DCIT, New Delhi V. Sh. Rajiv Gulati, New Delhi

ITA 2726/DEL/2012

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4174 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 29-05-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 05-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: MRS SWEETY ROTHARI CAS
• Keywords: Unexplained cash credit; Unexplained investment; Search and seizure; Document seized; Cost of acquisition; Valuation report; Block assessment; Retraction
• Section: 143(3); 153A; 132

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.:- 1762/DEL /2012 ASSESSMENT YEAR: 2007-08 RAJIV GULATI 9/44, KIRTI NAGAR INDUSTRIAL AREA, NEW DELHI PAN AAHPG1792M VS. ACIT, CENTRAL CIRCLE 25 NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO.:- 2726/DEL /2012 ASSESSMENT YEAR: 2007-08 O R D E R PER AMIT SHUKLA, J.M . ASSESSEE BY: SHRI VINOD KUMAR BINDAL & MRS. SWEETY ROTHARI, CAS DEPARTMENT BY : SMT. PARAMITA TRIPATHY, CIT(DR) DATE OF HEARING 07/11/2017 DATE OF PRONOUNCEMENT /01/2017 DCIT CENTRAL CIRCLE-25, ROOM NO. 331 ARA CENTRE, JHANDEWALAN EXT. NEW DELHI VS. RAJIV GULATI 9/44, KIRTI NAGAR INDUSTRIAL AREA NEW DELHI. PAN AAHPG1792M (APPELLANT) (RESPONDENT) ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 2 THE AFORESAID CROSS APPEALS HAVE BEEN FIL ED BY THE REVENUE AS WELL AS BY THE ASSESSEE AGAINST IMPUGNED ORDER DATED 7.3.2012, PASSED BY LD. CIT (APPEALS)-I FOR THE QUANTUM OF ASS ESSMENT PASSED U/S 143(3) FOR ASSESSMENT YEAR 2007-08. 2. WE WILL FIRST TAKE UP REVENUES APPEAL, WHE REIN FOLLOWING GROUNDS HAS BEEN RAISED:- 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN:- 1. THE ORDER OF THE CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 15,00,00,000 /- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE SURRENDER MADE U/S 132(4) OF I.T.A.T IN HIS STATEMENT RECORDED DURING THE COURS E OF SEARCH AND SEIZURE ACTION U/S 132(1) OF LT. ACT 1961 ON 22.11. 2006 WHICH THE ASSESSEE RETRACTED. RELIANCE IS PLACED ON THE DECISION OF THE HON'BLE S UPREME COURT OF INDIA DATED 25.10.1996 IN SPECIAL LEAVE PETITION (E ) NO. 14028 OF 1996 IN THE CASE OF SURJEET SINGH CHHABRA VS. UNION OF INDIA AND OTHERS WHEREIN THE APEX COURT HAS HELD THAT THE REV ENUE OFFICIALS ARE NOT POLICE OFFICERS AND THE CONFESSIO N, THOUGH RETRACTED, IS AN ADMISSION AND BINDS THE PETITIONER . RELIANCE IS ALSO PLACE ON THE DECISION OF THE PUNJA B AND HARYANA HIGH COURT IN THE CASE OF RAKESH MAHAJAN VS. CLT CI TED AT 6420F 2007 (TAXPERT) AND 214 CTR 218 WHEREIN IT HAS BEEN HELD THAT' IT IS WELL SETTLED THAT ADMISSIONS CONSTITUTE BEST PIE CE OF EVIDENCE BECAUSE ADMISSION ARE SELF-HARMING STATEMENTS MADE BY THE MAKER BELIEVING IT TO BE BASED ON TRUTH IT IS WELL KNOWN THAT NO ONE WILL TELL A LIE ESPECIALLY HARMING ONE'S OWN IN TEREST UNLESS SUCH A STATEMENT IS TRUE.' FURTHER RELIANCE IS PLACED ON THE DECISION OF THE K ERALA HIGH COURT IN THE CASE OF KUNHAMBU(V) AND SONS VS. CIT C ITED AT (1996) 219 ITR 235 WHEREIN IT HAS BEEN HELD THAT 'A SSESSMENT ON ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 3 THE BASIS OF THE VOLUNTARY STATEMENT DURING SEARCH UNDER THE PROVISIONS OF I.T. ACT, 1961 WAS VALID.' 3. THE ORDER OF LD CIT(A) IS PERVERSE IN LAW AND ON FACTS. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY /AL L OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARIN G OF THE APPEAL. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE, SHRI BINOD KUMAR BINDAL SUBMITTED THAT, EXACTLY THE SAME ISSUE HAD COME UP FOR CONSIDERATION BEFORE THIS TRIBUNAL IN THE CASE OF ASS ESSEES FATHER, I.E., SHRI DHARAM PAL GULATI, WHEREIN TRIBUNAL VIDE ORDER DATED 20 TH JUNE, 2013 IN ITA 671/DEL/2012 HAS DISMISSED THE REVENUES APPEAL AFTER DETAILED DISCUSSION. HE POINTED OUT THAT THE AO IN THIS CA SE HAS RECORDED A SIMILAR FINDING AS WAS THERE IN THE CASE OF SHRI DHARAM PAL GULATI AND ALSO THE REASONING GIVEN BY THE LD. CIT(A ) FOR DELETING THE ADDITION IS ALSO SAME. THEREFORE, THE IMPUGNED ISSUE STANDS SQUARELY COVERED. 4. THE BRIEF FACTS QUA THE ISSUE INVOLVED ARE THAT, A SEARCH AND SEIZURE ACTION U/S 132 WAS CONDUCTED AT THE RESIDENCE O F THE ASSESSEE AND HIS FAMILY MEMBERS ON 22.12.2006. THE ASSESSEE HAS FILED RETURN OF INCOME ON 2.9.2008 DECLARING INCOME OF RS. 3,40, 90,628/- WHICH INCLUDES; I) UNDISCLOSED INVESTMENT IN JEWELLERY AMOU NTING TO RS. 20,17,737/-; II) UNDISCLOSED INVESTMENT IN AGRICULTUR AL LAND OF RS. 2,98,640/- ; AND III) UNDISCLOSED CASH OF RS. 48 LA CS FOUND DURING THE ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 4 COURSE OF SEARCH. THE AO IN THE IMPUGNED ASSESSMENT ORDER HAS OBSERVED THAT DURING THE COURSE OF SEARCH THE ASSESSEE HAD SURRENDERED AN AMOUNT OF RS. 15 CRORES TOWARDS INCOME FROM SPECULATIVE TRADING IN THE STATEMENT RECORDED U/S 132 (4 ) DURING THE COURSE OF SEARCH ON 22.11.2006. LATER ON, THE ASSESS EE RETRACTED THE SAID STATEMENT ON THE GROUND THAT HE WAS UNDER MENTAL PRES SURE AT THE TIME OF RECORDING THE STATEMENT AND ALSO NO EVIDENCE WHATSOEVER WAS FOUND RELATING TO SUCH SURRENDER. HOWEVER, THE LD. AO HELD THAT ASSESSEE HAS CATEGORICALLY ADMITTED TO HAVE CARRIED OUT SPECULATIVE TRADING IN AGRICULTURAL COMMODITY IN CASH WHICH IS EV IDENT FROM QUESTION NOS. 13 TO 19 IN THE STATEMENT, THE RELEVANT EX TRACT OF WHICH HAS BEEN INCORPORATED BY HIM AT PAGES 2 AND 3 OF THE ASSESSMENT ORDER. IN THE WAKE OF SUCH RETRACTION, THE AO AGAIN SU MMONED THE ASSESSEE, WHEREIN AGAIN THE ASSESSEE SUBMITTED THAT NO S PECULATIVE BUSINESS RESULTING INTO UNDISCLOSED INCOME WAS UNDERTA KEN PRIOR TO 1.4.2006; AND THEREFORE, NO SUCH INCOME WAS EARNED IN THE EARLIER YEARS. MOREOVER, AGRICULTURAL COMMODITIES ARE SEASON AL PRODUCTS AND ONLY ONE TRANSACTION WAS UNDERTAKEN BY HIM IN NOVEMBER , 2006 FOR WHICH HE HAS MADE A PROFIT OF APPROXIMATELY RS. 48 LA CS WHICH HAS BEEN SURRENDERED BY HIM IN THE RETURN OF INCOME AND OTHER THAN THIS, NO EVIDENCE OF ANY OTHER INCOME OR INVESTMENT WAS FOU ND AT THE TIME ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 5 OF SEARCH TO SUGGEST SOME MORE INCOME HAS BEEN EARNED ON THIS ACCOUNT. ENTIRE SPECULATIVE PROFIT WHICH HAS BEEN EARN ED IN THE EARLIER YEARS HAS DULY BEEN DECLARED IN THOSE YEARS IN THE R EGULAR BOOKS OF ACCOUNTS. APART FROM THAT, HE ALSO STATED THAT SIMILAR DIS CLOSURE WAS TAKEN FROM HIS FATHER AND FROM THE COMPANY MDH LTD. AN D NO CORRESPONDING INVESTMENT/ EXPENDITURE WERE FOUND FROM ANY OF THE PREMISES DURING THE SEARCH CARRIED OUT AT VARIOUS PLA CES. HOWEVER, THE LD. AO REJECTED THE ASSESSEES CONTENTION AFTER OBSERVI NG AND HOLDING AS UNDER:- THE CLAIM OF THE ASSESSEE THAT HE WAS UNDER MENTAL PRESSURE AT THE TIME OF GIVING THE STATEMENT U/S 132(4) ON 22.1 1.2006 IS NOT AT ALL BORNE OUT BY THE FACTS ON RECORD. HE HAS GIVEN THE STATEMENT WITHOUT ANY FEAR, FAVOUR OR COERCION. HE HAS GIVEN THE DISCLOSURE AFTER NOTICING VARIOUS DISCREPANCIES IN THE ACCOUNT S AND STOCK AND AFTER CONSULTING HIS FAMILY MEMBERS. HE HAS CONFIRM ED THE DISCLOSURE GIVEN BY HIS FATHER SH. DHARAM PAL GULAT I AND HIS BROTHER-IN-LAW SH. SUSHIL K TREHAN AS ALSO HIS MAIN SUPPLIER SH. PREM K ARORA. NO ONE IN A STATE OF MENTAL TENSION W OULD BE IN A POSITION TO TAKE STOCK OF THE ENTIRE EVIDENCE FOUND IN A CASE AND COME TO A CONCLUSION ABOUT THE DISCLOSURES TO BE GI VEN BY DIFFERENT RELATED PARTIES AND THEN REQUEST FOR NON-INITIATION OF PENALTIES. THE STATEMENT GIVEN U/S 132(4) IS AN ADMISSIBLE EVIDENC E AND ITS AN ADMISSION OF FACT. THEREFORE, THE STATEMENT GIVEN B Y SH. RAJEEV GULATI IS A GOOD PIECE OF EVIDENCE IN SUPPORT OF TH E FACT THAT HE ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 6 EARNED SPECULATION INCOME OF RS 15 CRORES DURING TH E FY 2006~07. 5. BEFORE THE LD. CIT (A) THE ASSESSEE HAD MADE EXH AUSTIVE SUBMISSIONS WHICH HAVE BEEN DEALT AND INCORPORATED BY THE LD. CIT (A) FROM PAGES 3 TO 17 OF THE APPELLATE ORDER. ON SUC H SUBMISSIONS LD. CIT (A) HAD ALSO CALLED FOR THE REMAND REPORT WHICH TO O HAS BEEN INCORPORATED BY HIM FROM PAGES 17 TO 31 AND ALSO THE ASSESSEES REJOINDER TO THE SAID REMAND REPORT WHICH HAS BEEN INC ORPORATED BY HIM FROM PAGES 31 TO 40 OF THE IMPUGNED ORDER. AFTER C ONSIDERING THE ENTIRE MATERIAL PLACED ON RECORD AND THE FINDING OF T HE AO AS WELL AS THE SUBMISSIONS MADE BY THE ASSESSEE, LD. CIT(A) HAS DELETED THE SAID ADDITION IN A VERY DETAILED MANNER AFTER RELYING UPON VARIOUS JUDGMENTS. THE RELEVANT PORTION OF HIS FINDINGS ON MER ITS READS AS UNDER:- 7.1 IT IS FURTHER SEEN THAT THE ASSESSING OFF ICER HAS NOWHERE QUANTIFIED THE AMOUNT OF RS 15,00,00,000/- ANYWHERE IN THE ASSESSMENT ORDER. EVEN IN THE REMAND REPORT, THERE IS A MENTION ABOUT THE HUGE CASH AND INVESTMENTS BUT NOW HERE HAS THE ASSESSING OFFICER QUANTIFIED ANY UNDISCLOSE D INCOME EITHER. 7.2 IN THE REMAND REPORT, THE ASSESSING OFFICER HAS STATED THAT THERE WAS MATERIAL EVIDENCE SHOWING AN UNACCOU NTED INCOME FROM COMMODITY TRADING, ACTIVITIES IN SHARE AND JEWELLERY ETC. TO THIS, IT IS SEEN THAT THE APPELLA NT HAS HIMSELF OFFERED INCOME ON ACCOUNT OF UNEXPLAINED JE WELLERY ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 7 AS WELL AS THE CASH GENERATED FROM COMMODITY TRADIN G. THE CONTENTION OF THE APPELLANT THAT HAD THE ASSESSEE G ENERATED AN INCOME OF RS 15,00,00,000/- DURING THE LAST EIGH T MONTHS THAN THE SAME WOULD HAVE BEEN REFLECTED SOMEWHERE I N THE ASSETS FOUND FROM THE ASSESSEE IS ACCEPTABLE. APART FROM THE RELIANCE PLACED BY THE APPELLANT ON THE BOARD INSTRUCTION, HE HAS ALSO GIVEN A REASONABLE JUSTIFI CATION REGARDING THE IMPROBABILITY OF EARNING SUCH A HUGE AMOUNT WITHIN A CALENDAR YEAR. XXX XXX XXX XXX XXX XXX 7.5 AS REGARDS, THE CONTENTION OF THE APPELL ANT THAT HE WAS UNDER PRESSURE AT THE TIME OF GIVING THE STATEMENT AND THE COUNTER ARGUMENT OF THE ASSESSING OFFICER THAT TWO NEUTRAL WITNESS WERE PRESENT TO OVERSEE THE SEARCH PROCEEDI NGS. IT IS MY VIEW THAT SUCH A ISSUE SHALL NOT GO TO DETERMINE WHETHER THE ASSESSEE CAN RETRACT THE STATEMENT OR NOT, FOR THE FACT REMAINS THAT THE SURRENDERED INCOME HAS TO BE QUANT IFIED ON THE BASIS OF THE INCRIMINATING MATERIAL FOUND DURIN G THE SEARCH OR ON THE BASIS OF ANY OTHER EVIDENCE COLLEC TED DURING THE ASSESSMENT PROCEEDINGS. NEITHER IN THE ASSESSME NT PROCEEDINGS NOR IN THE REMAND REPORT HAS ANY SUCH QUANTIFICATION OF CONCEALED INCOME HAS TAKEN PLACE. 7.6 THE FURTHER ARGUMENT GIVEN BY THE ASSE SSING OFFICER THAT HUGE CASH WAS FOUND FROM THE PREMISES DOES NOT IMPLY THAT IT CAN FORM THE BASIS OF MAKING AN ADDITION WI THOUT ANY EVIDENCE. THE ASSESSING OFFICER IN THE REMAND REPOR T HAS FURTHER STATED THAT THE APPELLANT HAD MADE EARNINGS FROM SPECULATIVE ACTIVITIES IN AGRICULTURAL COMMODITIES. HOWEVER, NOWHERE HAS THE ASSESSING OFFICER QUANTIFIED SUCH I NCOME TO SHOW THAT IT IS COMMENSURATE WITH THE SURRENDERED A MOUNT. 7.7 IN THE STATEMENT RECORDED U/S 132(4) IN REPLY TO QUESTION NO. 19, THE ASSESSEE HAD REPLIED THAT HE H AD INVESTED THIS MONEY IN PURCHASE OF GOLD AND PROPERT Y. HOWEVER, DURING THE SEARCH NO INVESTMENT IN GOLD WA S ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 8 FOUND TO THE EXTENT OF RS 15,00,00,000/- WHICH ITSE LF GOES TO SHOW THAT THE STATEMENT GIVEN BY THE APPELLANT WAS WITHOUT ANY BASIS. NOR ANY ADDITION HAS BEEN MADE BY REFERR ING THE VALUATION OF PROPERTY TO THE DVO. THUS, ADDITIONS C ANNOT BE MADE ON BASIS OF HYPOTHETICAL INCOME AND CORRESPOND ING HYPOTHETICAL EXPENDITURE. WHATEVER EXCESS GOLD AND INVESTMENT IN PROPERTY WAS FOUND DURING THE SEARCH WAS EITHER OFFERED IN THE RETURN OF INCOME OR SEPARATE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER. 7.8 CONSIDERING THE ABOVE DISCUSSIONS AND T HE LEGAL POSITION AS STATED IN THE VARIOUS JUDGMENTS CITED S UPRA, THE ADDITION OF RS 15,00,00,000/- CANNOT BE SUSTAINED B ECAUSE NO INCRIMINATING MATERIAL JUSTIFYING SUCH AN ADDITI ON HAS BEEN FOUND DURING THE SEARCH FROM THE ASSESSEE. FUR THER, THE APPELLANT HAD RETRACTED THE STATEMENT WITHIN A PERIOD OF SIX DAYS ON 28/11/2006, THEREFORE, IF THE INVESTIGA TION WING HAD ANY GRIEVANCE, IT WAS FREE TO CARRY OUT FURTHER INVESTIGATION IN THIS REGARD FOR THE SEARCH WAS CAR RIED ON TILL 18/0112007, THE DATE ON WHICH THE LAST LOCKER WAS OPERATED. NEITHER THE ASSESSING OFFICER NOR THE INV ESTIGATION WING COULD PIN POINT ANY CONCEALMENT OF THIS AMOUNT , THEREFORE, THE ADDITION OF RS 15,00,00,000/- IS HER EBY DELETED. 6. BEFORE US, LD. CIT(DR) SUBMITTED THAT THERE WAS A SPECIFIC ADMISSION BY THE ASSESSEE THAT HE HAS EARNED HUGE INCO ME FROM SPECULATIVE TRADING WHICH HAS BEEN INVESTED IN JEWELL ERY AND PROPERTIES. SUCH A STATEMENT WAS NEITHER UNDER COERCION NOR UNDER ANY PRESSURE, WHEREAS THERE WAS A SPECIFIC AND CATEGO RICAL ADMISSION BY THE ASSESSEE WHICH ITSELF CONSTITUTES RELEVANT PIECE OF EVIDENCE AGAINST THE ASSESSEE. THUS, THE ADDITION MADE BY THE AO ON THE BASIS ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 9 OF ADMISSION MADE BY THE ASSESSEE DESERVES TO BE ACCE PTED. IN SUPPORT OF HER CONTENTION SHE RELIED UPON JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF RAJ HANS TOWERS (P.) LTD. VS. CIT REPORTED IN (2015) 373 ITR 9 (DELHI), WHEREIN IT WAS HELD THAT WHERE THE ASSESSEE HAD NOT OFFERED ANY EXPLANATION REGARDING SURRENDERED AMOUNT BEING NOT BONAFIDE AND IT WAS ALSO NOT BORNE OUT FROM THE CONTE NTION RAISED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES, THEN SUCH A SURRENDERED INCOME NEEDS TO BE ADDED. SIMILARLY, SHE RELIED UPON ANOTHER JUDGMENT OF BOMBAY HIGH COURT IN THE CASE OF PARAS SHANTILAL SHAH VS. DCIT REPORTED IN (2015) 378 ITR 41 . 7. WE HAVE HEARD THE CONTENTIONS MADE BY THE PAR TIES AND ALSO THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AS WE LL AS THE ORDER OF THE TRIBUNAL. IN THE CASE, THOUGH IT IS SEEN THAT THE ASS ESSEE DURING THE STATEMENT RECORDED ON OATH U/S 132(4) AT THE TIME OF SEARCH HAS STATED THAT HE HAS EARNED RS. 15 CRORES DURING THE LAST E IGHT MONTHS FROM SPECULATIVE TRADING WHICH HE HAS SPENT IN PURCHAS E OF JEWELLERY AND INVESTMENT IN HOME AND ALSO ADVANCES AGAINST PURCH ASE OF PROPERTIES, BUT LATER ON, THIS STATEMENT HAS BEEN RETRACTED AND AO HAD ALSO CALLED UPON THE ASSESSEE POST RETRACTION TO RECORD HIS STATEMENT. IN SAID STATEMENT HE HAS CATEGORICALLY STATED THAT NO UNDI SCLOSED INCOME OR EXPENSES OF CORRESPONDING INVESTMENT WAS FO UND AND THERE ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 10 IS NO MATERIAL TO SHOW THAT ASSESSEE HAS EARNED HUGE SU M OF RS. 15 CRORES IN SUCH A SHORT DURATION, SPECIFICALLY IN AGRI CULTURAL COMMODITY WHICH IS A SEASONAL PRODUCT. WHATEVER ADDITIONAL INCOM E WAS EARNED ON SUCH SPECULATION, THE SAME HAS ALREADY BEEN SURREN DERED AND OFFERED AS INCOME IN THE RETURN OF INCOME. AS RECORDE D BY THE LD. CIT (A) AND ALSO ON THE PERUSAL OF THE RELEVANT PORTION O F THE REMAND REPORT, WE FIND THAT, NOWHERE AO HAS MENTIONED THAT ANY MATERIAL WAS FOUND TO SHOW THAT ASSESSEE HAD MADE ANY KIND OF INVE STMENT OUT OF SUCH CASH OR INCURRED ANY EXPENDITURE, THAT IS, NO IOTA OF EVIDENCE HAS BEEN FOUND DURING THE COURSE OF SEARCH SO AS TO CORRO BORATE THAT SURRENDER MADE BY THE ASSESSEE WAS BASED ON ANY MATE RIAL OR INCRIMINATING DOCUMENT FOUND DURING THE COURSE OF SEA RCH. THE ASSESSEE HIMSELF HAS OFFERED THE INCOME AND SAID THAT HE HAS MADE INVESTMENT IN JEWELLERY, HOWEVER IT HAS NOT BEEN FOUND TO BE CORROBORATED BY THE ACTUAL JEWELLERY FOUND FROM THE PR EMISES OF THE ASSESSEE OR HIS FAMILY MEMBERS OR HIS BANK LOCKERS; AND WHATEVER JEWELLERY WHICH REMAINED UNEXPLAINED THE SAME HAS AL READY BEEN OFFERED BY THE ASSESSEE AND ADDED BY THE DEPARTMENT. N OWHERE THE SURRENDERED INCOME HAS BEEN QUANTIFIED ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OR ANY EV IDENCE HAS BEEN COLLECTED EVEN DURING THE COURSE OF ASSESSMENT PROCEE DINGS SO THAT ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 11 SUCH SURRENDER IS SUPPORTED BY ANY QUANTIFICATION BY WAY OF ANY SEIZED MATERIAL. WE FIND THAT ON SIMILAR FACTS AND CI RCUMSTANCES ADDITION WAS MADE IN THE CASE OF ASSESSEES FATHER SHRI DHARAM PAL GULATI (SUPRA), WHEREIN THE TRIBUNAL HAS UPHELD THE SIMILAR ORDER OF THE CIT(A) AFTER OBSERVING AND HOLDING AS UNDER :- 6. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE H AVE ALSO PERUSED THE RECORDS AVAILABLE. THE RETURN WAS FILED BY THE ASSESSEE DECLARING INCOME OF RS.5,88,06,735/- WHICH INCLUDED AN AMOUNT OF RS.12,85,777/- ON ACCOUNT OF UNDISCLOSED INVESTM ENT IN JEWELLERY AND AMOUNT OF RS.24,86,000/- ON ACCOUNT O F CASH FOUND DURING THE SEARCH. THE ASSESSEE HAS NOT INCLUDED TH E AMOUNT OF RS.15 CRORES WHICH WAS SURRENDERED U/S 132(4) OF TH E ACT. THIS AMOUNT WAS ADDED BACK TO THE INCOME OF THE ASSESSEE BY THE ASSESSING OFFICER. THIS STATEMENT RECORDED U/S 132( 4) ON 22.11.2006 WAS RETRACTED BY THE ASSESSEE ON 28.11.2 006. AS PER THE STATEMENT, THIS AMOUNT WAS EARNED FROM SPECULAT IVE BUSINESS CARRIED OUT BY THE ASSESSEE FROM 01.04.2006 TILL TH E DATE OF SEARCH. THE ASSESSING OFFICER MADE THE RELIANCE FO R THE EXISTENCE OF SUCH BUSINESS ON ACCOUNT OF INCOME DECLARED BY T HE ASSESSEE FROM SUCH BUSINESS IN THE MONTHS OF JUNE AND AUGUST , 2003 FOR WHICH THE ASSESSEE RECEIVED PROFIT EARNED BY THE CH EQUES. THERE WAS NO INCRIMINATING DOCUMENT OR SUPPORTING DOCUMEN T FOUND OR SEIZED DURING THE SEARCH OPERATION CARRIED OUT AT T HE PREMISES OF THE ASSESSEE WHICH COULD SUGGEST THAT ASSESSEE WAS DOING THE BUSINESS OF SPECULATION IN COMMODITIES DURING THE R ELEVANT PERIOD STATED IN STATEMENT. NO INCRIMINATING DOCUMENT WAS FOUND AND ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 12 SEIZED WHICH COULD PUT A LIGHT IN RESPECT OF THE SP ECULATIVE BUSINESS STATED BY THE ASSESSEE IN ITS STATEMENT. T HIS STATEMENT WAS RECORDED WHEN THE SEARCH WAS CONTINUING FOR 28 HOURS FROM 8.00 AM ON 22.11.2006 TO 11.57 AM ON 23.11.2006. WE ALSO FIND THAT ALTHOUGH THERE WAS SEIZURE OF SOME PAPERS/DOCU MENTS AS PER PANCHNAMA, ANNEXURE A-1 TO A-11, HOWEVER, NO QUESTI ON WAS ASKED PERTAINING TO THESE PAPERS OR DOCUMENTS. THIS FACT SHOWS THAT THE DISCLOSURE WAS NOT BASED ON ANY CALCULATIO N OF UNDISCLOSED INCOME ON THE BASIS OF SEIZED PAPERS/DO CUMENTS. THE DISCLOSURE SO MADE WAS ALSO NOT BASED ON ANY UNACCO UNTED ASSETS/VALUABLES. THE ASSESSEE WAS 83 YEARS OLD PER SON AND THE LONG DURATION OF THE SEARCH MIGHT HAVE TIRED OUT AN D FRUSTRATED HIM AND THE REVENUE WAS ABLE TO EXTRACT THE SURREND ER WHICH HAS BEEN RETRACTED WITHIN 6 DAYS WHERE TWO HOLIDAYS WER E IN BETWEEN. THE CBDT HAS ISSUED INSTRUCTIONS WITH REGA RD TO THE CONFESSION OF ADDITIONAL INCOME DURING THE COURSE O F SEARCH AND SEIZURE AND SURVEY OPERATIONS. INSTRUCTION NO.F.NO. 286/2/2003-IT (INV.II) DATED 10.03.2003 GIVE SOME REFLECTIONS ABO UT SUCH CONFESSION OF ADDITIONAL INCOME WITHOUT ANY CREDIBL E EVIDENCE DURING THE COURSE OF SEARCH AND SEIZURE WHICH IS QU OTED AS UNDER:- INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WHERE ASSESSEES HAVE CLAIMED THAT THEY HAVE BEEN FORCED TO CONFESS THE UN DISCLOSED INCOME DURING THE COURSE OF THE SEARCH & SEIZURE AND SURVEY OPE RATIONS. SUCH CONFESSIONS, IF, NOT BASED UPON CREDIBLE EVIDENCE, A RE LATER RETRACTED BY THE CONCERNED ASSESSEES WHILE FILING RETURNS OF INCOM E. IN THESE CIRCUMSTANCES, SUCH CONFESSIONS DURING THE COURSE OF S EARCH & SEIZURE AND SURVEY OPERATIONS DO NOT SERVE ANY USEFUL PURPOSE. IT IS, THEREFORE, ADVISED THAT THERE SHOULD BE FOCUS AND CONCENTRATION ON COLLECTION OF EVIDENCE OF INCOME WHICH LEADS TO INFORMATION ON WHA T HAS NOT BEEN ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 13 DISCLOSED OR IS NOT LIKELY TO BE DISCLOSED BEFORE THE INCOME-TAX DEPARTMENT. SIMILARLY, WHILE RECORDING STATEMENT DURING THE COURSE OF SEARCH & SEIZURE AND SURVEY OPERATIONS NO ATTEMPT SHOUL D BE MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INCOME. ANY ACTION ON THE CONTRARY SHALL BE VIEWED ADVERSELY. FURTHER, IN RESPECT OF PENDING ASSESSMENT PROCEEDINGS ALSO, ASSESSING OFFICERS SHOULD RELY UPON THE EVIDENCES/MATERIALS GATH ERED DURING THE COURSE OF SEARCH/SURVEY OPERATIONS OR THEREAFTER WHILE F RAMING THE RELEVANT ASSESSMENT ORDERS. IN THE ASSESSEES CASE ALSO, THIS ADMISSION OF ADDI TIONAL INCOME IS NOT BASED UPON ANY CREDIBLE EVIDENCE AND THE SAME H AS BEEN RETRACTED WITHIN 6 DAYS FROM THE SEARCH. NON-ASKING ANY QUESTION REGARDING SEIZED PAPERS/DOCUMENTS FROM THE PREMISES OF THE ASSESSEE CLEARLY SHOWS THAT THERE WAS NO FOCUS AND CONSIDERATION OF THE SEARCH PARTY ON THE COLLECTION OF EVIDENCE O F INCOME WHICH LEAD TO INFORMATION ON WHAT HAS BEEN DISCLOSED OR I S NOT LIKELY TO BE DISCLOSED BEFORE THE REVENUE AUTHORITIES. THERE IS NO EVIDENCE FOUND AND SEIZED THAT ASSESSEE HAS CARRIED OUT SPEC ULATION TRADING DURING THE RELEVANT PERIOD. NO DOCUMENT IN THIS REGARD WAS SEIZED FROM THE PREMISES OF THE ASSESSEE. THE D OCUMENTS SEIZED FROM THE RESIDENCE OF SHRI PREM ARORA WAS RE LATED TO THE FINANCIAL YEAR 2003-04 AND THE INCOME EARNED IN THO SE TRANSACTIONS HAS BEEN RECEIVED BY THE ASSESSEE THRO UGH BANKING CHANNELS AND NOT BY CASH AND THE SAME HAS BEEN DULY ACCOUNTED FOR. IN SUCH A SITUATION, THE PRESUMPTION THAT ASSE SSEE MIGHT HAVE CARRIED OUT SPECULATION BUSINESS DURING THE YEAR ON THE BASIS OF SUCH DOCUMENT SEIZED IS COMPLETELY UNTENABLE AND UN SUSTAINABLE AND ADDITIONS BASED ON SUCH PRESUMPTION CANNOT BE S USTAINED. THE INFERENCE THAT SHRI PREM ARORA WAS IN POSSESSIO N OF THE CASH ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 14 AND BEING THE CLOSE PERSON OF THE ASSESSEE, ASSESSE E MIGHT HAVE BEEN INDULGING IN THE SPECULATION BUSINESS OF THE C OMMODITY TRADING IS ALSO UNSUSTAINABLE PRESUMPTION. NO ADVER SE INFERENCE CAN BE DRAWN ABOUT THE ASSESSEE ON SUCH PRESUMPTION . THE ASSESSING OFFICERS RELIANCE THAT ASSESSEE HAS ALSO NARRATED ABOUT THE INVESTMENT OF THE UNDISCLOSED SPECULATIVE INCOME IN THE PURCHASE OF GOLD AND JARAU JEWELLERY, INVESTMENT IN SHARES AND INVESTMENT IN VAIDA BAZAAR AND ADVANCES GIVEN TO TH E PARTIES TRADING IN AGRICULTURAL FIELD IS ALSO NOT SUPPORTED BY ANY DOCUMENT. NOTHING HAS BEEN FOUND DURING THE SEARCH AND NO SUCH ASSETS HAD BEEN RECOVERED. THEREFORE, SUCH ADDITION S MADE ONLY ON THE BASIS OF A STATEMENT WHICH HAS BEEN RETRACTE D IMMEDIATELY THEREAFTER ARE NOT SUSTAINABLE. THE PATTERN OF THE QUESTIONS PUT TO THE ASSESSEE DURING THE SEARCH OF THE PREMISES SHOW S THAT WHATEVER RECORDED IN THESE STATEMENTS IS NOT TRUE. ONLY ON THE BASIS OF PRESUMPTION THAT LARGE SCALE CONSTRUCTION WAS GOING ON AT THE SCHOOL BUILDING OF THE TRUST AND HOSPITAL OF TH E TRUST CANNOT BE MADE A BASIS FOR ADDITION. THE ASSESSING OFFICER SH OULD HAVE ASCERTAINED THE INVESTMENT BY WAY OF REFERRING THE CASE TO THE DVO IF HE HAS ANY DOUBT IN THIS REGARD. NO EVIDENCE REGARDING ANY ANONYMOUS DONATION BY THE TRUST WAS FOUND AND S EIZED AND NOTHING HAS BEEN MADE OUT BY THE ASSESSING OFFICER IN THE ASSESSMENT. THE OTHER ASSESSMENTS U/S 153A OF THE A CT IN ASSESSEES CASE FOR ASSESSMENT YEAR 2001-02 TO 2006 -07 HAVE BEEN MADE WITHOUT ANY ADDITION. THUS, IN OUR CONSID ERED VIEW, NO INCRIMINATING EVIDENCE WAS FOUND AGAINST THE ASSESS EE WHICH COULD SUGGEST OR SHOW THAT UNEXPLAINED INVESTMENT H AS BEEN MADE TO THE TUNE OF RS.15 CRORES AND SUCH INCOME HA S BEEN ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 15 UTILIZED OR INVESTED AS STATED BY THE ASSESSEE IN T HE RETRACTED STATEMENT. NOTHING OF SUCH SORT BORNE OUT OF THE FA CTS. IN OUR CONSIDERED VIEW, NO ADDITION CAN BE MADE MERELY ON THE BASIS OF SURRENDER WITHOUT EXISTENCE OF ANY CORROBORATIVE EV IDENCE FOUND AGAINST THE ASSESSEE. FOR THIS PROPOSITIONS, RELIAN CE IS PLACED ON THE FOLLOWING CASE LAWS :- A. KAILASHBEN MANGARLAL CHOKSHI VS CIT (2008) 174 TAXMANN 466 (GUJ.) / (2008) 14 DTR 257 (GUJ.) MERELY ON THE BASIS ADMISSION, THE ASSESSEE COULD N OT HAVE BEEN SUBJECTED TO ADDITIONS, UNLESS AND UNTIL SOME CORROBORATIVE EVIDENCE WAS FOUND IN SUPPORT OF SUCH ADMISSION. FURTHER STATEMENT RECORDED AT SUCH ODD H OURS (AT MIDNIGHT) COULD NOT BE CONSIDERED TO BE VOLUNTARY S TATEMENT, IT WAS SUBSEQUENTLY RETRACTED AND NECESSARY EVIDENC E WAS LED CONTRARY TO SUCH ADMISSION. ADDITION WAS DELETE D. B. ARUN KUMAR BHANSALI VS DCIT (2006) 10 SOT 46 (BANG) (URO) BLOCK PERIOD 1990-91 TO 1999-2000 - WHETHER WHILE COMPUTING UNDISCLOSED INCOME OF ASSESSEE, ASSESSING OFFICER SHOULD TAKE COGNIZANCE OF SUCH CORRECT INCO ME AS DEPICTED IN BOOKS OF ACCOUNT AS WELL AS IN SEIZED M ATERIAL, AND SHOULD NOT ADOPT A FIGURE MERELY AS PER ADMISSI ON OF ASSESSEE - HELD, YES. C. SHREE CHAND SONI VS DCIT (2006) 101 TTJ (JD) 10 28 SEARCH AND SEIZURE BLOCK ASSESSMENT CONSUMPTIO N OF UNDISCLOSED INCOME ADDITION BASED ON THE ASSES SEES STATEMENT UNDER S. 132 (4) ADMITTEDLY, NO INCRIMI NATING DOCUMENT WAS FOUND TO SUPPORT THE IMPUGNED ADDITION REGARDING BOGUS CAPITAL - STATEMENT RECORDED UNDER S. 132(4) DOES NOT TANTAMOUNT TO UNEARTHING ANY INCRIMINATING EVIDENCE DURING THE COURSE OF SEARCH - THEREFORE, N O ADDITION COULD BE MADE ONLY ON THE BASIS OF SUCH STATEMENT. ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 16 D. RAJESH JAIN VS DCIT (2006) 100 TTJ (DEL) 929 SEARCH AND SEIZURE - BLOCK ASSESSMENT - RETRACTION OF STATEMENT - ADDITION OF RS.25 LAKHS MADE SOLELY ON THE BASIS OF CONFESSIONAL STATEMENT OF ASSESSEE THAT HE EARNED THE SAID AMOUNT IN THE LAST TEN YEARS WAS NOT JUSTI FIED - CONFESSIONAL STATEMENT SHOULD BE CORROBORATED WITH SOME MATERIAL TO SHOW THAT ASSESSMENT MADE IS JUST AND F AIR - CONDUCT OF AFFAIRS BY THE REVENUE AUTHORITIES SHOWS THAT GOOD AMOUNT OF PSYCHOLOGICAL PRESSURE WAS BUILT ON THE ASSESSEE TO MAKE THE SAID STATEMENT, WHICH WAS RETR ACTED - FURTHER, THE ADDITION WAS ILLEGAL AS WHILE THE ASSE SSEE SPOKE OF EARNING THE SAID INCOME OVER A PERIOD OF 1 0 YEARS, TOTAL ADDITION WAS MADE IN TWO ASST. YRS. 1999-2000 AND 2000-2001 - ALL MATERIAL FOUND DURING SEARCH WAS DU LY EXPLAINED BY ASSESSEE ON WHICH NO ADVERSE COMMENT W AS MADE BY AO - ASSESSEE TO BE ASSESSED ON THE INCOME RETURNED BY HIM FOR THE BLOCK PERIOD. FURTHER RELIANCE IS ALSO PLACED WHETHER NO ADDITION CAN BE MADE SIMPLY ON THE BASIS OF SURRENDER WITHOUT ANY C OGENT AND VALID REASONS AND WHICH THE ASSESSEE HAS SUBSEQUENTLY RETRACTED. FOR THIS PROPOSITION, THE RELIANCE IS PLACED ON THE FOLLOWING CASE LAWS:- A. INDIA SEED HOUSE V S ASSTT. CIT (2000) 69 TT J (DELHI) (TM) 241 IN CASE OF BLOCK ASSESSMENT NO ADDITION CAN BE MADE MERELY ON THE BASIS OF STATEMENT RECORDED AT THE TIME OF S EARCH WHICH STANDS FULLY PROVED TO BE INCORRECT IN VIEW O F THE MATERIAL ITSELF WHICH WAS SEIZED AT THE TIME OF SEA RCH. ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 17 B. PRANAV CONSTRUCTION CO. VS ASSTT. CIT (1998) 3 D TC 719 (MUM-TRIB) (1998) 61 TTJ (MUM.-TRIB) 145 IT WAS HELD THAT THE ADMISSION CANNOT BE READ AS AN ACT OF PARLIAMENT AND THAT IT HAS TO BE READ IN THE CONTEX T FAIRLY AND REASONABLY. THE BURDEN OF INCURRING THE EXPENDI TURE CAN BE DISCHARGED EITHER BY DIRECT EVIDENCE OR IF SUCH EVIDENCE IS NOT AVAILABLE THE ASSESSEE CAN ALWAYS POINT OUT TO CIRCUMSTANTIAL EVIDENCE SUPPORTING THE CLAIM. THUS, STATEMENT RECORDED UNDER SECTION 132(4) CANNOT BE M ADE USE FOR PURPOSE OF PRECLUDING ASSESSEE FROM CLAIMIN G EXPENDITURE FOR EARNING INCOME WHICH ASSESSEE FORGO T TO CLAIM WHILE MAKING STATEMENT DISCLOSING INCOME. C. GANGA SARAN & SONS (P) LTD. VS ITO (1981) 130 IT R 1 (SC) : ITO VS NAWAB MIR BARKAT AU KHAN BAHADUR (1974) 97 I TR 239 (SC) BELIEF SHOULD NOT BE ARBITRARY OR IRRATIONAL BUT BA SED ON RELEVANT AND MATERIAL REASONS. D. S. NARAYANAPPA VS CIT (1967) 63 ITR 219 (SC) BELIEF MUST BE IN GOOD FAITH, AND CANNOT MERELY BE A PRETENCE. E. MADHYA PRADESH INDUSTRIES LTD. VS ITO (1970) 77 ITR 268 (SC) ABSENCE OF EVIDENCE TO PROVE EXISTENCE OF ITO'S BEL IEF THAT INCOME HAS ESCAPED ASSESSMENT, WILL INVALIDATE REASSESSMENT. F. MAYANK PODDAR (HUF) VS WTO (2003) 181 CTR (CAT) 362 IF IN LAW AN ITEM IS NOT TAXABLE, NO AMOUNT OF ADMI SSION OR MISAPPREHENSION CAN MAKE IT TAXABLE. THE TAXABILITY OR THE AUTHORITY TO IMPOSE TAX IS INDEPENDENT OF ADMISSION . NEITHER THERE CAN BE ANY WAIVER OF THE RIGHT BY THE ASSESSE E. THE DEPARTMENT CANNOT RELY UPON ANY SUCH ADMISSION OR MISAPPREHENSION IF IT IS NOT OTHERWISE TAXABLE. ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 18 WE WOULD ALSO LIKE TO STATE THAT ASSESSEE RETRACTED BY FILING A WRITTEN SUBMISSION BEFORE THE DIT, INV.-I, NEW DELH I ON 28.11.2006 WHICH IS 6 DAYS AFTER THE SEARCH. THERE WAS SUFFICIENT TIME WITH THE INVESTIGATION WING TO CARRY ON THE IN VESTIGATION AND TO COLLECT THE EVIDENCE AGAINST THE RETRACTION. HOW EVER, RECORDS SHOW THAT NOTHING HAS BEEN DONE IN THIS REGARD. IN SUCH A SITUATION, THE RETRACTION OF THE ASSESSEE CANNOT BE SAID TO BE INVALID IN ABSENCE OF ANY INCRIMINATING DOCUMENTS. IN VIEW OF THESE FACTS, WE UPHOLD THE ORDER OF THE CIT (A). 8. SINCE SIMILAR FACTS ARE PERMITTING IN THIS APPE AL ALSO, THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID DECISI ONS RENDERED ON SIMILAR FACTS, WE ALSO UPHOLD ORDER OF LD. CIT (A) O N THE GROUND THAT SUCH A SURRENDER MADE BY THE ASSESSEE IS NOT SUPPORTED BY ANY INCRIMINATING MATERIAL OR EVIDENCE UNEARTHED DURING THE COURSE OF SEARCH OR HAS BEEN FOUND DURING THE COURSE OF THE ASS ESSMENT PROCEEDINGS. ACCORDINGLY THE REVENUES APPEAL IS DIS MISSED. 9. NOW WE WILL COME TO THE ASSESSEES APPEAL, WHEREIN FOLLOWING GROUNDS HAVE BEEN RAISED:- 1. THE ID. CIT (APPEALS) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS. 13,33,975/- ON ACCOUNT OF DIFFE RENCE IN THE VALUE OF JEWELLERY ESTIMATED BY THE DEPARTMENTA L VALUER OVER & ABOVE ITS ACTUAL COST OF ACQUISITION DECLARE D BY THE APPELLANT; ALTHOUGH THERE WAS NO DIFFERENCE IN THE GROSS ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 19 WEIGHT OF THE IMPUGNED JEWELLERY ITEMS. THUS, THE A DDITION CONFIRMED ON SURMISES AND CONJECTURES MUST BE DELET ED. 2. THE ID. CIT (APPEALS) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS. 5,00,000/- AS UNEXPLAINED CASH CREDIT FOR ALLEGEDLY PAYING ADVANCE TOWARDS PURCHASE OF SOME PROPERTY ON THE BASIS OF A SEIZED DOCUMENT - A. THOUGH FACTUALLY NO SUCH DEAL EVER TOOK PLACE ; B. WHILE IGNORING THAT THE ALLEGED RECEIVER OF MONE Y WAS NOT CONFRONTED BY THE DEPARTMENT; AND C. WHILE REJECTING THE PLEA THAT OTHERWISE ALSO THE SAID AMOUNT BECOMES PART OF THE CASH FOUND THAT STOOD OFFERED AS INCOME BECAUSE THE SAME HAD TO BE TAKEN AS RETURNED TO THE ASSESSEE AS THE SAID PROPERTY WA S NOT PURCHASED. THUS, THE ADDITION SO MADE MUST BE DELETED. 10. SO FAR AS THE FIRST ISSUE IS CONCERNED THE BRIE F FACTS ARE THAT THE AO OBSERVED THAT DURING THE COURSE OF SEARCH, JEWELLER Y OF RS. 38,45,840/- WAS FOUND FROM THE RESIDENCE AND RS. 26, 40,331/- WAS FOUND FROM THE LOCKER. THE ASSESSEE SUBMITTED A RECONC ILIATION OF JEWELLERY FOUND WITH RESPECT TO THE WEALTH TAX RETURN OF HIMSELF AND HIS WIFE AGGREGATING TO RS. 47,58,469/-, AND POINTED OUT T HAT OUT OF THE SAID AMOUNT, SUM OF RS. 27,40,732/- IS EXPLAINABLE F ROM THE SOURCES ALREADY DECLARED AND THE BALANCE OF RS. 20,17,737/- WAS ADMITTED AS ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 20 UNDISCLOSED INCOME IN THE RETURN OF INCOME FILED. AS REGARDS THE EXPLANATION ABOUT JEWELLERY ALREADY DECLARED AT RS. 2 7,40,732/- THE ASSESSEE HAS CLAIMED THAT HE HAS PURCHASED CERTAIN ITEM S OF JEWELLERY FROM M/S. R.R. GEMS (P) LTD. FOR SUMS AGGREGATING TO R S. 9,89,350/-, WHEREAS THE DEPARTMENTAL VALUATION OFFICER HAS VALUED I T AT RS. 23,23,325/-. ACCORDINGLY, AO ADDED THE DIFFERENCE A MOUNTING TO RS. 13,33,975/-. LD. CIT (A) TOO HAS CONFIRMED THE SAID ADDITION ON THE GROUND THAT THE DIFFERENTIAL AMOUNT AS PER THE BILL AND THE DVOS REPORT MUST HAVE BEEN INVESTED IN CASH. 11. AFTER HEARING BOTH THE PARTIES, WE FIND THAT TH E ASSESSEE HAS GIVEN FOLLOWING RECONCILIATION OF JEWELLERY FOUND A ND THE JEWELLERY DECLARED BY THE ASSESSEE:- JEWELLERY FOUND FROM THE RESIDENCE ON 22/11/06 (AS PER DEPARTMENTAL VALUATION REPORT):. 38,45,840 JEWELLERY FOUND FROM THE BANK LOCKER ON 511/07 (AS PER DEPARTMENTAL VALUATION REPORT): 26,40,331 TOTAL JEWELLERY FOUND DURING THE SEARCH: 64,86 ,171 LESS: DECLARED BY MRS. JYOTI GULATI (WIFE OF THE AS SESSEE): 17,27,702 JEWELLERY BELONGING TO MR. RAJIV GULATI (THE ASSESS EE): 47,58,469 LESS: ALREADY DECLARED AS PER BOOKS BY THE ASSESSEE : 27,40,732 DECLARED IN THE RETURN FILED FOR THE AY 2007-08 AFT ER SEARCH: 20,17,737 ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 21 SO FAR AS THE JEWELLERY ALREADY DECLARED BY THE ASSE SSEE AMOUNTING TO RS. 27,40,732/- THE SAME IS NOT IN DISPUTE. THE DISPUT E IS ONLY WITH REGARD TO CERTAIN ITEMS OF JEWELLERY WHICH ASSESSEE HA S STATED TO HAVE BEEN PURCHASED FROM THE JEWELLER M/S. R R GEMS (P) LTD. FOR SUM OF RS. 5,09,600/- ON 30.8.2006 VIDE BILL NO. 1269; AND SUM OF RS. 4,79,750/- VIDE BILL NO. 1270 DATED 30.8.2006. HOWE VER, THE DEPARTMENTAL VALUATION OFFICER HAS VALUED THE SAME AT RS . 23,23,325/- WHICH AS PER THE BILL AGGREGATED TO RS. 9 ,89,350/-. THE DIFFERENCE BETWEEN THE VALUATION REPORT AS WELL AS IN THE PURCHASE BILLS SUBMITTED BY THE ASSESSEE IS AS UNDER:- AS PER VALUATION REPORT DATED 22/11/06 SL. DESCRIPTION GROSS NET WEIGHT OF VALUE OF DESCRIPTION OF VALUE OF TO TAL NO. WEIGHT PRECIOUS METAL PRECIOUS METAL PREC IOUS & SEMI STONES (GMS.) (GMS.) CONTENT (RS.) PRECIOUS STONES (RS.) (RS.) & WEIGHT 1. 2 PC.DIAMOND 46.300 40.700 30 .525 DIA.-28 CT. 616,000 646.525 BANGLES (18K)) 11. 3 PCS. DIAMOND 140.000 134.400 100,8 00 DIA.-28 CT. 368,000 468,800 17. 1 PR.TOPS OF 5.200 4.000 3,000 2 PC. DIA.-6 CT. 1,205,000 1,208,000 SINGLE DIAMOND _________________ _ __________ TOTAL 191.500 179.100 2,323,325 __________________ _ AS PER THE ASSESSEE (PURCHASE BILLS) BILL NO. 1269 DATED 30/8/2006 OF RR GEMS (P) LTD. RS. 5,09,600/- 1. 1 PAIR DIAMOND 46.355 41.261 26,159 DIA-25.01 CT. 233,843 260,002 BANGLES SET IN GOLD 139.545 131.000 83 ,054 DIA-42.5 CT. 161.500 244,554 ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 22 504,556 ADD: 1% VAT 5,044 _______ ______________ TOTAL 185.900 172.261 509,600 ________________ ______ __ BILL NO. 1270 DATED 30/8/2006 OF RR GEMS (P) LTD. RS. 4,79,750/- 1. 1 PC. SILVER POLISHED TOPS DIAMOND SETTING IN GOLD 5.200 4.00 6 2,540 DIA-6.04 CT. 472,460 475,000 ADD: 1% VAT 4,750 __________ _____ _________ TOTAL 5.200 4.006 479,750 ____________ ____ __________ ____________________ ______ ______ GRAND TOTAL 191.100 176.267 989,350 (BOTH BILLS) _____________________ ____________ 12. FROM THE PERUSAL OF THE ABOVE IT IS SEEN THAT THERE IS NOT MUCH DIFFERENCE IN THE GROSS WEIGHT OR NET WEIGHT ALBEIT THE DIFFERENCE IS ON ACCOUNT OF VALUATION OF THE JEWELLERY. THE DIFFERENCE IN GROSS WEIGHT IS MERELY 0.400 GMS, HOWEVER THERE IS A HUGE DIFFERENCE IN THE VALUATION. IF THERE IS NO QUANTITATIVE DIFFERENCE AND THE DIFFERE NCE IN ON ACCOUNT OF VALUATION, THEN AO SHOULD HAVE MADE SOME SORT OF EN QUIRY FROM THE JEWELLER, BECAUSE AS PER THE PURCHASE BILL THE SAME Q UANTITY OF JEWELLERY, HE HAS SHOWN A PARTICULAR VALUE AND IF SU CH VALUE IS LESS, THAN AO SHOULD HAVE ASCERTAIN THIS FACT. ONCE THERE IS E VIDENCE IN THE FORM OF ACTUAL PURCHASE BILL, THEN ESTIMATE MADE BY THE DVO CANNOT STAND UNLESS SOME MATERIAL IS BROUGHT ON RECORD TO SHO W THAT VALUE ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 23 SHOWN IN THE BILL HAS BEEN SUPPRESSED. THUS, WE DO NOT FIND ANY REASON TO CONFIRM SUCH AN ADDITION MERELY ON THE BA SIS OF ESTIMATE MADE BY THE DVO WHEN THERE IS NO DIFFERENCE IN THE QUA NTITY OF JEWELLERY. THUS, ADDITION OF RS. 13,33,975/- IS DELE TED. 13. LASTLY, ON THE ISSUE OF RS. 5 LACS AS UNEXP LAINED CASH CREDIT, THE RELEVANT FACTS ARE THAT, ONE SEIZED DOCUMENT PAGE N O. 18 OF ANNEXURE A-1 MENTIONED RECEIPT OF RS. 5 LACS IN CASH FROM SHRI RAJIV GULATI (ASSESSEE) ON 14.11.2006 BY THE OWNER OF THE F LAT NO. B-525 SUSHANT LOK-I, NEW DELHI. THE AO DID NOT FIND ASSESSE ES SUBMISSION AS SATISFACTORY AND THUS, HAD ADDED THE SAME AS UNEXPL AINED CASH CREDIT. BEFORE THE LD. CIT(A) THE ASSESSEE HAD STATED AS UNDER :- 9.2 THE APPELLANT HAS STATED THAT AS PER THE FACTS OF THE ISSUE, A RECEIPT FOR PAYMENT OF RS. 5,00,000/- TOWARDS PUR CHASE OF A PROPERTY WAS FOUND FROM THE FACTORY PREMISES OF M/S MAHASHIAN DI HATTI LTD. AT 139, UDYOG VIHAR PHASE-I, GURGAON (PARTY 0-3) DURING THE COURSE OF SEARCH PROCEEDINGS. THE SAME W AS SEIZED AT PAGE NO. 18 OF ANNEXURE A-I, PHOTOCOPY OF WHICH WAS FURNISHED IN THE PAPER BOOK. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, IT WAS EXPLAINED TO THE ASSESSING AUTHORITY THAT TH E APPELLANT RECEIVED A PROPOSAL FROM SOME MR. RAJEEV SETHI C/O GRAPH ASSOCIATES, C-889A, SUSHANT LOK-I, GURGAON, WHO WAS A PROPERTY DEALER, TO PURCHASE PLOT NO. B-525 AT SUSHANT LOK-I , GURGAON. IN ORDER TO PROVE HIS GENUINENESS, AS IS A STANDARD PR ACTICE OF THE PROPERTY BROKERS IN GURGAON, THE SAID BROKER BROUGH T A COPY OF THE TITLE DEED OF THE SAID PROPERTY FROM THE SELLER AND ALSO A PRE- SIGNED RECEIPT DATED 14/11/06 FOR RS. 5,00,000/- IN CASH BY THE PURCHASER. THE APPELLANT DID NOT LIKE THE LOCATION OF THE SAID ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 24 PROPERTY AND ALSO FELT THAT THE RATE QUOTED FOR THE PROPERTY WAS QUITE HIGH. THEREFORE, HE DECLINED TO PURCHASE THE SAME. BUT THE PROPERTY BROKER KEPT ON PERSUADING HIM TO PURCHASE THE SAID PROPERTY AND EVEN LEFT THOSE DOCUMENTS WITH THE APP ELLANT FOR HIS CONSIDERATION LATER ON. IT WAS FURTHER SUBMITTED THAT ASSESSEE HAD NEVER SIGNED O N THE SAID PAPER IT IS NOT KNOWN AS WHO HAS SIGNED AT THE PLACE OF THE PURCHASER AS THE ASSESSEE COULD NOT RECOGNISE THE SAID SIGNATU RE ON THE RECEIPT. 14. HOWEVER THE LD. CIT(A) CONFIRMED THE SAID ADDI TION AFTER OBSERVING AS UNDER :- 9.4 THE SUBMISSION GIVEN BY THE APPELLANT IS NOT A CCEPTABLE FOR THERE IS NO SUCH STANDARD PRACTICE ACCORDING TO WHI CH THE BROKER BRINGS PRE-SIGNED RECEIPTS OF WHICH THE APPELLANT I S TALKING. IN FACT, THIS IS AN ADMISSION BY THE APPELLANT THAT HE WAS INVOLVED IN THE SAID PROPERTY DEAL. THE FURTHER CONTENTION OF T HE APPELLANT THAT THE RECEIPTS IN ORDER TO BE ENFORCEABLE HAS TO BE S IGNED BY THE RECIPIENT, IS ALSO NOT ACCEPTABLE BECAUSE WHERE ON MONEY TRANSACTIONS TAKE PLACE THE PAPERS ARE NOT SIGNED E ITHER BY THE RECIPIENT OR BY THE GIVER. THUS, THE EXPLANATION GI VEN BY THE ASSESSEE IS NOT ACCEPTABLE AND THE ADDITION OF RS 5 ,00,000/- MADE BY THE ASSESSING OFFICER IS UPHELD. THIS GROUN D OF APPEAL IS DECIDED AGAINST THE APPELLANT. 15. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AS WELL AS THE MA TERIAL PLACED ON RECORD, WE FIND THAT A DOCUMENT WAS FOUND FROM THE POS SESSION OF THE ASSESSEE WHICH CLEARLY SHOWS A RECEIPT OF SUM OF RS. 5 LACS IN CASH TOWARDS THE PURCHASE OF THE PROPERTY. THE ASSESSEES S UBMISSION IS THAT THE PROPERTY DEALER HAD GIVEN A PROPOSAL TO THE ASS ESSEE FOR THE ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 25 PURCHASE OF SAID PLOT AND THE SIGNED RECEIPT IN CASH BY THE PURCHASER WAS GIVEN AS A MATTER OF PRACTICE. SINCE ASSESSEE DID NOT LIKE THE LOCATION, THEREFORE, HE DECLINED TO PURCHASE THE SAME. SUCH AN EXPLANATION IS NEITHER CORROBORATED BY ANY EVIDENCE NO R ANY CONFIRMATION BY THE SAID BROKER. ONCE A DOCUMENT HAS BEEN FOUND FROM THE POSSESSION OF THE ASSESSEE THEN THERE IS A PRE SUMPTION U/S 292C R.W.S. 132(4A) OF THE ACT THAT IT BELONGS TO THE ASSESSEE AND ONUS IS VERY HEAVY UPON THE ASSESSEE TO SHOW THAT THE I NCOME/ EXPENDITURE MENTIONED IN SUCH DOCUMENT DOES NOT PERTAIN TO THE ASSESSEE. HERE IN THIS CASE THERE IS A CLEAR CUT RECEI PT OF PAYMENT OF CASH OF RS. 5 LACS WHICH ASSESSEE HAS FAILED TO REBU T BY ADDUCING ANY PROPER EVIDENCE AND THEREFORE, FINDING GIVEN BY THE L D. CIT (A) IS CONFIRMED. ACCORDINGLY GROUND NO. 2 AS RAISED BY THE ASSESSEE IS DISMISSED. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED; WHE REAS, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH JANUARY, 2018. SD/- SD/- (PRASHANT MAHARISHI) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 4 TH JANUARY, 2018 ITA NO. 1762/DEL/2012 RAJIV GULATI VS. ACIT & ITA NO. 2726/DEL/2012 DCIT VS. RAJIV GULATI 26 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI