed. Ground of appeal No.16 is thus dismissed. 42 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 21. Ground No.17 raised by the Revenue reads as under:- “The CIT(A) has erred in law and on facts in deleting the addition of Rs. 17,39,000/- out of Rs.25 lacs made on account of unexplained investment in various household goods, without considering the fact that the assessee has not shown withdrawals for the same and the value of goods recorded in the books of account had already been deducted by the Assessing Officer. The Ld. CIT(A) has further erred in giving telescoping benefit of Rs.9.33 lacs of unexplained expenditure in jewellery with that of unexplained expenditure in household goods which is against the accounting principle as an asset cannot be explained by another asset.” 21.1 The Assessing Officer made addition of Rs.25 lakhs to the income of the assessee on account of unexplained investment in various luxurious items found at the time of search in the residence of the assessee being 20 sofas, colour TV sets, 8-10 Air Conditioners, superior fixtures and fittings, imported fridges, steam chamber, screen projectors, etc. The Assessing Officer estimated the value for these items to be Rs.38,02,054/- and noting that the assessee had disclosed investment in furniture to the tune of Rs.13.02 lakhs, he accordingly made addition of the difference, amounting to Rs.25 lakhs, in the assessment order framed. The Assessing Officer, while dealing with the issue of jewellery found in the locker of the assessee which the assessee had explained as having purchased during the year from one Mahendra & Co. and paid out of withdrawals from his capital account, had held the evidences filed by the assessee in this regard being purchase bill of Mahendra & Co. to be bogus, and accordingly he treated the source of investment in jewellery to be unexplained and added the same to the income of the assessee. While doing so, he noted in his order that the withdrawals made from his capital account were surely not used for investment in jewellery, but were used for his personal purposes. The personal expenditures and other luxuries, the assessee had not disclosed in the books of accounts. He noted that the expenditures for personal purposes and luxuries had in fact being debited by 43 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 the assessee in the name of purchase of jewellery. The Assessing Officer, however, while making addition on account of unexplained investment in furniture and luxuries did not give benefit of this findings while making addition of Rs.25 lakhs on account of the same to the income of the assessee. 21.2 The ld. CIT(A), however, allowed the assessee the benefit of this finding by the Assessing Officer and it is aggrieved by this benefit of telescoping given by the ld. CIT(A) that the Revenue is in appeal before us in the above ground. 21.3 We have heard both the parties. We find no infirmity in the order of the ld. CIT(A) giving the benefit of telescoping of Rs.9.33 lakhs to the addition made on account of unexplained expenditure in the luxuries and furniture amounting to Rs.25 lakhs. It is not disputed and in fact it has been clearly recorded in the order of the Assessing Officer at paragraph no.2 while dealing with the issue of jewellery found in the locker of the assessee that the assessee’s explanation of the same having been sourced from withdrawals made from his capital account was incorrect and the Assessing Officer had clearly noted that these withdrawals in fact had been used towards personal expenditure and other luxuries which were not disclosed in the books of the assessee. 21.4 The ld. DR was unable to controvert this fact on record. In the light of the same, therefore, the ld. CIT(A), we hold, has rightly given the benefit of telescoping to the addition made by the Assessing Officer on account of unexplained source of investment in luxuries and furniture when, as per the Assessing Officer himself, the withdrawals from the capital of the assessee to the tune of Rs.9.33 lakhs stated by him to be utilized in investment in jewellery were actually invested in jewellery and furniture. In view of the same, we do 44 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 not find any merit in the ground raised by the Revenue and accordingly dismiss ground No.17 raised by the Revenue. Ground No. 17 raised by the Revenue is accordingly dismissed. 22. In the result, the appeal filed by the Revenue bearing ITA No. 2548/Ahd/2008 is dismissed. 23. Now, we take up the appeal filed by the assessee i.e. ITA No. 2150/Ahd/2008. 24. The ground No.1 taken by the assessee reads as follows:- “1. The learned Commissioner of Income Tax (Appeals) has erred in confirming the disallowance made by the A.O. of Rs. 5835/ for the alleged excess depreciation claimed by the appellant.” 24.1 The issue raised in above ground relates to disallowance of depreciation amounting to Rs.5835/- confirmed by the ld. CIT(A). The assessee had claimed depreciation @ 25% on electrical installation and fittings installed in hotel buildings, while the authorities below had held the applicable rate of depreciation on the same to be 15%. Accordingly, the excess claim of Rs.5,835/- has been denied to the assessee. 24.2 Before us, the contention of the ld. Counsel for the assessee was that the issue is squarely covered in favour of the assessee by the decision of the Hon’ble Jurisdictional High Court in the case of CIT Vs. Express Resorts & Hotels Ltd, reported in [2015] 56 taxmann.com 171 (Gujarat) – Copy of the same was placed before us. Referring to the same, it was pointed out that the Hon’ble High Court in the said case had categorically held that electrical 45 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 installations and fittings even if installed in a hotel building would be regarded as plant and the same were entitled to depreciation @ 25%. 24.3 The ld. DR was unable to distinguish the said decision before us. In view of the same, we agree with the ld. Counsel for the assessee that the disallowance of depreciation on electrical installations and fittings in hotel buildings of the assessee by applying rate of 15% as against 25% applied by the assessee treating it as plant and machinery was contrary to law. The issue, we agree with the ld. Counsel for the assessee, is squarely covered in favour of the assessee by the decision of the Hon’ble Jurisdictional High Court in the case of CIT Vs. Express Resorts & Hotels Ltd (supra). In view of the same, the disallowance made of depreciation amounting to Rs.5,835/- is directed to be deleted. Ground No. 1 raised by the assessee is accordingly allowed. 25. Ground No. 2 raised by the assessee reads as under:- “2. The learned Commissioner of Income Tax (Appeals) has erred in confirming the disallowance of Rs.22,837/- made by the A.O. @ 20% of the expenses on telephone/ mobile.” 25.1 Ground No. 2 was stated to be not pressed before us. Accordingly, ground No.2 is dismissed as not pressed. 26. Ground No. 3 raised by the assessee reads as under:- “3. The learned Commissioner of Income Tax (Appeals) has erred in partly confirming the addition made by the Assessing Officer u/s.69B of the Act for the alleged unexplained investments i.e. to the extent of Rs. 14,90,312/- for construction of Swaminarayan Farm residence and to the extent of Rs.5,61,655/- in construction of Hotel Neelkanth out of the total additions made of Rs.25,67,158/- i.e. Rs. 17,23,126/- & Rs.8,44,032/- respectively.” 46 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 26.1 The issue relates to addition made to the income of the assessee on account of unexplained investment in construction of residential house and Hotel Neelkanth, amounting to Rs.14,90,312/- and Rs.5,61,655/- respectively. The addition was made basis the valuation of the said properties by the DVO. The Assessing Officer noted that, as per the DVO’s report, the cost of construction of the Swaminarayan Farm Residence as on 31.03.2005 was Rs.31,04,193/- as against the disclosed cost by the assessee of Rs.13,81,067/-. In the case of Hotel Neelkanth, the Assessing Officer noted that the cost of construction disclosed by the assessee was at Rs.32,541/- as against the cost of construction estimated by the DVO at Rs.8,76,573/- - i.e. a difference of Rs.8,44,032/- in the impugned year. As such, the total addition came to be Rs.25,67,156/- in respect of Swaminarayan Farm Residence and Hotel Neelkanth. The same was confirmed by the ld. CIT(A). 26.2 The ld. Counsel for the assessee pointed out that this issue came up for consideration before the ITAT in the preceding year, i.e. AY 2004-05 and was decided in favour of the assessee. Our attention was drawn to the order of the ITAT in ITA No. 2149/Ahd/2008 at paragraph Nos. 7-11 of the order as under:- “7. Taking up the said ground, the ld.counsel for the assessee contended that the issue/grievance of the assessee against order of the ld.CIT(A) was in relation to confirmation of addition made to the income of the assessee on account of unexplained investment in property, under section 69B of the Act, amounting to Rs.20,26,120/- . Drawing our attention to the facts of the case from page nos.27 to 31 of para-(d) of the assessment order, the ld.counsel for the assessee pointed out that the impugned addition related to investment in two properties, and the addition related to the difference in investment shown by the assessee and that determined by the DVO as under: Sr. No. Property Amount shown as invested by the assessee during the year Amount of investment estimated by the DVO 47 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 i. Swaminarayan Farm, SG Highway, Ahmedabad 1,85,894/- 4,17,830/- Difference of Rs.2,31,936/- added to the income of the assessee under Section 69B of the Act. ii. Hotel Neelkanth 4,82,349/- 28,49,084 Difference of Rs.23,66,735/- added to the income of the assessee under Section 69B of the Act. He pointed out that the Ld.CIT(A) restricted the amount of undisclosed investment to Rs.2,00,599/- in respect of Swaminarayan residence, and Rs.18,25,521/- in respect of Hotel Neelkanth. 8. With respect to the residential house, it was pointed out that the DVO had determined the total value of the property at Rs.1,73,12,146/-, while the assessee had declared total investment in the same upto 31.3.2004 at Rs.77,02,238-. The AO took the cost of construction, as determined by the DVO and taking this as the basis for 31.3.2004, he determined the cost of construction as at the end of each preceding year, and in the same ratio. Accordingly, the cost of construction as per the valuation report as on 31.3.2004 for the impugned year i.e. Asst.Year 2004-05 was taken at Rs.4,17,830/-, and noting the cost of construction disclosed by the assessee for the year at Rs.1,85,894/-; the difference of Rs.2,31,936/- was added to the income of the assessee as unexplained investment in the residential house during the year. Similarly, in respect of investment made in Hotel Neelkanth, the DVO determined the cost of construction as on 31.3.2004 at Rs.28,49,084/- while the assessee showed cost of construction of Rs.4,82,349/-. The difference in the cost of construction of Rs.23,66,735/- was treated as undisclosed investment in this property in the absence of any information furnished by the assessee to justify its cost of construction in the property. 9. The ld.CIT(A) reduced the addition on account of unexplained investment in the residential house from Rs.2,31,936/- to Rs.2,00,599/- allowing adjustment to the DVO's valuation on account of self-supervision/own purchases/variation in CPWD/local rates etc. at the rate of 15% as opposed to 7.5% granted by the DVO. With respect to Hotel Neelkantha, similar deduction of 15% was allowed in the estimated cost of construction; thus reducing unexplained investment made during the impugned year from Rs.23,66,736/- to Rs.18,25,521/- . 10. The argument of the ld.counsel for the assessee before us was that determination of cost of construction was referred to the DVO by the AO without rejecting the books of accounts of the assessee, which he pointed out has been categorically held by the Hon'ble Apex Court in the case of Sargam 48 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 Cinema, 328 ITR 513 (SC) to be not in accordance with law. He further pointed out that identical reference made in the case of Sanjay H. Thakkar, brother of the assessee, was deleted by the ITAT, finding the same to be based on an invalid reference to DVO, on the basis of the decision of the Hon'ble Apex Court in the case of Sargam Cinema (supra). This decision of the ITAT he pointed out was confirmed by the Hon'ble jurisdictional High Court also. Our attention was drawn to the order of the ITAT in the case of Sanjay H. Thakkar, in IT(SS)A.No.849/Ahd/2010 dated 18.1.2016 and judgment of the Hon'ble High Court confirming the finding of the ITAT in Tax Appeal No.832 of 2016 dated 22.12.2016.Copies of both the orders were placed before us. 11. The ld.DR, though supported order of the ld.CIT(A) but was unable to controvert either the factual contention of the ld.counsel for the assessee that the reference for determination of cost of construction in the property of the assessee was made to the DVO without rejecting the books of accounts of the assessee; nor distinguish the decision of the Hon'ble Apex Court in the case of Sargam Cinema (supra) laying down the proposition of law that no reference to the DVO could be made without rejecting the books of accounts of the assessee. In view of the same, the decision rendered by the ITAT in the case of brother of the assessee, Shri Sanjay H. Thakkar which was confirmed by the Hon'ble jurisdictional High Court also, applies to the facts of the present case, following which, we hold that the addition made on account of unexplained investment in two properties of the assessee amounting to Rs.20,26,120/-, was not sustainable in law, since it was based on reference made to the DVO, which was illegal and not in accordance with law.” 26.3 We have noted from the above that the ITAT deleted the addition made noting that the reference made to the DVO for valuation of the property was not in accordance with the law having been made without rejecting the books of accounts of the assessee. Reliance was placed on the decision of the Hon’ble Apex Court in this regard in the case of Sargam Cinema Vs. CIT, reported in [2011] 197 Taxman 203 (SC). The ITAT noted that identical reference made in the case of Shri Sanjay H. Thakkar, brother of the assessee, was deleted by the ITAT finding the reference made to the DVO to be invalid on the basis of the decision of the Hon’ble Apex Court in the case of Sargam Cinema (supra) and this decision of the ITAT was confirmed by the Hon’ble jurisdictional High 49 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 Court also. The ld. DR was unable to point out any distinction either on facts or on law on the issue before us. In view of the same, we agree with the ld. Counsel for the assessee that the issue of addition made on account of unexplained investment in Swaminarayan Farm Residence and Hotel Neelkanth, amounting in all to Rs.25,67,158/-, stands covered in favour of the assessee by the decision of the ITAT in the case of the assessee itself in the immediately preceding year i.e. AY 2004-05. The addition, therefore, is directed to be deleted. Ground No. 3 raised by the assessee is thus allowed. 27. Ground No. 4 raised by the assessee reads as under:- “4. The learned Commissioner of Income Tax (Appeals) has erred in confirming the addition to the extent of Rs.5,99,531/- for the alleged unaccounted investment in jewellery found from the locker belonging to Smt. Kanaklata U. Thakkar and Ramesh Sachdev and from residence.” 27.1 The issue raised in above ground relates to addition made to the income of the assessee on account of investment in jewellery found from the locker and residence amounting to Rs.5,99,531/- held to be unexplained by the Assessing Officer and confirmed by the ld. CIT(A). 27.2 The facts relating to this issue have been brought out in Ground No.3 of the Revenue’s appeal. For the sake of brevity and convenience, the facts are being restated here, being that 1336gms of jewellery valued at Rs.8,52,355/- was found in the locker of the assessee and 1441gms of jewellery valued at Rs.2,57,824/- was found at the residence of the assessee, which was treated as unexplained and added to the income of the assessee. The ld. CIT(A) gave the assessee the benefit of notification issued by the CBDT and judicial decisions in this regard treating 1150 gms of jewellery to be treated as explained in the hands of the assessee vis-à-vis of the family members and 50 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 also gave the benefit of jewellery attributed to the maids of the assessee of 469 gms as explained by the spouse of the assessee during search. Accordingly, the ld. CIT(A) treated only 866.9 gms jewellery found in the locker as unexplained and confirmed addition to the tune of Rs.5,99,531/- against which the assessee has come up in appeal before us. 27.3 The explanation of the assessee with regard to this jewellery which was found in the locker of the assessee was that it was purchased from one Mahendra & Co., sourced out of withdrawals reflected in the books of accounts. The Assessing Officer, on inquiry made in this regard, found that the said person was not in existence on the date of the supposed sale. The ld. CIT(A), based on this finding of the Assessing Officer which remained uncontroverted, confirmed the addition to the extent of Rs.5.99 lakhs. The assessee was unable to convince us in any manner about the genuineness of the alleged purchases made of the jewellery from Mahendra & Co. He was unable to controvert the findings of the inquiry of the Assessing Officer that the said party was not in existence when the sale of the jewellery purportedly was made. In view of the same, we see no reason to interfere in the order of the ld. CIT(A) confirming the addition of unexplained investment in jewellery to the tune of Rs.5,99,531/-. Ground of appeal No. 4 of the assessee is dismissed. 28. Ground No. 5 raised by the assessee reads as follows:- “5. The learned Commissioner of Income tax (Appeals) has erred in confirming an addition made by the A.O. to the extent of Rs.7,67,000/- on account of alleged undisclosed investment in Valuables found from the residence.” 28.1 The issue in the above ground relates to the addition made to the income of the assessee on account of unexplained investment in luxuries and 51 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 furniture found in the residence of the assessee. The AO valued the luxuries and household items found at Rs.38.02 lacs and found assessee to have disclosed investment in the same to the tune of Rs.13.02 lacs , the balance accordingly of Rs.25 lacs was added to the income of the assessee by the AO as investments made from unexplained sources. 28.2 The ld. CIT(A) restricted the same to Rs.7,67,000/-giving the benefit of telescoping from the admitted cash withdrawals of Rs.9.33 lacs made by the assessee which were found by the Assessing Officer to have been utilized for purchase of luxuries and personal items out of its books. Further, the ld. CIT(A) held that, on a holistic consideration, it would be justified to estimate the total expenditure on household items at Rs.30 lakhs and noting that the assessee had disclosed expenditure to the tune of Rs.13 lakhs, he estimated the unaccounted expenditure at Rs.17 lakhs and after giving the benefit of telescoping of Rs.9.33 lakhs, he treated the remaining amount of Rs.7.67 lakhs as unexplained expenditure in furniture and household items. His findings in this regard are at page No. 29.4 of the order as under:- “On perusal of the details/contentions of the A.O., it is apparent that the expenses disclosed by the appellant, at Rs. 13 lakhs were not adequate. There is no evidence that the disclosed household withdrawals were also to an extent which could justify these acquisition. On a holistic consideration, it would be justified to estimate the total expenditure on the observed household items/white goods/furniture, etc, at Rs.30 lakhs, out of which the disclosed expenditure is Rs.13 lakns. Hence estimated expenditure of Rs.17 lakhs is unaccounted/unexplained. After the benefit of telescoping of Rs.9.33 lakhs, the unexplained expenditure would remain at Rs.767 lakhs. As such, the addition made by the A.O. is restricted to Rs.7.67 lakhs. The related ground of appeal is adjudicated accordingly.” 28.3 The ld. Counsel for the assessee before us relied on the decision of the ITAT, Chandigarh Bench in the case of ITO Vs. Balbir Singh Sekhon, reported in [2012] 24 taxmann.com 84 (Chandigarh-Trib.) for the proposition that 52 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 where the Assessing Officer had estimated household expenses of the assessee at a higher sum without assigning any reason, the addition could not be sustained. 28.4 We have heard both the parties. We do not find any infirmity in the order of the ld. CIT(A). On the contrary, we find that ld. CIT(A) has taken a holistic view of the matter and given due benefit to the assessee as required. The addition made by the Assessing Officer on account of unexplained investment in luxuries and furniture to the tune of Rs.25 lakhs. The ld. CIT(A) has given the benefit of telescoping from the withdrawals reflected in the books of accounts to the tune of Rs.9.33 lakhs attributed by the Assessing Officer himself for the purposes of purchasing luxurious items outside the books. Further, the ld. CIT(A) has estimated the value of items so found with the assessee at Rs.30 lakhs as opposed to Rs.38,02,054/- valued by the Assessing Officer. On perusal of the order of the Assessing Officer, it is revealed that the assessee was found to be in possession of household articles more than that recorded in his books. The Assessing Officer has noted that while the assessee had disclosed in his books only one TV, there were 3 TVs found in his residence. Similarly, while the assessee had disclosed only 1 AC, there were 5 ACs found in the assessee’s house. Similarly, there were several refrigerators found which was not disclosed in the books of accounts of the assessee as also exercise machine, steam bath chamber, screen projector etc.. Therefore, there were many items which were categorically found not disclosed in the books of the assessee. The fact situation, therefore, calls for addition to be made on account of unexplained investment in these assets and the ld. CIT(A) has been fair enough in scaling down the valuation of the assets made by the Assessing Officer from Rs.38 lakhs to Rs.30 lakhs, and further giving the benefit of telescoping against the same. The ld. Counsel for the assessee was unable to point out any perversity in the valuation attributed by 53 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 the ld. CIT(A) to these items at Rs.30 lakhs. Further the decision relied by the ld. Counsel for the assessee before us in the case of Balbir Singh Sekhon (supra), we find, is of no assistance since the findings of the ITAT of the said case was to the effect that where no reasons have been assigned to valuation of household expenses at higher amount, the addition is not sustainable. In the present case, however, there are valid reasons for making addition on account of unexplained investment. The articles found at the residence of the assessee being far more than that recorded in the books of the assessee. Therefore, in view of the above, the addition confirmed by the ld. CIT(A) to the tune of Rs.7.67 lakhs as undisclosed investment in valuables is, therefore, upheld. Ground of appeal No. 5 raised by the assessee is dismissed. 29. Ground of Appeal No. 6 raised by the assessee reads as under:- “6. The learned Commissioner of Income Tax (Appeals) has erred in confirming an addition of Rs.1,00,000/- for the alleged undisclosed expenditure u/s.69C of the Act on the basis of seized page-41 of Ann. -9 (Para 14 of the A.O.)” 29.1 The issue relates to addition made of Rs.1.5 lakhs by the Assessing Officer to the income of the assessee on the basis of notings contained in page No.41 of Annexure-A9 attributed as being payments made by the assessee to one Rasikbhai Patel, out of the books. The ld. CIT(A) interpreted the findings as reflecting 3 amounts of Rs.50,000/- each paid to one Shri Rasikbhai Patel whose name also found mention in the document and also held two of the payments to be made in cash and one in cheque noting the code “C” and “CHQ” written against them. The fact of cheque payment was also corroborated by the ld. CIT(A) from the books of the assessee. He accordingly deleted the addition made of Rs.50,000/- relating to cheque payment made 54 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 to Shri Rasikbhai Patel disclosed in the books of the assessee while the remaining Rs. 1 lakh was confirmed by him. The contention of the ld. Counsel for the assessee before us was a reiteration of that made to the authorities below that this document page No.41 of Annexure A9 was a dumb paper since it neither contained name of the person nor its associates, and the same was unsigned and undated. That it only contained the figure ‘50’ and it was not sure whether it represented income, receipt, expenditure or investment. That the paper was not in his handwriting, and it had no evidentiary value being a dump document. 29.2 The ld. DR, however, relied on the findings of the ld. CIT(A) at page No.51 as under:- (e) In respect of the addition of Rs. 1.50 lakhs on the basis of seized page 41 of Annexure A-9, it was argued that the document was a dumb paper. It did not contain the name of the appellant/his associate and was unsigned/undated. It is not known whether the figure 50 represented income, receipt, expenditure or investment and no specific question had been put to the appellant during the search/assessment proceedings. The paper was not in is handwriting, nor was found from his cabin and had no evidentiary value, being dumb document. The addition was therefore not justified.” 29.3 We have heard the rival contentions and we see no reason to interfere in the order of the ld. CIT(A) confirming the addition of Rs.1 lakh on the basis of page No.41 of Annexure A9 seized from the assessee. The ld. CIT(A) has analyzed the document and found the same to be corroborated with a cheque entry in the books of the assessee. He has noted that there were three figures of “50” written in the document against two of which “C” was written and against one “CHQ” was written. The name of one Shri Rasikbhai Patel was also found mention in the document. The ld. CIT(A) noted that the payment of Rs.50,000/- by cheque was accounted for in the books of the assessee and, therefore, he read the rest of the figures also as representing Rs.50,000/- and 55 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 the code “C” was to be representing cash. The addition was confirmed to the extent of Rs.1 lakh accordingly treating the notings to be either receipts or payments – both unaccounted in the books of the assessee. The ld. Counsel for the assessee has been unable to controvert the above facts and findings of the ld. CIT(A) with any convincing argument. In view of the same, we uphold the order of the ld. CIT(A) confirming the addition of Rs.1 lakh made to the income of the assessee on account of Annexure-A9, page No.41. Ground of appeal No.6 is accordingly dismissed. 30. Ground No. 7 raised by the assessee reads as under:- “7. The learned Commissioner of Income Tax (Appeals) has erred in confirming an addition made by the A.O. of Rs.66,42,935/- on account of seized papers A-18, Page-28 (Para 10 of the A.O.) as alleged sales proceeds of the godown sales not disclosed in the books of account of Dharmadev Housing Corporation, proprietary concern of the appellant.” 30.1 The issue relates to addition made to the income of the assessee on account of godown sales not disclosed in the books of the assessee. The basis for the disallowance was the information emanating from page No.28 of the Annexure-18 seized during search from the assessee. The said document contained entries reflecting booking of godown and the booking amounts received towards the building of the assessee namely Sahjanand Estate, Sarkhej constructed by Dharamdev Housing Corporation. The Assessing Officer found the payment received from the purchaser were shown to be much lesser extent in the regular books of accounts of the assessee. The Assessing Officer tabulated the party-wise date in his assessment order which totalled to Rs.66,42,935/- and added it to the income of the assessee. 30.2 Before the ld. CIT(A), the assessee stated that the document had been impounded from the office of 3 rd party and the assessee had nothing to do 56 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 with the said concern nor any control of the concerned premises. He, therefore, stated that the addition was unwarranted. The ld. CIT(A), however, noted that the details mentioned in the chart prepared by the Assessing Officer from the document mentioning the purchaser party and godown numbers purchased by them along with the amounts paid on comparison with entries relating to these parties in the books of the assessee were found to be much higher. The ld. CIT(A) noted that the assessee did not refute the fact that the godowns were sold to the specified parties listed in the document and noted in the books of accounts. He, therefore, held that a nexus was clearly established and accordingly noting no credible explanation given by the assessee, he upheld the addition made by the Assessing Officer of Rs.66,42,935/-. His findings in this regard are at paragraph no. 14.2 of his order as under:- “14.2 The contentions/decisions cited/details on record were perused carefully. It is seen from the chart prepared by the A.O. (page 26 of his order) that the purchaser party and godown numbers purchased by them, amounts paid by them, were specified. The receipts from these parties as entered in regular books was also specified by the AO and difference in receipts as per impugned document and as recorded was computed. The appellant has not refuted the fact that the godowns were constructed/sold to the specified parties which also appear as its customers. The nexus is therefore clearly established. The analogy for other assessment years does not apply in view of the direct and immediate nexus to the admitted business activity of godown construction and sales to these persons. Thus there is no infirmity in the action of the AO in making the addition of the differential total amount. Further as no credible explanation has been offered, the addition of Rs.66,42,935 is sustained and confirmed. The related ground of appeal is therefore dismissed.” 30.3 Before us, the ld. Counsel for the assessee was unable to controvert the factual finding of the ld. CIT(A) that the data found in the seized document page 28 of Annexure A-18 with respect to the purchasers and godown numbers tallied with that reflected in the books of the assessee while the amounts mentioned in the document were higher than that reflected in the 57 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 books of the assessee to the tune of Rs.66,42,935/-. In view of the same, we do not find any infirmity in the order of the ld. CIT(A) holding that a nexus of the data contained in the document seized with the assessee was clearly established and, as rightly pointed out by the ld. CIT(A), in the absence of any credible explanation given by the assessee for the said document there is no other recourse left but to confirm the addition of Rs.66,42,935/- made on account of the difference in the receipts as per the seized document and that reflected in the books of the assessee on account of sale of godowns. Ground of appeal No. 7 of the assessee is dismissed. 31. Ground No. 8 raised by the assessee is as follows:- “8. The learned Commissioner of Income Tax (Appeals) has erred in confirming an addition of Rs.3,54,273/- made by the A.O. for the alleged extra work receipts for the extra work carried out in different flats from the notings on seized Pg. Nos. 92, 94 & 95 of Ann X-1 ie. Rs.1,63,770/- (92), Rs. 75,138/- (94), and Rs.1,15,385/- (95) (as per Para 16 of the A.O.).” 31.1 The issue relates to addition made of Rs.3,54,273/- on the basis of seized document No.92, 94 and 95 of Annexure X-1. The contention was that the said document disclosed receipts of Rs. 3.54 lakhs for extra work done in the impugned year while the assessee had disclosed far more amount in his books amounting to Rs.13.04 lakhs. The authorities below, however, dismissed this contention of the assessee noting that the disclosed receipts were from members other than the ones mentioned in the impugned document. The ld. Counsel for the assessee was unable to controvert this factual finding of the authorities below. In view of the same, the addition made by the Assessing Officer and confirmed by the ld. CIT(A) amounting to Rs.3,54,273/- based on seized document Annexure-X1, page Nos. 92, 94 & 95, is upheld. Ground of appeal No. 8 of the assessee is dismissed. 58 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 32. Ground No. 9 raised by the assessee is as follows:- “The learned Commissioner of Income Tax (Appeals) has erred in not granting benefit of telescoping and not granting set off of alleged unaccounted income against alleged unexplained investment in various assets found during the course of search proceedings.” 32.1 The assessee has sought telescoping of unaccounted income against unaccounted investment. There is merit in this contention of the ld. Counsel for the assessee. The Assessing Officer is directed to grant the benefit of telescoping of the unaccounted income of the assessee against unaccounted investment in various assets as possible on facts and in law. Ground of appeal No. 9 is allowed in above terms. Ground No. 9 raised by the assessee is allowed. 33. In the result, the appeal filed by the assessee bearing ITA No. 2150/Ahd/2008 is partly allowed. 34. In the combined result, the appeal filed by the Revenue in ITA No. 2548/Ahd/2008 is dismissed, whereas the appeal of the assessee in ITA No. 2150/Ahd/2008 is partly allowed. Order pronounced in the open Court on 30/07 /2024 at Ahmedabad. Sd/- Sd/- (T.R. SENTHIL KUMAR) JUDICIAL MEMBER ( से क " #$क स ) (ANNAPURNA GUPTA) ACCOUNTANT MEMBER ( , ेख स ) Ahmedabad; Dated 30/07/2024 *btk 59 ITA No. 2150 & 2548/Ahd/2008 Assessee-Shri Umang Hiralal Thakkar-Cross Appeals AY : 2005-06 आदेश आदेशआदेश आदेश क琉 क琉क琉 क琉 灹ितिलिप 灹ितिलिप灹ितिलिप 灹ितिलिप अ灡ेिषत अ灡ेिषतअ灡ेिषत अ灡ेिषत/Copy of the Order forwarded to : 1. अपीलाथ牸 अपीलाथ牸अपीलाथ牸 अपीलाथ牸 / The Appellant 2. 灹瀄यथ牸 灹瀄यथ牸灹瀄यथ牸 灹瀄यथ牸 / The Respondent. 3. संबंिधत संबंिधतसंबंिधत संबंिधत आयकर आयकरआयकर आयकर आयु猴 आयु猴आयु猴 आयु猴 / Concerned CIT 4. आयकर आयकरआयकर आयकर आयु猴 आयु猴आयु猴 आयु猴)अपील अपीलअपील अपील (/ The CIT(A)- 5. िवभागीय िवभागीयिवभागीय िवभागीय 灹ितिनिध 灹ितिनिध灹ितिनिध 灹ितिनिध ,आयकर आयकरआयकर आयकर अपीलीय अपीलीयअपीलीय अपीलीय अिधकरण अिधकरणअिधकरण अिधकरण,/DR,ITAT, Ahmedabad, 6. गाड榁 गाड榁गाड榁 गाड榁 फाईल फाईलफाईल फाईल /Guard file. आदेशानुसार आदेशानुसारआदेशानुसार आदेशानुसार/ BY ORDER, TRUE COPY सहायक सहायकसहायक सहायक पंजीकार पंजीकारपंजीकार पंजीकार (Asstt. Registrar) आयकर आयकरआयकर आयकर अपीलीय अपीलीयअपीलीय अपीलीय अिधकरण अिधकरणअिधकरण अिधकरण ITAT, Ahmedabad 1. Date of dictation ............25.07.2024...... 1. Date on which the typed draft is placed before the Dictating Member :..... 26.07.2024 2. Other Member...29.07.2024..................... 3. Date on which the approved draft comes to the Sr.P.S./P.S...29.07.2024... 4. Date on which the fair order is placed before the Dictating Member for pronouncement...30.07.2024... 5. Date on which the fair order comes back to the Sr.P.S./P.S...30.07.2024................ 6. Date on which the file goes to the Bench Clerk...30.07.2024.......... 7. Date on which the file goes to the Head Clerk....... 8. The date on which the file goes to the Assistant Registrar for signature on the order............ 9. Date of Despatch of the Order..................