LATE SHRI NARSILAL ALIAS BABULAL S. JAIN THROUGH HIS L/R & HEIR SHRI. BHARAT KUMAR BABULAL JAIN, MUMBAI V. I.T.O. WARD-16(3)(2), MUMBAI

ITA 2600/MUM/2009

• Counselvise Citation: 260019914 RSA 2009
• Duration Of Justice: 4 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 10-07-2013
• Assessment Year: 1989-1990
• Appeal Filed On: 23-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ITA MUM; O P SINGH ITA MUM
• Assessee Lawyers: VIPUL B JOSHI
• Keywords: Unexplained investment; Business income; Search and seizure; Document seized; Opportunity of being heard; Retraction; Documents seized
• Section: 143(3); 131; 68; 69; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI .. , !'# $ $ $ $ ! %, & !'# !' BEFORE SHRI P.M. JAGTAP, AM AND SHRI SANJAY GARG, J M !./ I.T.A. NO. 2600 /MUM/2009 ( &) % $*% &) % $*% &) % $*% &) % $*% / / / / ASSESSMENT YEAR : 1989-90) LATE SHRI NARSILAL ALIAS BABULAL S. JAIN, THROUGH HIS L/R & HEIR SHRI BHARAT KUMAR BABULAL JAIN, 803, PARTIKSHA TOWER, R.S. NIMKAR MARG, FORES ROAD, MUMBAI 400 008. ) ) ) ) / VS. INCOME TAX OFFICER WARD 16(3)(2), ROOM NO. 224, IST FLOOR, MATRU MANDIR, GRANT ROAD, MUMBAI 400 004. #+ !./ PAN : ADBPJ 4685Q ( +, / // / APPELLANT ) .. ( -.+, / RESPONDENT ) !./ I.T.A. NO. 3139 /MUM/2009 ( &) % $*% &) % $*% &) % $*% &) % $*% / / / / ASSESSMENT YEAR : 1989-90) INCOME TAX OFFICER WARD 16(3)(2), ROOM NO. 224, IST FLOOR, MATRU MANDIR, GRANT ROAD, MUMBAI 400 004. ) ) ) ) / VS. LATE SHRI NARSILAL ALIAS BABULAL S. JAIN, THROUGH HIS L/R & HEIR SHRI BHARAT KUMAR BABULAL JAIN, 803, PARTIKSHA TOWER, R.S. NIMKAR MARG, FORES ROAD, MUMBAI 400 008. #+ !./ PAN : ADBPJ 4685Q ( +, / // / APPELLANT ) .. ( -.+, / RESPONDENT ) +, / 0 ! / APPELLANT BY : SHRI VIPUL B. JOSHI -.+, / 0 ! / RESPONDENT BY : SHRI O.P. SINGH ITA 2600 /MUM/2009 & ITA 3139/MUM/2009 2 !)$ / / // / DATE OF HEARING : 10-07-13 12* / / DATE OF PRONOUNCEMENT : 04-09-13 '3 / O R D E R PER P.M. JAGTAP, A.M . : THESE TWO APPEALS, ONE FILED BY THE ASSESSEE BEING ITA NO. 2600/MUM/2009 AND THE OTHER FILED BY THE REVENUE BE ING ITA NO. 3139/MUM/2009, ARE CROSS APPEALS WHICH ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A)- XVII, MUMBAI DATED 26-02-2009. 2. THE RELEVANT FACTS OF THE CASE GIVING RISE TO T HESE APPEALS ARE THAT A SEARCH AND SEIZURE ACTION U/S 132 OF THE INCOME TAX ACT, 1961 (THE ACT) WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF THE ASSESS EE ON 11-01-1989 WHEREIN CASH OF RS. 72,000/- AND JEWELLERY OF RS. 1,75,000/ - WAS FOUND. IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH U/S 132(4) OF THE ACT, THE ASSESSEE ADMITTED TO HAVE EARNED UNDISCLOSED INCOME OF RS. 23.08 LACS. IN RESPONSE TO NOTICE U/S 148 OF THE ACT, THE ASSESSEE , HOWEVER, DECLARED TOTAL INCOME OF RS. 4,15,000/- ONLY WHICH INCLUDED UNDISC LOSED INCOME OF RS. 3,73,000/-. IN THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT VIDE AN ORDER DATED 23-03-1993, THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED BY THE A.O. AT RS. 21,21,560/-. ON APPEAL, THE LD. CIT(A) UPHELD SUBSTANTIALLY THE ASSESSMENT MADE BY THE A.O. ON FURTHER APPEAL, THE TRIBUNAL VIDE AN ORDER DATED 10-10-1996 RESTORED THE MATTER TO THE FILE OF THE A.O. WITH A DIRECTION TO FRAME THE ASSESSMENT DE-NOVO AS THE ASSESSEE HAD AL READY EXPIRED ON 20-03- 1993 IN A MOTOR ACCIDENT AND THE LEGAL HEIRS OF THE ASSESSEE WERE REQUIRED TO BE BROUGHT ON RECORD. AS PER THE DIRECTION OF THE TRIBUNAL, A FRESH ASSESSMENT WAS FRAMED BY THE A.O. VIDE AN ORDER DAT ED 31-03-1999 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 21,07,000/- RETAINING MOST OF THE ADDITIONS AS WERE MADE IN THE ORIGINAL ASSESSMENT. AGAINST THE ITA 2600 /MUM/2009 & ITA 3139/MUM/2009 3 ORDER OF THE A.O. DATED 31-3-1999, THE ASSESSEE AGA IN PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO DISMISSED THE SAME VIDE A N ORDER DATED 30-9-1999 CONFIRMING THE ORDER OF THE A.O. DATED 31-03-1999 I N TOTO. THE ASSESSEE CHALLENGED THE SAID ORDER OF THE LD. CIT(A) BEFORE THE TRIBUNAL BY WAY OF AN APPEAL AND THE TRIBUNAL VIDE AN ORDER DATED 6-11-20 06 DISPOSED OF THE SAID APPEAL OF THE ASSESSEE RESTORING BACK THE MATTER AG AIN TO THE FILE OF THE A.O. WITH A DIRECTION TO MAKE THE ASSESSMENT DE NOVO AFT ER GIVING THE LEGAL HEIRS OF THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. AS PER THE DIRECTION OF THE TRIBUNAL, THE A.O. COMPLETED A FRESH ASSESSMENT VID E AN ORDER DATED 27-12- 2007 DETERMINING THE TOTAL INCOME OF THE ASSESSEE A T RS. 21,07,000/- BY RETAINING ALL THE ADDITIONS AS WERE MADE IN THE EAR LIER ASSESSMENT FRAMED VIDE ORDER DATED 31-3-1999. THE ADDITIONS SO MADE BY TH E A.O. WERE AS UNDER:- (I) UNDISCLOSED INCOME AS LOANS AND ADVANCES IN RS .12,50,000/- MONEY MARKET U/S 69 AS DISCUSSED ABOVE: (II) INTEREST ACCRUED ON LOANS AND ADVANCES RS. 2,50,000/- (III) DRAFT DISCOUNTING BUSINESS INCOME AS DISCUS SED RS. 3,00,000/- ABOVE. (IV) INVESTMENT WITH SHRI BHUPASINGH IN LAND RS. 2,87,000/- TRANSACTION U/S 69 AS DISCUSSED ABOVE. (V) CASH PAYMENT U/S 68 TO SHRI SHAMSUDDIN AS PER ASSESSEES DECLARATION U/S 132(4) RS. 20,000 /- ----------------- TOTAL INCOME RS.21,07,000/- ============ 3. AGAINST THE ORDER PASSED BY THE A.O. DATED 27-1 2-2007, THE ASSESSEE AGAIN WENT IN APPEAL BEFORE THE LD. CIT(A) CHALLENG ING THE VARIOUS ADDITIONS MADE BY THE A.O. THE MAIN CONTENTION RAISED ON BEHA LF OF THE ASSESSEE BEFORE THE LD. CIT(A) WAS THAT THE ADDITIONS MADE IN THE A SSESSMENT BY THE A.O. WERE BASED ON A STATEMENT RECORDED DURING THE COURSE OF SEARCH U/S 132(4) OF THE ACT WITHOUT TAKING INTO CONSIDERATION THAT THE SAID STATEMENT ESPECIALLY THE INCOME SURRENDERED THEREIN WAS RETRACTED BY THE ASS ESSEE. IT WAS CONTENDED ITA 2600 /MUM/2009 & ITA 3139/MUM/2009 4 ON BEHALF OF THE ASSESSEE THAT THE A.O. OUGHT TO HA VE EXAMINED THE VARIOUS ISSUES INVOLVED IN THE ASSESSMENT AFRESH AFTER TAKI NG INTO CONSIDERATION THE RETRACTION OF THE STATEMENT BY THE ASSESSEE WHEN HE WAS DIRECTED TO DO SO BY THE TRIBUNAL. KEEPING IN VIEW THAT THE ASSESSEE WAS NO MORE AND THE WITNESSES TO HIS STATEMENT WERE NOW STATING THAT TH E STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF SEARCH WAS N OT VOLUNTARY, THE LD. CIT(A) FOUND THAT THE TRUTH OF THE MATTER REMAINED IN BETWEEN THESE TWO CONTRADICTORY ASSERTIONS. HE, HOWEVER, WAS OF THE V IEW THAT THE ADDITIONS TO THE TOTAL INCOME OF THE ASSESSEE COULD NOT BE MADE MERELY ON THE BASIS OF DECLARATION MADE IN THE STATEMENT RECORDED DURING T HE COURSE OF SEARCH UNLESS THERE WAS SOME OTHER MATERIAL FOUND DURING T HE COURSE OF SEARCH TO CORROBORATE THE DECLARATION. ACCORDINGLY, HE PROCE EDED TO CONSIDER AND DECIDE THE ISSUES RELATING TO VARIOUS ADDITIONS MAD E BY THE A.O. TO THE TOTAL INCOME OF THE ASSESSEE TAKING INTO CONSIDERATION TH E DECLARATION MADE BY THE ASSESSEE RECORDED DURING THE COURSE OF SEARCH AS WE RE SUPPORTED BY OTHER MATERIAL FOUND DURING THE COURSE OF SEARCH. ON SUCH CONSIDERATION, HE CONFIRMED THE VARIOUS ADDITIONS MADE BY THE A.O. AG GREGATING TO RS. 21,07,000/- TO THE EXTENT OF RS. 8,83,750/- AND ALL OWED THE ASSESSEES APPEAL PARTLY VIDE HIS APPELLATE ORDER DATED 26-02-2007. AGGRIEVED BY THE SAME, THE ASSESSEE AND THE REVENUE BOTH ARE IN APPEAL BEFORE THE TRIBUNAL. 4. THE ISSUES RAISED IN GROUND NO. 1 OF THE REVENU ES APPEAL AND GROUND NO. 1 & 2 OF THE ASSESSEES APPEAL ARE GENERAL IN N ATURE WHICH WILL BE CONSIDERED WHILE DECIDING THE ISSUES RAISED IN OTHE R GROUNDS DEALING WITH VARIOUS ADDITIONS ON MERIT, WHENEVER IT IS FOUND TO BE RELEVANT. 5. GROUND NO. 3 & 4 OF THE ASSESSEES APPEAL AND G ROUND NO. 2 (I) & 2(III) OF THE REVENUES APPEAL INVOLVE COMMON AND INTERLIN KED ISSUES RELATING TO THE ADDITIONS OF RS. 12,50,000/- AND RS. 2,50,000/- MAD E BY THE A.O. ON ACCOUNT OF INVESTMENT ALLEGEDLY MADE BY THE ASSESSEE IN THE LOANS AND ADVANCES AND ITA 2600 /MUM/2009 & ITA 3139/MUM/2009 5 INTEREST EARNED THEREON WHICH HAD BEEN SUSTAINED BY THE LD. CIT(A) TO THE EXTENT OF RS. 5 LACS AND RS. 1 LAC RESPECTIVELY. 6. DURING THE COURSE OF SEARCH, A DOCUMENT IDENTIF IED AS PAPER 39 WAS FOUND AND SEIZED. IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH, THE ASSESSEE ADMITTED THAT THE ENTRIES FOUND RECORDED I N THE SAID DOCUMENT REPRESENTED HIS INVESTMENT MADE IN THE MONEY MARKET . ALTHOUGH THIS STATEMENT WAS SUBSEQUENTLY RETRACTED BY THE ASSESSE E, THE A.O. CAME TO THE CONCLUSION ON THE BASIS OF THE RELEVANT ENTRIES FOU ND RECORDED IN THE SEIZED DOCUMENT THAT A TOTAL SUM OF RS. 12.5 LACS WAS INVE STED BY THE ASSESSEE IN THE MONEY MARKET ON WHICH INTEREST OF RS. 2.5 LACS WAS EARNED @ 2.25% PER MONTH. THE EXPLANATION OFFERED BY THE ASSESSEE AS REGARDS THE ENTRIES THAT THE SAME REPRESENTED MERELY A ROUGH ESTIMATE OF THE BUILDING REPAIRS WAS NOT FOUND ACCEPTABLE BY THE A.O. ACCORDINGLY ADDITION OF RS. 12,50,000/- AND RS. 2.50 LACS WERE MADE BY THE A.O. TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF INVESTMENT MADE IN THE MONEY MARKET AND INTEREST EARNED ON SUCH INVESTMENT RESPECTIVELY. 7. BEFORE THE LD. CIT(A), IT WAS CONTENDED ON BEHA LF OF THE ASSESSEE THAT THERE WAS NO MATERIAL FOUND DURING THE COURSE OF SE ARCH WHICH COULD LEAD TO THE CONCLUSION THAT THE ASSESSEE HAD MADE INVESTMEN T OF RS. 12,50,000/- IN THE MONEY MARKET OR HAD EARNED INTEREST OF RS. 2.50 LACS THEREON DURING THE YEAR UNDER CONSIDERATION. IT WAS CONTENDED THAT THE DOCUMENT IDENTIFIED AS PAPER 39 FOUND DURING THE COURSE OF SEARCH WAS NOTH ING BUT A DUMP DOCUMENT GOING BY THE ROUGH NOTINGS MADE THEREIN AN D THE SAME COULD NOT BE TAKEN AS A BASIS TO MAKE ADDITION TO THE TOTAL I NCOME OF THE ASSESSEE. THE LD. CIT(A) DID NOT FIND MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE RELEVANT DOCUMENT IDENTIFIED AS PAGE 39 WAS A DUMP DOCUMENT. HE ACCORDINGLY EXAMINED THE CONTENTS OF THE SAID DOCUMENT AND HELD ON SUCH EXAMINATION THAT THE ADDITIONS MADE BY THE A.O. ON ACCOUNT OF I NVESTMENT MADE BY THE ITA 2600 /MUM/2009 & ITA 3139/MUM/2009 6 ASSESSEE IN MONEY MARKET AND ON ACCOUNT OF INTEREST EARNED ON SUCH INVESTMENT WERE SUSTAINABLE TO THE EXTENT OF RS. 5 LACS AND RS. 1 LAC RESPECTIVELY. THE REASONS GIVEN BY THE LD. CIT(A) TO COME TO THIS CONCLUSION AS GIVEN IN PARA 6.3 AND 7.3 OF HIS IMPUGNED ORDER ARE AS UNDER:- 6.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, REASONING OF THE ASSESSING OFFICER AND THE SUBMISSIONS OF THE LD. AU THORISED REPRESENTATIVE OF THE APPELLANT. MY PREDECESSOR IN THE FIRST APPELLATE PROCEEDINGS BY HIS ORDER DATED 25.2.1994 HAS DISCUS SED THIS ISSUE IN PARA 7 OF HIS ORDER. THE WHOLE ISSUE IS RELATING TO NOTINGS IN SEIZED PAGE 39 REGARDING INVESTMENT OF THE APPELLANT IN MONEY M ARKET TRANSACTIONS. THE EXPLANATION OF THE APPELLANT THAT THE NOTINGS R ELATE TO BUILDING UNDER REPAIR CANNOT BE BELIEVED. NO EVIDENCE HAS BE EN FURNISHED RELATING TO SUCH A CLAIM AT ANY STAGE. HOWEVER, I F IND THAT THE ONLY CONCLUSIVE EVIDENCE OF INVESTMENT IS 5 PET 40 DAYS 1,000 WHICH COULD MEAN AN AMOUNT OF RS.5 LAKHS ADVANCED FOR A P ERIOD OF 40 DAYS AND YIELDING INTEREST OF RS.15,000/-. THE OTHER ENT RY I.E., 200 14.12 L8DAYS 2700 COULD ALSO MEAN AN AMOUNT OF RS.2 LA KHS GIVEN FOR A PERIOD OF 18 DAYS EARNING AN INTEREST OF RS.2700/-. IT IS NOT KNOWN WHETHER THIS AMOUNT IS AN ADDITIONAL INVESTMENT OR BROUGHT FORWARD FROM THE EARLIER ADVANCE OF RS.5 LAKHS. THE NEXT EN TRY OF 100-16.12 16 DAYS 1,200 13,050 COULD ALSO MEAN A LOAN OF RS .1 LAKH. IT APPEARS IT IS REDUCING BALANCE AFTER PERIODIC REPAY MENTS. AS PER THE NOTINGS ON THE PAGE 1 COULD CONCLUDE THAT A MINIMUM AMOUNT OF RS.5 LAKHS WAS ADVANCED BY THE APPELLANT EVEN IF NOT RS. 12.50 LAKHS AS ESTIMATED BY THE ASSESSING OFFICER. THE APPELLANT H AS ALSO EARNED INTEREST ON THIS AMOUNT WHICH HAS NOT BEEN DISCLOSE D TO THE DEPARTMENT. THE EARNINGS ARE SUPPORTED BY THE ENTRI ES OF RS.34,750/- APPEARING IN THE SAME PAGE. IT CAN BE CONCLUDED THA T THE APPELLANT HAD AN UNDISCLOSED INCOME OF RS.5,00,000/- WHICH WAS AD VANCED AS LOAN AND INTEREST INCOME HAS BEEN EARNED THEREON. THE SU BSEQUENT ENTRIES OF 200 AND 100 APPEAR LIKE THE REDUCING BALANCE O F THE LOAN GIVEN. IN ANY CASE THE INITIAL AMOUNT OF RS.5 LAKHS WHICH APP EARS TO HAVE BEEN ADVANCED IS SUPPORTED BY THE UNAMBIGUOUS ENTRY OF 5 PET 40 DAYS- 1000. THE APPELLANT HAD INITIALLY AGREED FOR A DIS CLOSURE OF RS.12.50 IAKHS IN HIS STATEMENT RECORDED U/S. 132(4) RELATIN G TO LOANS ADVANCED. LATER ON HE HAS RETRACTED HIS ENTIRE DISCLOSURE BY LETTER DATED 2.5.1989. EVEN AFTER HIS RETRACTION I AM INCLINED TO CONCLUDE THAT THE SEARCH PAPERS INDICATE THAT THERE WAS UNEXPLAINED INVESTME NTS OF RS.5 LAKHS AS LOAN. HOWEVER, THE OTHER ENTRIES CANNOT PROVE TH AT THE TOTAL AMOUNT OF CASH INVESTED IS RS.12.5.0 LAKHS AS STATED IN DI SCLOSURE. ADDITIONS CANNOT BE MADE ONLY ON THE BASIS OF THE STATEMENT O F THE APPELLANT ALONE PARTICULARLY AT A TIME WHEN THIS STATEMENT HA S BEEN WITHDRAWN. AFTER THE DIRECTION OF ITAT THE ASSESSING OFFICER H AS NOW ALSO EXAMINED THE WITNESSES, AS THE ASSESSEE IS NO MORE; AND THE WITNESSES HAVE STATED THAT THE STATEMENT WAS NOT VOLUNTARY.ON EARL IER OCCASIONS MY ITA 2600 /MUM/2009 & ITA 3139/MUM/2009 7 PREDECESSORS HAVE GONE BY THE STATEMENTS ALONE AND HAVE CONFIRMED THE ENTIRE ADDITION OF RS.12.50 IAKHS. AFTER CONSID ERING THE ENTIRETY OF FACTS I FIND THAT ONLY AN AMOUNT OF RS.5 LAKHS ON A CCOUNT OF UNDISCLOSED LOANS ADVANCED BY THE APPELLANT CAN BE CONFIRMED OUT OF A TOTAL ADDITION OF RS.12.50 IAKHS. IN THE RESULT AN ADDITION OF RS.5 LAKHS ON THIS COUNT IS CONFIRMED AND THE BALANCE AMOUNT O F RS.7,50,000/- IS DELETED. THIS GROUND IS PARTLY ALLOWED. 7.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, REASONING OF THE ASSESSING OFFICER AND THE SUBMISSIONS OF THE LD. AU THORISED REPRESENTATIVE OF THE APPELLANT. I FIND THAT THERE IS EVIDENCE OF INTEREST RECEIVED AMOUNTING TO RS.34,750/-. HOWEVER, I HAVE ALREADY HELD THAT THE APPELLANT HAD ADVANCED RS.5 LAKHS OUT OF UNEXPL AINED INCOME AS LOANS AS EVIDENCED BY THE PAGE NO.39 OF THE SEIZED PAPERS. AFTER CONSIDERING ENTIRE EVIDENCE I HAVE COME TO THE CONC LUSION THAT AGAINST A DISCLOSURE OF RS.12.50 LAKHS ON ACCOUNT OF UNEXPLAI NED LOAN AN AMOUNT OF RS.5 LAKHS HAS TO BE HELD AS UNEXPLAINED INCOME OF THE APPELLANT EVEN AFTER HIS RETRACTION. THIS IS IN THE RATIO OF 40% (RS.12.50 LAKHS : RS.5 LAKHS). IN THE SAME PROPORTION I WOULD CONCLUDE THAT THE APPELLANT HAS EARNED INTEREST. THE DISCLOSURE MADE UNDER THIS HEAD AMOUNTED TO RS.2,50,000/- WHICH HAS BEEN RETRACTED. 40% OF THIS AMOUNT IS CONFIRMED AS UNDISCLOSED INTEREST ON THE CASH LOANS. THE INTEREST INCOME CONFIRMED UNDER THIS HEAD AMOUNTS T O RS. 1,00,000/-. THERE IS NO EVIDENCE OF EARNING INTEREST FOR THE RE ST OF THE AMOUNT. THEREFORE THE BALANCE AMOUNT OF RS.1,50,000/- IS DE LETED. 8. THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR AT TENTION TO THE COPY OF THE RELEVANT SEIZED DOCUMENT PLACED AT PAGE 38 OF HIS P APER BOOK AND SUBMITTED THAT THE ENTRIES MADE THEREIN ARE NOT IN THE HANDWR ITING OF THE ASSESSEE. HE SUBMITTED THAT EVEN THERE IS NO YEAR SPECIFICALLY M ENTIONED IN THE ENTRIES APPEARING IN THE SAID DOCUMENT AND THE CONTENTS THE REOF ARE INSUFFICIENT TO DRAW ANY DEFINITE CONCLUSION AS REGARDS THE INVESTM ENT MADE BY THE ASSESSEE IN THE MONEY MARKET OR INTEREST EARNED ON SUCH INVE STMENT. HE CONTENDED THAT THE SAID DOCUMENT THUS IS NOTHING BUT A DUMP D OCUMENT ON THE BASIS OF WHICH NO ADDITION CAN BE MADE. HE CONTENDED THAT A LTHOUGH THE ASSESSEE HAD ADMITTED DURING THE COURSE OF SEARCH THAT THE E NTRIES IN THE SAID DOCUMENT REPRESENTED HIS UNDISCLOSED INVESTMENT MAD E IN THE MONEY MARKET, THE SAID STATEMENT WAS SUBSEQUENTLY RETRACT ED BY THE ASSESSEE. HE CONTENDED THAT THE SAID RETRACTION, HOWEVER, HAS NO T BEEN TAKEN INTO ITA 2600 /MUM/2009 & ITA 3139/MUM/2009 8 CONSIDERATION EITHER BY THE A.O. OR BY THE LD. CIT( A) AND THE ADDITION HAS BEEN MADE TO THE TOTAL INCOME OF THE ASSESSEE ON THIS IS SUE RELYING ON THE STATEMENT OF THE ASSESSEE RECORDED DURING THE COURS E OF SURVEY. 9. THE LD. D.R., ON THE OTHER HAND, CONTENDED THAT THE RETRACTION OF THE STATEMENT MADE BY THE ASSESSEE WAS RIGHTLY NOT ACCE PTED BY THE A.O. AND THE LD. CIT(A) AS THERE WAS NO EVIDENCE TO SHOW ANY COE RCION OR PRESSURE ON THE ASSESSEE SO AS TO SAY THAT THE STATEMENT RECORDED D URING THE COURSE OF SEARCH WAS NOT VOLUNTARY. HE SUBMITTED THAT THE ASSESSEE IN THE SAID STATEMENT HAD CLEARLY ADMITTED THAT THE RELEVANT SEIZED DOCUMENT REPRESENTED HIS INVESTMENT MADE IN THE MONEY MARKET AND ADDITION ON THIS ISSUE THEREFORE WAS RIGHTLY MADE BY THE A.O. ON THE BASIS OF THE SA ID STATEMENT WHICH WAS DULY SUPPORTED BY THE RELEVANT SEIZED DOCUMENT. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND A LSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD INCLUDING THE RELEVANT SEIZED DOCUMENT PLACED AT PAGE 38 OF THE ASSESSEES PAPER BOOK. ALTHOUGH IN HIS STATEMENT RECORDED DURING THE COURSE OF SEARCH, SURRENDER WAS MADE BY THE ASSESSEE ON ACCOUNT OF HIS UNDISCLOSED INCOME INCLUDING THE INCOME REPR ESENTING THE INVESTMENT MADE IN THE MONEY MARKET AS EVIDENCED BY THE RELEVA NT SEIZED DOCUMENT AND THE SAID STATEMENT WAS SUBSEQUENTLY RETRACTED BY TH E ASSESSEE, WE ARE IN AGREEMENT WITH THE STAND TAKEN BY THE LD. CIT(A) TH E ADDITION TO THE TOTAL INCOME OF THE ASSESSEE CANNOT BE MADE MERELY ON THE BASIS OF THE DECLARATION MADE IN THE STATEMENT UNLESS THERE IS OTHER EVIDENC E TO SUPPORT AND SUBSTANTIATE SUCH ADDITION. AS REGARDS THE ADDITIO N MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE IN THE MONEY MARKET AND THE INTEREST EARNED ON SUCH INVESTMENT, IT IS OBSERVED THAT THE SAME WAS BASED NOT MERELY ON THE STATEMENT OF THE ASSESSEE BUT THE SAME WAS ALSO SUPPORTED BY THE DOCUMENT IDENTIFIED AS PAPER 39 FOUND AND SE IZED DURING THE COURSE OF SEARCH. IF THE ENTRIES FOUND RECORDED IN THE SAID DOCUMENT ARE DECODED, IT CAN REASONABLY BE CONCLUDED THE SAME REPRESENTED IN VESTMENT MADE BY THE ITA 2600 /MUM/2009 & ITA 3139/MUM/2009 9 ASSESSEE IN GIVING LOANS ON INTEREST. AS HELD BY T HE LD. CIT(A), THERE WERE ATLEAST THREE ENTRIES EVIDENCING LOAN OF RS. 5 LACS GIVEN BY THE ASSESSEE ON 22 ND NOVEMBER FOR A PERIOD OF 40 DAYS YIELDING INTEREST OF RS. 15,000/-, RS. 2 LACS GIVEN ON 14 TH DECEMBER FOR 18 DAYS EARNING INTEREST OF RS. 2700/ - AND RS. 1 LAC GIVEN ON 16 TH DECEMBER FOR A PERIOD OF 16 DAYS YIELDING INTEREST OF RS. 1200/-. THE LD. CIT(A), HOWEVER, CONFIRMED THE ADDITION ON THIS ONLY TO THE EXTENT OF RS. 5 LACS FOR THE REASON THAT IT WAS NOT CLEAR AS TO WHETHER THE AMOUNTS OF RS. 2 LACS AND RS. 1 LAC WERE ADVANCED B Y THE ASSESSEE FROM THE REPAYMENT OF LOAN OF RS. 5 LACS GIVEN EARLIER. IT APPEARS THAT THE LD. CIT(A) HAS OVERLOOKED THE RELEVANT DATES AND PERIOD OF LOA N OF RS. 5 LACS GIVEN BY THE ASSESSEE. THE SAID LOAN OF RS. 5 LACS WAS GIVEN BY THE ASSESSEE ON 22 ND NOVEMBER FOR A PERIOD OF 40 DAYS AND IT THEREFORE W AS NOT POSSIBLE FOR THE ASSESSEE TO ADVANCE THE AMOUNT OF RS. 2 LACS AND RS . 1 LAC ON 14 TH DECEMBER AND 16 TH DECEMBER FROM THE REPAYMENT OF RS. 5 LACS AS THE S AID LOAN OF RS. 5 LACS HAD NOT BECOME DUE BY THAT TIME. IN OUR OPINI ON, THE ENTRIES FOUND TO BE MADE IN THE RELEVANT SEIZED DOCUMENT IDENTIFIED AS PAGE 39 THUS ARE SUFFICIENT TO SHOW THAT INVESTMENT OF RS. 8 LACS WAS MADE BY T HE ASSESSEE IN THE MONEY MARKET AND INTEREST OF RS. 18,900/- WAS EARNED THER EON. THE SAID DOCUMENT THEREFORE CANNOT BE TERMED AS DUMP DOCUMENT AS CONT ENDED BY THE LD. COUNSEL FOR THE ASSESSEE AND REJECTING THE SAID CON TENTION, WE SUSTAIN THE ADDITION MADE ON ACCOUNT OF INVESTMENT MADE BY THE ASSESSEE IN MONEY MARKET AND INTEREST EARNED THEREON TO THE EXTENT OF RS. 8 LACS AND RS. 18,900/- RESPECTIVELY. GROUND NO. 3 OF THE ASSESSEE S APPEAL IS ACCORDINGLY DISMISSED AND GROUND NO. 4 OF THE ASSESSEES APPEAL IS PARTLY ALLOWED WHILE GROUND NO. 2(I) OF THE REVENUES APPEAL IS PARTLY A LLOWED AND GROUND NO. 2(III) IS DISMISSED. 11. GROUND NO. 5 OF ASSESSEES APPEAL AND GROUND N O. 2(II) OF REVENUES APPEAL INVOLVE A COMMON ISSUE RELATING TO THE ADDIT ION OF RS. 3 LACS MADE BY THE A.O. ON ACCOUNT OF INVESTMENT ALLEGEDLY MADE BY THE ASSESSEE IN DRAFT ITA 2600 /MUM/2009 & ITA 3139/MUM/2009 10 DISCOUNTING BUSINESS WHICH HAS BEEN SUSTAINED BY TH E LD. CIT(A) TO THE EXTENT OF RS. 1,20,000/-. 12. DURING THE COURSE OF SEARCH, TWO BLANK UNSIGNE D CHEQUES WERE FOUND. ON THE BASIS OF THESE CHEQUES, THE A.O. CAME TO THE CONCLUSION THAT THE ASSESSEE WAS CARRYING ON THE BUSINESS OF BILL DISCO UNTING AND ADDITION IF RS. 3 LACS WAS MADE BY HIM ON ACCOUNT OF INCOME FROM SUCH BUSINESS. BEFORE THE LD. CIT(A), IT WAS CONTENDED THAT NO EVIDENCE WAS F OUND DURING THE COURSE OF SEARCH TO ESTABLISH THAT THE ASSESSEE WAS CARRYING ON THE BUSINESS OF BILL DISCOUNTING AND THE CONCLUSION DRAWN BY THE A.O. RE GARDING SUCH BUSINESS BEING CARRIED ON BY THE ASSESSEE MERELY ON THE BASI S OF TWO BLANK CHEQUES WAS TOTALLY UNFOUNDED. IT WAS CONTENDED THAT IT CO ULD NOT BE SAID ON THE BASIS OF THESE TWO UNSIGNED BLANK CHEQUES THAT ASSE SSEE HAD CARRIED ON THE BUSINESS OF DRAFT DISCOUNTING AND EARNED INCOME OF RS. 3 LACS FROM SUCH BUSINESS. 13. AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHA LF OF THE ASSESSEE AND MATERIAL AVAILABLE ON RECORD, THE LD. CIT(A) DECIDE D THIS ISSUE VIDE PARA NO. 8.3 OF HIS IMPUGNED ORDER AS UNDER:- 8.3 HAVE CAREFULLY CONSIDERED THE FACTS OF THE CAS E, REASONING OF THE ASSESSING OFFICER AND THE SUBMISSIONS OF THE LD.AUT HORISED REPRESENTATIVE OF THE APPELLANT. IN THE FIRST APPEL LATE ORDER MY PREDECESSOR HAS CONSIDERED THIS ISSUE IN PARA 9 OF HIS ORDER ON PAGE NO.10. AFTER CONSIDERING THE DISCLOSURE MADE BY THE APPELLANT LD.CIT(A) CONFIRMED AN ADDITION OF RS.3 LAKHS ON ACCOUNT OF U NDISCLOSED INCOME EARNED BY THE APPELLANT FROM BILL DISCOUNTING BUSIN ESS. LATER ON THE APPELLANT HAS COMPLETELY DISOWNED THIS INCOME. HOWE VER THE SEARCH PAPERS PROVE THAT APPELLANT HAD UNDISCLOSED BUSINES S OF BILL DISCOUNTING. THE SEARCH PARTY HAD FOUND TWO BLANK C HEQUES OF UNRELATED PERSONS. THIS INDICATES THAT THE APPELLAN T HAD CARRIED POSSIBLE DRAFT DISCOUNTING ACTIVITY. THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY ON THIS ISSUE EXCEPT FOR RELY ING ON THE SEIZED PAPERS. ALTHOUGH THE APPELLANT HAS RETRACTED, I AM INCLINED TO CONFIRM 40% OF SUCH ADDITION IN THE SAME RATIO AS DISCUSSED IN PARA 7.3 ABOVE. THERE WAS EVIDENCE THAT APPELLANT ADVANCED UNDISCLO SED LOANS AND EARNED INCOME WHICH WAS NOT DISCLOSED BEFORE THE DE PARTMENT. TAKING ITA 2600 /MUM/2009 & ITA 3139/MUM/2009 11 INTO VIEW ENTIRE FACTS AN ADDITION OF RS. 1,20,000/ - IS CONFIRMED AS INCOME FROM DRAFT DISCOUNTING BUSINESS AND THE BALA NCE AMOUNT OF RS. 1,80,000/- IS DELETED. THE LD. CIT(A) THUS SUSTAINED THE ADDITION OF RS. 3 LACS MADE BY THE A.O. ON THIS ISSUE TO THE EXTENT OF RS. 1,20,000/-. 14. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD INCLUDING THE COPIES RELEVANT DOCUMENTS FOUND DURING THE COURSE OF SEARCH IN THE FORM OF TW O CHEQUES PLACED AT PAGE 36 AND 37 OF ASSESSEES PAPER BOOK. A PERUSAL OF T HE SAID DOCUMENTS SHOWS THAT THE SAME ARE TWO BLANK CHEQUES WHICH ARE NOT E VEN SIGNED BY ANYBODY. ALTHOUGH ONE CHEQUE CONTAINS A RUBBER STAMP OF M/S M.J. ENTERPRISES, THE OTHER CHEQUE IS TOTALLY BLANK. GOING BY THE CONTEN TS OF THESE TWO CHEQUES WHICH REPRESENTED TWO BLANK UNSIGNED CHEQUES, WE AR E OF THE VIEW THAT NO CONCLUSION CAN BE DRAWN ON THE BASIS OF THESE EVIDE NCES THAT THE ASSESSEE WAS INDULGING IN ANY UNDISCLOSED BUSINESS OF BILL D ISCOUNTING AND HAD EARNED INCOME FROM SUCH BUSINESS TO THE EXTENT OF RS. 3 LA CS. AS MENTIONED BY THE LD. CIT(A) IN HIS IMPUGNED ORDER, THE A.O. HAD ALSO NOT CONDUCTED ANY ENQUIRY ON THIS ISSUE AND ADDITION WAS MADE MERELY ON THE B ASIS OF RELEVANT SEIZED DOCUMENTS WHICH, IN OUR OPINION, CANNOT BE ASSIGNED ANY EVIDENTIARY VALUE. THE LD. CIT(A), HOWEVER, STILL SUSTAINED THE ADDITI ON MADE BY THE A.O. ON THIS ISSUE TO THE EXTENT OF RS. 1,20,000/- BEING 40% OF THE TOTAL ADDITION OF RS. 3 LACS MADE BY THE A.O. APPLYING THE SAME RATIO AS WA S FOUND BY HIM WHILE DECIDING THE ISSUE RELATING TO THE INVESTMENT MADE BY THE ASSESSEE IN MONEY MARKET. HE, HOWEVER, APPEARS TO HAVE IGNORED THE F ACT THAT THE ADDITION ON ACCOUNT OF INVESTMENT IN MONEY MARKET WAS SUPPORTED BY DOCUMENTARY EVIDENCE FOUND DURING THE COURSE OF SEARCH WHILE TH ERE WAS NO SUCH RELIABLE EVIDENCE FOUND TO SUPPORT THE ADDITION MADE ON ACCO UNT OF INCOME ALLEGEDLY EARNED BY THE ASSESSEE FROM THE BUSINESS OF BILL DI SCOUNTING. IN OUR OPINION, THE ADDITION MADE BY THE A.O. ON THIS ISSUE THUS IS NOT SUSTAINABLE AND ITA 2600 /MUM/2009 & ITA 3139/MUM/2009 12 DELETING THE SAME, WE DISMISS GROUND NO. 2(II) OF R EVENUES APPEAL AND ALLOW GROUND NO. 5 OF ASSESSEES APPEAL. 15. GROUND NO. 6 OF ASSESSEES APPEAL AND GROUND N O. 3 OF REVENUES APPEAL INVOLVE A COMMON ISSUE RELATING TO THE ADDIT ION OF RS. 2,87,000/- MADE BY THE A.O. ON ACCOUNT OF INVESTMENT ALLEGEDLY MADE BY THE ASSESSEE IN PROPERTY AT VASAI WHICH HAS BEEN SUSTAINED BY THE L D. CIT(A) TO THE EXTENT OF RS. 1,43,750/-. 16. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. DURING THE COURSE OF SEARCH, THE ASSESSEE WAS FOUND TO HAVE MADE INVESTMENT IN THE P LOT OF LAND AT NAIGAON. SINCE THE SAID INVESTMENT REPRESENTED UNDISCLOSED I NCOME OF THE ASSESSEE, THE VALUE OF SUCH INVESTMENT AT RS. 2,87,000/- WAS ADDED BY THE A.O. TO THE TOTAL INCOME OF THE ASSESSEE. BEFORE THE LD. CIT(A ), IT WAS POINTED OUT ON BEHALF OF THE ASSESSEE THAT THE ASSESSEE WAS ONLY T HE CO-OWNER OF THE PLOT OF LAND AT NAIGAON WITH 50% SHARE WHILE SHRI BHUPSINGH SABTE WAS THE OTHER OWNER WITH 50% SHARE. IT WAS ALSO POINTED OUT THAT THE SAID OTHER OWNER IN HIS STATEMENT RECORDED U/S 131 OF THE ACT DURING TH E COURSE OF EARLIER ROUND OF ASSESSMENT PROCEEDINGS HAD ADMITTED AND OWNED 50 % INVESTMENT MADE IN THE PLOT OF LAND AND RELYING ON THE SAID STATEMENT, THE LD. CIT(A) IN THE EARLIER ROUND HAD ALREADY RESTRICTED THE ADDITION MADE BY T HE A.O. ON THIS ISSUE ONLY TO THE EXTENT OF RS. 1,43,750/- BEING 50% OF RS. 2, 87,000/-. IT WAS ALSO BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT THE RE LIEF SO ALLOWED IN THE EARLIER ROUND WAS EVEN NOT DISPUTED BY THE DEPARTMENT BY FI LING THE APPEAL BEFORE THE TRIBUNAL. HAVING CONSIDERED ALL THESE FACTS OF THE CASE BROUGHT TO HIS NOTICE BY THE ASSESSEE, THE LD. CIT(A) RESTRICTED T HE ADDITION OF RS. 2,87,000/- MADE BY THE A.O. TO THE EXTENT OF RS. 1,43,750/- AN D HAVING REGARD TO ALL THE FACTS OF THE CASE, WE FIND NO JUSTIFIABLE REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE. THE SAME IS ACCORDINGLY UPHELD ITA 2600 /MUM/2009 & ITA 3139/MUM/2009 13 DISMISSING GROUND NO. 3 OF REVENUES APPEAL AS WELL AS GROUND NO. 6 OF ASSESEES APPEAL. 17. AS REGARDS THE ISSUE RAISED IN GROUND NO. 7 OF ASSESSEES APPEAL RELATING TO THE ADDITION OF RS. 20,000/- MADE BY THE A.O. AN D CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF CASH PAID BY THE ASSESSEE TO M R. SHAMSUDDIN, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THIS AM OUNT WAS FORMING PART OF THE INCOME OF RS. 4,15,000/- DISCLOSED BY THE ASSES SEE IN HIS RETURN OF INCOME. A PERUSAL OF THE COMPUTATION OF TOTAL INCO ME MADE BY THE A.O., HOWEVER, SHOWS THAT THE INCOME DECLARED BY THE ASSE SSEE WAS NOT TAKEN INTO CONSIDERATION BY HIM AND THIS AMOUNT OF RS. 20,000/ -, IN OUR OPINION, THUS WAS RIGHTLY ADDED BY HIM TO THE TOTAL INCOME OF THE ASSESSEE SEPARATELY. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER OF THE LD. CIT (A) CONFIRMING THE ADDITION MADE BY THE A.O. ON THIS ISSUE AND DISMISS GROUND N O. 7 OF ASSESSEES APPEAL. 18. IN THE RESULT, APPEAL OF THE ASSESSEE AS WELL A S APPEAL OF THE REVENUE, BOTH ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH AUG. 2013. . '3 / 12* 4')5 04-09-2013 2 / SD/- SD/- (SANJAY GARG) (P.M. JAGTAP ) & !'# JUDICIAL MEMBER !'# / ACCOUNTANT MEMBER MUMBAI ; 4') DATED 04-09-2013. $.&).!./ RK , SR. PS ITA 2600 /MUM/2009 & ITA 3139/MUM/2009 14 '3 / -&67 87* '3 / -&67 87* '3 / -&67 87* '3 / -&67 87*/ COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. 9 () / THE CIT(A)- XVII, MUMBAI 4. 9 / CIT 16, MUMBAI 5. 7$< -&&) , , / DR, ITAT, MUMBAI I BENCH 6. =% > / GUARD FILE. '3)! '3)! '3)! '3)! / BY ORDER, !.7 -& //TRUE COPY// ? ? ? ?/ // /!@ !@ !@ !@ ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI