Chandulal Sadhuram Khemani, Nashik V. Asstt.CIT, (Cen.) Cir-2, Nashik, Nashik

ITA 370/PUN/2008

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9859 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-09-2012
• Assessment Year: 1998-1999
• Appeal Filed On: 05-03-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Unexplained investment; Unexplained expenditure; Search and seizure; Document seized; Opportunity of being heard; Documents seized
• Section: 69C; 40A(3); 153A; 234B; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER SRNO I.T.A. NO. ASSTT.YEAR APPELLANT V/S RESPPONDENT 1. 370 /PN/ 08 1998 - 99 CHANDULAL SADHURAM KHEMANI, 14, C.K. VILLA, OPP. SONALI APARTMENT, VISE MALA, COLLEGE ROAD, NASHIK 422 005, PAN :AMA PK 1030 G V. ASSTT. COMMISSIONER OF INCOME-TAX, (CENTRAL) CIRCLE- 2,NASHIK 422002 2. 371/PN/08 1999 - 00 - DO - V. - DO - 3. 372/PN/08 2000 - 01 - DO - V. - DO - 4. 373/PN/08 2001 - 02 - DO - V. - DO - 5. 374/PN/08 2002 - 03 - DO - V. - DO - 6. 375/PN/08 2003 - 04 - DO - V. - DO - 7. 376/PN/08 2004 - 05 - DO - V. - DO - 8. 383/PN/08 1998 - 99 ASSTT. COMMISSIONER OF INCOME-TAX, (CENTRAL) CIRCLE-2, NASHIK 422002 V. CHANDULAL SADHURAM KHEMANI, 14, C.K. VILLA, OPP. SONALI APARTMENT, VISE MALA,COLLEGE ROAD,NASHIK 422 005, PAN :AMA PK 1030 G 9. 384/PN/08 1999 - 00 - DO - V. - DO - 10. 385/PN/08 2000 - 01 - DO - V. - DO - 11. 386/PN/08 2001 - 02 - DO - V. - DO - 12. 387/PN/08 2002 - 03 - DO - V. - DO - 13. 388/PN/08 2003 - 04 - DO - V. - DO - 14. 389/PN/08 2004 - 05 - DO - V. - DO - ASSESSEE BY : S/SHRI SUNIL PATHAK & NIKHIL PATHAK DEPARTMENT BY : SHRI. S. K. SINGH DATE OF HEARING : 12/09/1 2 DATE OF PRONOUNCEMENT : 31-10-12 O R D E R PER BENCH IN THIS BATCH OF 14 APPEALS, 7 ARE FILED BY THE AS SESSEE AND 7 ARE FILED BY THE REVENUE. THESE APPEALS ARE ARISING OU T ASSESSMENT MADE AFTER SEARCH AND SEIZURE OPERATION AGAINST THE ASSE SSEE U/S. 132(1) OF THE ACT ON 9 TH OCTOBER 2003. 2 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., 2. WE FIRST TAKE UP THE ASSESSEES APPEAL BEING ITA NO. 370/PN/08 (A.Y. 1998-99). THE FIRST ISSUE IS THE ADDITION OF RS. 3,16,09,555/- IN RESPECT OF THE OPENING STOCK OF LAND DECLARED BY TH E ASSESSEE AS ON1.4.1997 AND THIS ISSUE IS ARISING FROM GROUND NO .3. THE ASSESSEE IS IN THE BUSINESS OF REAL ESTATE SINCE 1984. THERE W AS A SEARCH AND SEIZURE OPERATION AGAINST HIM U/S. 132(1) OF THE ACT ON 9.1 0.2003. THE ASSESSEE WAS NOT REGULAR IN FILING HIS RETURNS OF INCOME AND THE ONLY RETURN OF INCOME FILED BY THE ASSESSEE IS FOR THE A.Y. 1998-9 9 ON 28 OCTOBER 2000 DECLARING THE TOTAL INCOME OF RS. 97,530/-. THE SA ID INCOME WAS ACCOMPANIED BY THE BALANCE SHEET AS ON 31.3.1998. SL.NO. PARTICULARS AMOUNT RS. 1. PLOT ADVANCE S.NO. 329 20,43,000/- 2. INVESTMENT IN AGRICULTURAL LAND GUT NO.350/IA & GUT NO. 349/1/6D OF VILLAGE JALALPUR 27.07,000/- 3. SRIRAM CO-OPERATIVE BANK LTD. 4,65,968/- 4. CASH IN HAND 18,259/- 3. THE ASSESSEE HAS MADE THE DECLARATION UNDER THE VOLUNTARY DISCLOSURE OF INCOME SCHEME 1997 (IN SHORT VDIS -19 97) DECLARING UNDISCLOSED INCOME OF RS. 30,00,000/-. AS PER THE SAID DECLARATION, THE ASSESSEE HAD DECLARED INVESTMENTS AS UNDER : SL.NO. PARTICULARS AM OUNT RS. 1. INVESTMENT IN RESIDENTIAL HOUSE 16,00,000/- 2. ADVANCE FOR LAND SURVEY NO. 329 2,50,000/- 3. CASH IN HAND 8,50,000/- 4. HOUSE EXPENDITURE 1,80,000/- AFTER THE SEARCH AND SEIZURE ACTION U/S 132(1) OF T HE ACT, THE ASSESSEE FILED THE RETURN OF INCOME IN RESPONSE TO NOTICE I SSUED U/S. 153A FOR THE A.Y. 1998-99, DECLARING TOTAL INCOME OF RS. 4,88,50 0/- WHICH WAS FROM THE BUSINESS OF THE LAND DEVELOPMENT. THE ASSESSEE WAS NOT REGULARLY MAINTAINING THE BOOKS OF ACCOUNT IN RESPECT OF HIS BUSINESS IN THE 3 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., PURCHASE AND SALE OF THE LAND. THE ASSESSEE FILED THE PROFIT & LOSS A/C. DECLARING THE OPENING STOCK OF RS. 3,76,09055/- AS ON 1.4.1997 AND SUBSEQUENTLY THE ASSESSEE FILED BALANCE SHEET AS ON 1.04.1997 IN WHICH ALSO, HE HAD SHOWN THE STOCK OF LANDS OF RS. 3,76,0 9055/- AND THE ADVANCES FOR LAND OF RS. 84,86,500/-. THE DETAILS OF THE OPENING STOCK OF LAND/ PROPERTY DECLARED BY THE ASSESSEE IN HIS PROF IT & LOSS A/C. AS WELL AS THE BALANCE SHEET AS ON 1 ST APRIL 1997 ARE AS UNDER : SR.NO. PARTICUL ARS AMOUNT RS. P. 1. SURVEY NO. 6/4/1 6/3/2 65,05,000/ - 2. S.NO. 685B + 686/1/1A (DRC) 48,01,000/ - 3. S.NO. 705/2/1 LAY OUT 1 93,900/ - 4. S.NO.705/2/1 NSK LAY OUT 1 PART 2,50.102/ - 5. S.NO.705/2/1 NASIK LAY OUT 2 18,05,053/ - 6. S.NO. 208 1,96 ,000,00/ - 7. 23/1/2/3 12,81,500/ - 8. S. NO.72/1/3/125 32,73,000/ - AS AGAINST THE PROPERTY AT SL. NO. 6, I.E. BEARING S. NO. 208, THE ASSESSEE HAS SHOWN THE OUTSTANDING LIABILITY OF RS. 60,000,0 0/- AS ON 1 ST APRIL 1997. 4. THE A.O ASKED THE ASSESSEE TO FURNISH THE DOCUME NTARY EVIDENCE IN SUPPORT OF THE CLAIM OF OPENING STOCK OF LAND/PROPE RTY AS ON 01.4.97 OF RS. 3,76,09055/-. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, DOCUMENT RELATED TO S.NO. 685 B + 686/1/1A(S.NO.2 D RC), S.NO. 705/2/1 LAY OUT NO.2, I.E. S. NO.5, S. NO. 705/2/1 LAY OUT 1 PART (S.NO.4) AND S.NO. 72/1/3/125 (S.NO.8) WERE FOUND AND SEIZED. A LL THE ABOVE TRANSACTIONS OF THE PURCHASE OF LANDS WERE CLAIMED TO HAVE BEEN MADE IN CASH. NONE OF THE DOCUMENT/AGREEMENTS WHICH WERE M ADE IN RESPECT OF THE ABOVE IMMOVABLE PROPERTIES WERE REGISTERED UNDE R THE REGISTRATION ACT, IN SPITE OF THE FACT THAT THE AMOUNTS INVOLVE D IN THE SAID TRANSACTIONS WERE QUITE AT HIGHER SIDE. THE A.O AS KED THE ASSESSEE TO PROVE THE AUTHENTICITY AND GENUINENESS OF THE SAID DOCUMENTS. ALL THE SEIZED DOCUMENTS WERE ON THE STAMP PAPERS AND THE S AME WERE DULY NOTARIZED FROM TIME TO TIME. THE ASSESSEE CLAIMED THAT AS PER THE MODUS OPERANDI ADOPTED BY THE ASSESSEE, HE WAS PREFERING TO SETTL E THE DEAL WITH THE LAND OWNER BY EXECUTING THE AGREEMEN TS ON PAYMENT OF THE CONSIDERATION MOSTLY IN CASH AND THOSE DOCUMENT S/AGREEMENTS WERE NOTARIZED BEFORE THE NOTARY PUBLICS. IN ADDITION T O THE DOCUMENTS FOUND 4 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., DURING THE COURSE OF SEARCH AND SEIZURE OPERATION I N THE RESIDENTIAL/BUSINESS PREMISES OF THE ASSESSEE, THE ASSESSEE ALSO FILED THE DOCUMENTS IN RESPECT OF THE FOLLOWING PROPERTIES WH ICH WERE CLAIMED AS A PART OF THE OPENING STOCK OF IMMOVABLE PROPERTIES SHOWN AS ON 1.4.97 : SL.NO. PARTICULARS AGREEMENT DATE AMOUNT RS. P. 1. S.NO.6/3/2 & S.NO.6/4/1 28.4.1996 & COPY TO GENERAL POWER OF ATTORNEY (GPA) DT. 26.11.1993 65,05,000/- 2. LAND BEARING S.NO.208/1/1, COPY OF AGREEMENT DATED 15 FEB 95 FOR PURCHASE OF PLOT OF 1H, 22R FROM SHRI SAYYED HANIF SAYYED PHIRJADE & OTHERS BUT NO GPA , ONLY NOTARIZED AND ALSO COPY OF SUPPLEMENTARY AGREEMENT DATED 7.12.1998 WITH THE SAME LAND OWNERS FOR THE PURPOSE OF ULC 15 FEB 95 1,96,00,000/- 3. COPY OF AGREEMENT DATED 22.7.96 IN RESPECT OF S.NO.23/1/1-2-3, DATED 22.7.96 FOR PURCHASE OF 3 PLOTS ON 2000 SQ.MTS. EACH WHICH WAS ONLY NOTARIZED DOCUMENT.GPA FROM THE SAME LAND OWNER DT. 15.10.96 (ONLY NOTARIZED) 22.7.96 & GPA DT. 15.10.96 12,80,000/- 4. S.705/2/1 LAY OUT -1 3.4.1992 93,900/- TOTAL 2,74,80,400/- 5. IN RESPECT OF THE AUTHENTICITY AND GENUINENESS O F THE DOCUMENTS FILED IN SUPPORT OF THE TOTAL INVESTMENT OF RS. 2,7 4,80,400/- AND THE CLAIM WAS MADE THAT THE SAID TRANSACTIONS WERE PRIOR TO 1.4.1997 THE A.O. ASKED THE ASSESSEE TO PROVE THE SAME. IN RESPECT O F THE TRANSACTION OF RS.1,96,00,000/- (S.NO. 208/1/1, OWNER SHRI SAYYED HANIF SAYYED PHIRJADE & OTHERS) IT WAS CLAIMED THAT OUT OF THE T OTAL CONSIDERATION, THE SUM OF RS. 60,00,000/- WAS OUTSTANDING AS ON 1.4.19 97. THE A.O. HAS 5 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., OBSERVED THAT IN RESPECT OF THE COPIES OF THE AGREE MENT AS WELL AS THE GENERAL POWER OF ATTORNIES (GPA) WHICH WERE RELATI NG TO THE ABOVE FOUR TRANSACTIONS, EVEN THOUGH THE ASSESSEE FILED THE DE CLARATION UNDER THE VDIS 1997 BUT THE ABOVE INVESTMENTS WERE NOT DEC LARED TO THE EXTENT OF RS.2,14,80,400/- (RS. 2,74,80,400/- MINUS RS. 60 ,00,000/-). THE A.O. HELD THAT THE INVESTMENT MADE BY THE ASSESSEE AMOUNTS TO EXPENDITURE WITHIN THE MEANING OF SEC. 69C AND THE SAID PAYMENT/AMOUNT OF RS. 2,14,80,400/- AS PER THE PROV ISIONS OF SEC. 69C COULD NOT BE ALLOWED AS A DEDUCTION IN ANY HEAD OF INCOME IN ANY A.Y. IN WHICH THE PLOTS OF LAND OUT OF SUCH STOCKS ARE SOLD . IN RESPECT OF DOCUMENTS SEIZED DURING THE SEARCH AND SEIZURE OPER ATION, WHICH WERE RELATING TO THE PROPERTY SHOWN AS SL. 2, SL.4, SL.5 & 8 HEREINABOVE TO THE EXTENT OF RS.1,01,29,155/-, THE A.O HELD THAT EVEN THOUGH THE SAID DOCUMENTS WERE NOT REGISTERED DOCUMENTS, THEY ARE FOUND TO BE MADE PRIOR TO 1.4.1997, WHICH WERE IN THE NATURE OF THE AGREEMENTS AND GPA. THE A.O HAS OBSERVED THAT AS THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE, TO PROVE THEIR GENUINENESS AND AUTHENTICI TY NOR THE ASSESSEE DID PRODUCE ANY NOTARY, OR ANY NOTARY REGISTERED OR ANY OF THE SELLERS OR JOINT SELLERS IN THE SAID DOCUMENTS, HENCE THE SAME IS TO BE TREATED AS UNEXPLAINED EXPENDITURE WITHIN THE MEANING OF SEC. 69C AND AS PER THE PROVISO TO SEC. 69C, THE DEDUCTION CLAIMED BY THE A SSESSEE IN RESPECT OF THE SAID EXPENDITURE, CANNOT BE ALLOWED UNDER THE H EAD OF ANY INCOME. THE A.O. DID NOT MAKE ANY ADDITION U/S.69 OF THE AC T AS UNEXPLAINED INVESTMENT BUT ONLY PROCEEDED TO MAKE THE DISALLOWA NCE IN RESPECT OF THE PRO RATA DEDUCTION CLAIMED BY THE ASSESSEE AGAINST THE SALE OF ABOVE PROPERTIES/LANDS. THE ASSESSEE CHALLENGED THE ACTI ON OF THE A.O BEFORE THE LD CIT(A) AND THE ISSUE BEFORE US FOR THE CON SIDERATION IS ARISING OUT OF THE ENHANCEMENT MADE BY THE LD CIT(A) TREATING THE OPENING STOCK OF IMMOVABLE PROPERTY/LANDS AS ON 1.4.1997 DECLARED B Y THE ASSESSEE IN THE PROFIT & LOSS A/C. AS WELL AS BALANCE SHEET WH ILE FILING THE RETURN OF INCOME IN RESPONSE TO THE NOTICE U/S. 153A (AFTER SEARCH AND SEIZURE OPERATION), AS UNEXPLAINED INVESTMENT WITHIN THE M EANING OF SEC. 69 OF THE I.T. ACT. 6. THE LD CIT(A) ACCEPTED THE PLEA OF THE ASSESSEE THAT SEC. 69C CANNOT BE MADE APPLICABLE TO THE OPENING STOCK OF LANDS/PROPERTIES SHOWN BY THE ASSESSEE AS ON 1.4.1997, BUT IN THE O PINION OF THE LD CIT(A), THERE WAS AN ERROR ON THE PART OF THE A.O T O TREAT THE SAID 6 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., OPENING STOCK OF LAND AS AN UNEXPLAINED EXPENDITUR E WITHIN THE MEANING OF SEC. 69C WHEN IN FACT, THE SAME WAS UNEXPLAINED INVESTMENT WITHIN THE MEANING OF SEC. 69 OF THE INCOME TAX ACT. THE LD CIT(A), THEREFORE, HELD THAT THE AMOUNTS RS.2,14,800,400/- AND RS. 1, 01,29,155/- ( TOTAL RS. 3,16,09,555/-) IS TO BE TREATED AS UNEXPLAINED INVESTMENT U/S. 69 OF THE ACT. THE OPERATIVE PART OF THE REASONING GIVEN BY THE LD CIT(A) IS AS UNDER : 9.1 ATTENTION IS DRAWN TO PARA 11, PAGE 6 TO 10 OF THE IMPUGNED ORDER. THE DISCUSSION THERE IS MADE UNDER THE HEADING DOC UMENTS NOT FOUND AND NOT SEIZED BUT FILED DURING THE ASSESSMENT PROCEEDINGS . WHILE DEALING WITH THIS CASE IT IS TO BE KEPT IN MIND THAT THE ASSESSEE NEV ER MAINTAINED ANY BOOKS OF ACCOUNTS NOR KEPT ANY KIND OF ACCOUNTS THAT COULD T HROW LIGHT ON HIS VARIOUS ACTIVITIES AND LAND DEALINGS. MOST OF HIS TRANSACT IONS WERE IN CASH. THE ONLY RETURN THAT HE FILED BEFORE SEARCH TOOK PLACE IN HI S CASE DID NOT SHOW THE STOCK OF LAND AS SHOWN BY HIM IN THE RETURN FILED U/S. 15 3A FOR AY 1998-99. THE AO HAS RECORDED DETAILED REASONS AS TO WHY HE DID NOT ACCEPT ASSESSEES CLAIM OF OPENING STOCK OF RS. 2,14,80,400/- AS HAVING BEEN P URCHASED BEFORE 01-04- 1997. IT WOULD SUFFICE TO SAY THAT I AGREE WITH TH E REASONS RECORDED BY THE AO FOR HOLDING SUCH STOCK AS UNACCEPTABLE AS OPENING S TOCK. CARRYING THIS ISSUE FURTHER I AGAIN CONFRONTED THE ASSESSEE ON THE AUTH ENTICITY OF HIS CLAIM WITH REGARD TO OPENING STOCK OF AFORESAID AMOUNT ON THE BASIS OF DOCUMENTS THAT WERE NEITHER FOUND NOR SEIZED AT THE TIME OF SEARCH , RATHER PRODUCED LATER WHICH, FOR REASONS RECORDED BY THE AO, CANNOT BE AC CEPTED AS RELIABLE AND GENUINE. IN FACT, ONE OF THE MAIN CRUCIAL EVIDENCE IN POSSESSION OF THE DEPARTMENT WITH REGARD TO LAND HOLDINGS OF THE ASSE SSEE PRIOR TO AY 1998-99 IS HIS ORIGINAL RETURN OF INCOME WHICH HE FILED VOLUN TARILY ON 20-10-2000 DECLARING TOTAL INCOME FROM BUSINESS AT RS. 97,530/-. THE SA ID RETURN WAS ACCOMPANIED BY A BALANCE SHEET AS ON 31-031998 WHEREIN THE ASSE TS WERE SHOWN AS AFOREMENTIONED AT PARA 3.0 OF THIS ORDER. THE RET URN WAS FILED AND VERIFIED BY THE ASSESSEE AS TRUE AND CORRECT. IT IS ONLY SUBSE QUENT TO SEARCH IN HIS CASE THAT THE ASSESSEE CHANGED HIS BALANCE SHEET AS HAS SHOWN OPENING STOCK OF LAND AS AFORESAID. ON BEING CONFRONTED THE APPELLA NT SUBMITTED BEFORE ME THAT THE ORIGINAL RETURN WAS FILED TAKING HIS INCOME AS PROPERTY BROKER AND COMMISSION WAS SHOWN WHEREAS IN THE RETURN FILED U /S 153A HE HAS SHOWN HIS ACTUAL BUSINESS IN REAL ESTATE AND THE LANDS ARE SHOWN AS STOCK-IN-TRADE WHICH IS GENUINE AND SHOULD BE ACCEPTED. I WOULD REITERA TE THAT IN THE GIVEN SET OF CIRCUMSTANCES THE ASSESSEES SHIFT IN STAND AND DIF FERENT VERSIONS TO SUIT HIS CONVENIENCE CANNOT BE ACCEPTED AT THEIR FACE VALUE. THE PROPERTIES IN RESPECT OF WHICH NOTHING WAS FOUND AND SEIZED AT THE TIME OF SEARCH AGGREGATING TO RS. 2,14,80,400/- CANNOT BE ACCEPTED AS OPENING STOCK O F THE ASSESSEE AND HIS CLAIM WITH REGARD TO SAME REMAINS UNSUBSTANTIATED. EVEN IF HE PRODUCES DOCUMENTS WITH REGARD TO SAME IT IS NOT CLEAR AS TO WHETHER HE ACTED IN RELATION TO A PARTICULAR LAND TRANSACTION AS A BROKER OR AS HIS OWN INVESTMENT / PURCHASE OF STOCK-IN-TRADE. THESE THINGS ARE ONLY IN THE RE ALM OF IMAGINATION AND THE VERSION OF ASSESSEE CHANGES ACCORDING TO THE SITUAT ION WITH A VIEW TO ESCAPING RIGORS OF TAXATION AND OTHER LAWS OF THE LAND. IN THE LIGHT OF SHOCKING REVELATIONS MADE BY THE INVESTIGATION WING (PARA 8.1 SUPRA) AND IN THE FITNESS OF THINGS, ASSESSEES CONTENTIONS WITH REGARD TO AUTHENTICITY OF DOCUMENTS RECOVERED AND PRODUCED BY HIM SHOULD BE REJECTED. IN MY VIEW THI S IS A CASE WHERE 7 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., UNSUBSTANTIATED STOCK OF LAND TO THE TUNE OF RS.2,1 4,80,400/- HAS TO BE BROUGHT TO TAX AS THE PURCHASE / INVESTMENT OF THE YEAR UND ER CONSIDERATION. THE AO IN SPITE OF RECORDING PROPER REASONS AND FINDING TO TH IS EFFECT DID NOT BRING THIS ISSUE TO ITS LOGICAL CONCLUSION. THE APPELLANT IS A GITATING AGAINST THE VARIOUS OBSERVATIONS OF THE AO IN THE IMPUGNED ORDER, AND T HE OBSERVATIONS ON THE SAME LINES OF THE SUCCESSOR AO IN THE REMAND REPORT , BUT HIS OBJECTIONS ARE OVERRULED. THE APPELLANT MUST REMEMBER THAT IT IS NOT ONLY ONE FACTOR OR REASON ON ACCOUNT OF WHICH ADVERSE FINDING IS RECORDED IN HIS CASE, RATHER THIS IS A MATTER WHERE CUMULATIVE EFFECT OF COLLECTIVE FINDIN GS / REASONS / OBSERVATIONS AND THE BACKGROUND OF THE CASE OF THE ASSESSEE HAVE BEEN KEPT INTO MIND AND THAT IS OVERWHELMINGLY AGAINST HIM. THE APPELLANT IS RELYING ON THE BOARD CIRCULAR IN FAVOUR OF HIS STAND AS TO WHY NO ADVERS E VIEW BE TAKEN IN HIS CASE IF THE PROPERTIES WERE NOT REGISTERED IN HIS NAME. I HAVE GONE THROUGH THE CBDT CIRCULAR NO. 495 DATED 22-09-1987. THE SAID CIRCUL AR AIMS TO WIDEN DEFINITION OF TRANSFER AND READS AS UNDER : DEFINITION OF TRANSFER WIDENED TO INCLUDE CERTAIN TRANSACTIONS 11.1 THE EXISTING DEFINITION OF THE WORD TRANSFER IN S. 2(47) DOES NOT INCLUDE TRANSFER OF CERTAIN RIGHTS ACCRUING TO A PURCHASER, BY WAY OF BECOMING A MEMBER OF OR ACQUIRING SHARES IN A CO-OPERATIVE SOCIETY, C OMPANY, OR ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEME NT WHEREBY SUCH PERSON ACQUIRES ANY RIGHT IN ANY BUILDING WHICH IS EITHER BEING CONSTRUCTED OR WHICH IS TO BE CONSTRUCTED. TRANSACTIONS OF THE NATURE REFE RRED TO ABOVE ARE NOT REQUIRED TO BE REGISTERED UNDER THE REGISTRATION ACT, 1908. SUCH ARRANGEMENTS CONFER THE PRIVILEGES OF OWNERSHIP WITHOUT TRANSFER OF TI TLE IN THE BUILDING AND ARE A COMMON MODE OF ACQUIRING FLATS PARTICULARLY IN MULT I-STOREYED CONSTRUCTIONS IN BIG CITIES. THE DEFINITION ALSO DOES NOT COVER CA SES WHERE POSSESSION IS ALLOWED TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CO NTRACT, OF THE NATURE REFERRED TO IN S. 53A OF THE TRANSFER OF PROPERTY ACT, 1882. NEW SUB-CLS. (V) & (VI)HAVE BEEN INSERTED IN S. 2(47) TO PREVENT AVOIDANCE OF C APITAL GAINS LIABILITY BY RECOURSE TO TRANSFER OF RIGHTS IN THE MANNER REFERR ED TO ABOVE. 11.2 THE NEWLY INSERTED SUB-CL. (VI) OF S. 2(47) HA S BROUGHT INTO THE AMBIT OF TRANSFER, THE PRACTICE OF ENJOYMENT OF PROPERTY R IGHTS THROUGH WHAT IS COMMONLY KNOWN AS POWER OF ATTORNEY ARRANGEMENTS. T HE PRACTICE IN SUCH CASES IS ADOPTED NORMALLY WHERE TRANSFER OF OWNERSHIP IS LEGALLY NOT PERMITTED. A PERSON HOLDING THE POWER OF ATTORNEY IS AUTHORISED THE POWERS OF OWNER, INCLUDING THAT OF MAKING CONSTRUCTION. THE LEGAL O WNERSHIP IN SUCH CASES CONTINUES TO BE WITH THE TRANSFEROR. 11.3 THESE AMENDMENTS SHALL COME INTO FORCE W.E.F. 1 ST APRIL 1988 AND WILL ACCORDINGLY APPLY TO THE ASSTT YEAR 1988-89 AND SUB SEQUENT YEARS. PARA 11.2 OF AFORECITED CIRCULAR MAKES IT AMPLY CLE AR THAT TRANSFER OR ACQUISITION OF PROPERTY THROUGH POWER OF ATTORNEY I S ADOPTED OR RESORTED TO WHERE TRANSFER OF OWNERSHIP IS LEGALLY NOT PERMITTE D. THUS CLARIFYING THAT IT IS ONLY AN ARRANGEMENT THAT HAS BEEN WORKED OUT TO SET TLE THE TRANSFER OF POSSESSION WHERE THERE ARE LEGAL CONSTRAINTS IN THE DEAL. THE LEGAL OWNERSHIP OF SUCH PROPERTY REMAINS WITH THE TRANSFEROR THOUGH TH E PERSON HOLDING THE POWER OF ATTORNEY IS AUTHORIZED THE POWERS OF OWNER. THU S THE CIRCULAR SERVES A LIMITED PURPOSE OF WIDENING THE DEFINITION OF TRANSFER FOR INCOME TAX PURPOSES WHEREVER LEGAL CONSTRAINTS ARE INVOLVED ; IT DOES NOT HOWEVE R DISPENSE WITH THE REQUIREMENT OF REGISTRATION OF LAND DEALS. THEREFO RE, IN THE CASE OF PRESENT 8 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., ASSESSEE IT CANNOT BE SAID WITH CERTAINTY AS TO WHE N A PARTICULAR TRANSACTION DONE THROUGH POWER OF ATTORNEY IS FOR THE OWNERSHIP OF LAND IN HIS OWN RIGHT OR OWNERSHIP OF LAND AS COMMISSION AGENT ACTING ONLY O N BEHALF OF SOME OTHER PERSON. SINCE NONE OF THE PROPERTY IN QUESTION IS REGISTERED, AND SEVERAL PROPERTIES ARE ALSO HELD IN BENAMI NAMES AS WELL IT IS ALSO NOT KNOWN IN THE CASE OF ASSESSEE AS TO WHEN A PARTICULAR PROPERTY IS HEL D BY HIM AS PROPERTY BROKER ON BEHALF OF SOME OTHER CLIENT OR HELD AS STOCK-IN- TRADE DURING THE COURSE OF HIS BUSINESS. IT IS WORTH MENTIONING THAT THE ASSESSEE WITH AN ULTERIOR MOTIVE ALWAYS MAINTAINED TWO STANDS WITH REFERENCE TO HIS LAND DEALINGS, SOMETIMES OWNING IT UP AS BROKER ON COMMISSION BASIS AND SOME TIME AS BUSINESS OF LAND DEVELOPMENT AND REAL ESTATE. THIS IS CLEAR FROM H IS FOLLOWING STATEMENT BEFORE ME IN HIS VERY FIRST SUBMISSION DATED 08-01-2007 F ILED BEFORE ME IN THE APPELLATE PROCEEDINGS. ATTENTION IS DRAWN TO PARA 1.3 OR AFORESAID SUBMISSIONS IS AS UNDER : 1.3 ON 9 TH OCT, 2003 A SEARCH AND SEIZURE ACTION, U/S132 OF T HE IT ACT, WAS CARRIED OUT AGAINST THE APPELLANT AND VARIOUS D OCUMENTS, PAPERS, VALUABLES, ETC WERE FOUND / OR SEIZED. THE SEARCH ACTION REVE ALED THAT, IN REALITY APPELLANT WAS ENGAGED IN THE BUSINESS OF LAND DEVELOPMENT AND DEALING IN LANDS, IN OWN NAME AS WELL AS IN THE NAMES OF EMPLOYEES ETC, AND NOT IN THE BUSINESS OF COMMISSION ON REAL ESTATE. FIRSTLY, THIS SHOWS FALSITY OF EITHER OF THE RETUR NS FILED BY THE ASSESSEE FOR AY 1998-99 ORIGINAL RETURN AS AFORESAID AND RETUR N FILED U/S 153A. SECONDLY, THE ABOVE STATEMENT OF ASSESSEE MAKES IT MORE IMPOR TANT THAT NONE OF HIS STATEMENTS SHOULD BE BELIEVED. IT IS RIDICULOUS, T O SAY THE LEAST, THAT THE ASSESSEE IS SUBMITTING BEFORE AN AUTHORITY THAT UNT IL SEARCH TOOK PLACE IN HIS CASE AND HE DID NOT KNOW AS TO WHETHER HE WAS DEALI NG IN REAL ESTATE AS HIS OWN BUSINESS OR ON COMMISSION BASIS AS PROPERTY BROKER. THIRDLY, WITH REFERENCE TO THE AMOUNT MENTIONED ABOVE, I.E. RS.2,14,80,400/- D OCUMENTS WERE NEITHER FOUND NOR SEIZED DURING THE COURSE OF SEARCH. 9.2 DOCUMENTS FOUND AND SEIZED THE AO HAS DISCUSSED DOCUMENTS FOUND AND SEIZED A T PARA 12 OF HIS ORDER. IT IS STATED THAT IN SUPPORT OF THE INVESTM ENTS IN STOCK OF PROPERTIES APPEARING AT SR.NO.3.2, 3.4, 3.5 AND 3.8 MENTIONED IN PARA 9 OF THE IMPUGNED ORDER AND AGGREGATING TO RS.1,01,29,155/- (BEING TH E TOTAL OF RS.48,01,000/- + RS.2,50,102/- + RS. 18,05,053/- + RS.32,73,000/-) T HE ASSESSEE RELIED UPON THE SEIZED DOCUMENTS. ATTENTION OF ALL CONCERNED I S DRAWN TO FOLLOWING OBSERVATIONS OF THE AO. THEY ARE ALL NOTARIZED DOCUMENTS AND INVOLVING HU GE CASH PAYMENTS, WHICH WERE NEITHER REFLECTING IN THE INVESTMENTS SH OWN IN THE BALANCE SHEET AS ON 31-03-1998 FILED ALONGWITH THE ORIGINAL RETURN O F AY 1998-99 NOR REFLECTING IN THE INVESTMENTS SHOWN TO THE DECLARATION FILED UNDE R VDIS 1997. HENCE THE ASSESSEE WAS ASKED TO PROVE THE GENUINENESS AND AUT HENTICITY OF THE SAID SEIZED DOCUMENTS. THE ASSESSEE ONLY ARGUED THAT THE SUBSEQ UENT CONDUCT OF THE PARTIES PROVES THE GENUINENESS AND AUTHENTICITY OF THE SAID DOCUMENTS. HOWEVER, THE ASSESSEE DID NOT PRODUCE THE SAID NOTA RY OR HIS NOTARY REGISTERS. THE ASSESSEE DID NOT PRODUCE ANY OF THE PERSON OF T HE SEVERAL SELLERS OR JOINT SELLERS MENTIONED IN THE SAID DOCUMENTS. THE ASSES SE DID NOT PRODUCE ANY OF THE WITNESSES WHO WERE ALLEGED TO HAVE SIGNED IN TH OSE DOCUMENTS. NONE OF THESE DOCUMENTS ARE REGISTERED DOCUMENTS. 9 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., CONSIDERING THESE THINGS THE GENUINENESS AND AUTHE NTICITY OF THESE DOCUMENTS ARE NOT PROVED BY THE ASSESSEE. SINCE TH E SAID INVESTMENTS WERE NOT DISCLOSED EARLIER EITHER IN THE REGULAR RETURN OR IN THE DECLARATION MADE UNDER VDIS 1997, THEY ARE UNDISCLOSED INVESTMENTS. THE ASSESSEE HAS NOT EXPLAINED THE SOURCES OF THESE INVESTMENTS. THESE INVESTMENTS ARE IN RESPECT OF THE STOCKS OF THE LAND DEVELOPMENT BUSINESS OF THE ASSESSEE. SUCH INVESTMENTS ARE UNDISCLOSED AND UNEXPLAINED. FOR REASONS DISCUSSED IN DETAIL AT PARAS 9.0 & 9.1 ( SUPRA) I HOLD THAT STOCK OF LAND AT RS.1,01,29,155/- AS DISCUSSED ABOVE BY THE AO REPRESENTS UNEXPLAINED OPENING STOCK OF ASSESSEES REAL ESTATE BUSINESS. NOW THE ASSESSEE IS IN APPEAL BEFORE US RAISING SER IOUS OBJECTION AGAINST THE ENHANCEMENT MADE BY THE A.O TO THE EXTENT OF RS . 3,16,09,555/-. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORD. THE LD COUNSEL ARGUES THAT THERE CANNOT B E DOUBLE STANDARD FOR EVALUATING THE EVIDENCE. SO FAR AS SEIZED DOCUMENT S ARE CONCERNED, THOSE DOCUMENT WOULD SHOW THE MODUS OPERANDI ADOPTED BY THE ASSESSEE IN ITS BUSINESS AS A LAND DEVELOPER. HE S UBMITS THAT SOME OF THE DOCUMENTS WERE NOT SEIZED, BUT THE ASSESSEE PRO DUCED THE SAME AFTER THE SEARCH ACTION BEFORE THE DDI AS WELL AS B EFORE THE A.O. THERE WAS NO COMPULSION FOR REGISTRATION OF THE AGREEMENT EARLIER, BUT ALL THE AGREEMENTS ARE DULY EXECUTED ON THE STAMP PAPER AS WELL AS NOTARIZED. HE SUBMITS THAT THE LD CIT(A) MADE THE ADDITION IN RESPECT OF THE OPENING STOCK OF THE LANDS/PROPERTY AS ON 1.4.1997 DECLARED BY THE ASSESSEE AS UNEXPLAINED INVESTMENT U/S. 69 OF THE A CT. THE LD. COUNSEL REFERRED TO SEC. 153A AND SUBMITS THAT THE AUTHORIT Y OF THE A.O OR THE LD CIT(A) IS CONFINED TO THE TRANSACTION FOUND IN THE PERIOD RELATING TO THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE YEAR IN WHICH THE SEARCH ACTION WAS CARRIED OUT. NO INCRIMINATING MATERIAL WAS FOUND ALSO TO SHOW THAT THE TRANSACTIONS PRIOR TO 1.4.1997 WERE IN FAC T THE TRANSACTIONS AFTER THE SAID DATE. THE LD COUNSEL RELIED ON THE DECISI ON OF THE HONBLE JUDICIAL HIGH COURT IN THE CASE OF AZIEND COLORI N AZIONALI AFFINI VS. CIT, 110 ITR 145 (BOM.), IN SUPPORT OF HIS PROPOSITION T HAT DOCUMENT AS SUCH SHOULD BE READ IN ENTIRETY. HE FURTHER SUBMITTED T HAT IN THE SEARCH AND SEIZURE OPERATION PHOTO COPIES OF THE AGREEMENT A ND RELATED DOCUMENTS WERE FOUND BUT THE ORIGINAL DOCUMENTS WERE PRODUCED BEFORE THE ADI/DDI. HE SUBMITS THAT ASSESSEE ALSO FILED COPIE S OF THE NOTARY REGISTER TO PROVE THAT THE RELEVANT DOCUMENTS WERE EXECUTED ON THE DATE 10 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., MENTIONED THEREIN. HE, THEREFORE, PLEADED FOR DELE TING THE ENTIRE ADDITION OF RS. 3,16,09,555/-. 8. PER CONTRA, THE LD. D.R. SUPPORTED THE ORDER OF THE LD CIT(A). HE SUBMITS THAT THE DOCUMENTS WHICH WERE NOT FOUND DUR ING THE COURSE OF THE SEARCH AND SEIZURE ACTION BUT WHICH ARE SUBSEQU ENTLY PRODUCED ARE NOT GENUINE DOCUMENTS. HE SUBMITS THAT THE ASSESSE E DID NOT EVEN PRODUCE A SINGLE SELLER OR THE NOTARY BEFORE THE AU THORITIES BELOW TO PROVE THAT DOCUMENTS IN QUESTION WERE IN FACT EXECUTED O N THE DATES MENTIONED THEREIN. HE PLEADED FOR CONFIRMING THE O RDER OF THE LD CIT(A) ON THIS ISSUE. 9. ON THE PERUSAL OF THE ORDER OF THE LD CIT(A), WE FIND THAT LD CIT(A) HAS CONSIDERED THE ALLEGED CONDUCT OF THE ASSESSEE IN RESPECT OF THE ONE TRANSACTION WITH LATE MR. PETER REBELLO. THE LD C IT(A) HAS ALSO REFERRED THE APPLICATION FILED BY THE ASSESSEE TO THE CHARIT Y COMMISSIONER, MUMBAI BY ENCLOSING XEROX COPIES OF THE FORGED DEM AND DRAFTS OF RS. 4.5 CRORES, WHICH ONE OF THE ASPECT APPEARS TO BE INFLUENCED THE LD CIT (A) FOR DISBELIEVING THE DOCUMENTS WHICH WERE SEIZ ED DURING THE COURSE OF SEARCH AND SEIZURE AS WELL AS DOCUMENTS WHICH WE RE NOT FOUND BUT PRODUCED LATER ON. IN OUR OPINION, THE CONDUCT AND ANTECEDENT OF THE ASSESSEE SHOULD NOT BE THE INFLUENCING FACTOR WHILE DETERMINING HIS TAX LIABILITY. IN THIS CASE, IT IS NOT DISPUTED BY TH E LD CIT(A) ALSO THAT DURING THE COURSE OF SEARCH, THE DOCUMENTS PERTAINING TO T HE 4 LAND DEALINGS AGGREGATING TO RS. 1,01,29,155/- WERE FOUND. IN TH E SEARCH AND SEIZURE OPERATION, THERE IS SURPRISE VISIT BY THE DEPARTMEN T OFFICERS TO THE PLACE OF RESIDENCE AND BUSINESS OF THE ASSESSEE AND IT CA NNOT BE SAID THAT THE ASSESSEE HAD PLANNED OUT EVERYTHING TO MISLEAD THE DEPARTMENT OFFICERS. THE ONLY RESERVATION DISBELIEVING THE GENUINENESS O F THE DOCUMENTS WHICH WERE FOUND IN THE COURSE OF SEARCH IS THAT AL L THOSE DOCUMENTS WERE ONLY NOTARISED AND NOT REGISTERED IN SPITE OF THE F ACT THAT THE TRANSACTIONS OF THE LAND DEALINGS WERE INVOLVING HUGE CASH PAYME NTS. ANOTHER FACTOR WHICH HAS ALSO INFLUENCED LD CIT(A) IS THAT THE ASS ESSEE HAD FILED DECLARATION UNDER VDIS 1997 BUT THE TRANSACTIONS WHICH WERE UNEARTHED DURING THE SEARCH AND SEIZURE ACTION AS W ELL AS SUBSEQUENTLY DECLARED BY THE ASSESSEE WERE NOT THE PART OF THE DECLARATION FILED UNDER VDIS-1997. THE CORE QUESTION RAISED BY THE AUTHORI TIES BELOW IS WHETHER THE DOCUMENTS ARE GENUINE AS WELL AS AUTHENTICITY O F THE SAID DOCUMENT. 11 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., THE A.O HAS OBSERVED THAT THE ASSESSEE DID NOT PROD UCE ANY NOTARY OR HIS NOTARY REGISTER BEFORE WHOM EXECUTION OF AGREEM ENTS & GPA ARE CLAIMED. THE ASSESSEE ALSO DID NOT PRODUCE ANY OF THE PERSON OUT OF SEVERAL SELLERS OR JOINT SELLERS MENTIONED IN THE S AID TRANSACTION. MOREOVER, NONE OF THE DOCUMENT WAS REGISTERED. 10. SO FAR AS THE DOCUMENTS WHICH ARE SEIZED DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS ARE CONCERNED, IN OUR OPINION, AS PER THE PROVISIONS OF SEC. 132(4A) OF THE ACT, THE SAID DOC UMENTS ARE PRESUMED TO BELONGING TO THE PERSON IN POSSESSION I.E. THE ASSESSEE. MOREOVER, THE SIGNATURE AND CONTENTS ARE PRESUMED TO BE TRUE . SEC. 132(4A) READS AS UNDER : (4) WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, M ONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE O F A SEARCH, IT MAY BE PRESUMED (I) THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING BELO NG OR BELONG OR BELONGS TO SUCH PERSON; (II) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHE R DOCUMENTS ARE TRUE; AND (III) THAT THE SIGNATURE AND EVERY OTHER PART OF SUCH BOO KS OF ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE IN THE HAN DWRITING OF ANY PARTICULAR PERSON OR WHICH MAY REASONABLY BE ASSUM ED TO HAVE BEEN SIGNED BY, OR TO BE IN THE HANDWRITING OF, ANY PARTICULAR PERSON, ARE IN THAT PERSONS HANDWRITING, AND IN TH E CASE OF A DOCUMENT STAMPED, EXECUTED OR ATTESTED, THAT IT WAS DULY STAMPED AND EXECUTED OR ATTESTED BY THE PERSON BY WHOM IT P URPORTS TO HAVE BEEN SO EXECUTED OR ATTESTED.] 11. SO FAR AS THE FOUR TRANSACTIONS AMOUNTING TO RS. 1,01,29,155/- ARE CONCERNED, WHICH DETAILS ARE GIVEN HEREINABOVE, AND IN RESPECT OF WHICH, EITHER COPIES OR ORIGINAL AGREEMENT TO PURCHASE WE RE SEIZED DURING THE COURSE OF THE SEARCH AND SEIZURE OPERATION, THERE I S REASON TO DISBELIEVE THE EXECUTION OF THOSE DOCUMENTS ON THE DATES MENTI ONED ON THOSE DOCUMENTS. THE LD COUNSEL ALSO SUBMITTED THAT THE R ELEVANT ORIGINAL DOCUMENTS IN RESPECT OF THE 4 TRANSACTIONS WERE PRO DUCED BEFORE THE DDI OR A.O. AND THE ASSESSEE SUBSTANTIATED THE CLAIM. AS PER THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH, THOSE DOCUMENTS WERE EXECUTED AND WRITTEN ON 1.2.1995, 29.9.1995, 2.5.1996 AND 16.11.1996. EVEN PRESUMING THAT THE ASSESSEE WAS REQUIRED TO REGISTE R THOSE DOCUMENTS 12 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., UNDER REGISTRATION ACT 1908, BUT SO FAR AS INCOME T AX PROCEEDINGS ARE CONCERNED, WE ARE NOT DECIDING THE RIGHT OF THE PAR TIES IN THOSE PROPERTIES AS IF THOSE DOCUMENTS WERE NOT REGISTERED, THEN THE SAME MAY NOT BE ADMITTED AS EVIDENCE UNDER THE INDIAN EVIDENCE ACT. NOTHING CONTRARY HAS BEEN FOUND DURING THE COURSE OF SEARCH AND SEIZ URE IN RESPECT OF THOSE 4 TRANSACTIONS TO DISBELIEVE THE CLAIM OF THE ASSESSEE IN RESPECT OF THE EXECUTION OF THE RESPECTIVE AGREEMENTS ON DATES MENTIONED IN THOSE DOCUMENTS. WE FURTHER FIND THAT DURING THE COURSE OF SEARCH, COPIES OF THE POWER OF ATTORNEYS (POA) WERE ALSO FOUND WHICH WERE EXECUTED BY THE RESPECTIVE VENDORS IN FAVOUR OF THE ASSESSEE & AT LEAST THAT SUGGEST THAT THE ASSESSEE HAD A DEALING AND NEGOTIATION WIT H THE RESPECTIVE VENDORS OF THE LANDS/PROPERTIES. THAT ALSO SUGGEST S THAT THE ASSESSEE HAD ADOPTED A PARTICULAR MODUS OPERANDI FOR AVOIDING THE STAMP DUTY BY MERELY NOTARIZING THE AGREEMENT OF SALES AND GETTIN G THE GENERAL POWER OF ATTORNEY (GPA) FROM THE RESPECTIVE SELLERS OF LA NDS/PROPERTIES. WE, THEREFORE, HOLD THAT THE AMOUNT OF INVESTMENT IN RE SPECT OF THE DOCUMENTS FOUND PERTAINING TO THE FOUR PROPERTIES CAN NOT BE BROUGHT TO TAX EVEN U/S 69 OR 69 C OF THE ACT. THE SAID TRANS ACTIONS ARE AS UNDER : SL.NO. DESCRIPTION OF PROPERTY NAME OF VENDOR DATE OF AGREEMENT CONSIDERATION 1. 685B + 686/1/1A(DRC) MURALIDHAR V. SHAUCHE & OTHERS 16.11.1996 48,01,000/- 2. 705/2/1 NASIK LAYOUT 2 NATHU D. TILWANI & OTHERS 2.5.1996 18,05,053/- 3. 705/2/1 NASIK LAYOUT OUT 1 (PART) PA KARANJAKAR 01.2.1995 4. 72/1/3/1/ TO 5 KANTILAL CHUNNILAL SHAMSUKHA (LAND OWNER VISHNU GANPAT PAGARE) 24.9.1995 32,73,000/- TOTAL 1,01,29,155/- 12. SEC. 153A(1) READS AS UNDER 13 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., 153A(1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECT ION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISIT IONED UNDER SECTION 132A AFTER THE 31 ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNIS H WHICH SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING W ITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETT ING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO AS MAY BE, APPLY A CCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURN ISHED UNDER SECTION 139;. (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSME NT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MAD. AS PER CLAUSE (B) TO SEC. 153A(1), THE A.O CAN ASSE SS OR RE-ASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PR ECEDING THE A.Y RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH W AS CONDUCTED. IN THE CASE OF THE PRESENT ASSESSEE, THE SEARCH WAS CONDUC TED ON 9.10.2003 AND ACCORDINGLY, THE A.O ISSUED NOTICES TO THE ASSE SSEE U/S. 153A FOR THE IMMEDIATE PRECEDING SIX ASSESSMENT YEARS I.E FROM A.Y. 1998-99 AND THIS FACT IS ALSO NOT DISPUTED. SO FAR AS THE PERIO D PRIOR TO PERIOD 1.4.1997 IS CONCERNED WHICH IS NOT WITHIN THE JURISDICTION & AUTHORITIES OF THE A.O, TO MAKE THE ADDITION AND IN SUCH CIRCUMSTANCES, THE TRANSACTIONS PRIOR TO THE PERIOD MENTIONED IN CLAUSE (B) TO SEC. 153A A RE BEYOND THE JURISDICTION AND AUTHORITY OF THE A.O AS WELL AS TH E LD CIT(A) TO LOOK INTO AND TO BRING TO TAX. 13. NOW WE DEAL WITH THE TRANSACTIONS WHICH ARE CLA IMED BY THE ASSESSEE ENTERED INTO PRIOR TO 1.4.1997, WHICH ARE FOUR TRANSACTIONS. WE DEAL WITH EACH TRANSACTION INDEPENDENTLY. THE FIRST TRANSACTION IS WITH MR.SAYYAD HANEEF SAYYAD UMAR PHIRZADE & OTHERS IN R ESPECT OF S. NO. 208. AS PER THE AGREEMENT PRODUCED BY THE ASSESSE E, THE SAID AGREEMENT IS ALSO NOT REGISTERED UNDER THE REGISTRA TION ACT, BUT NOTARIZED BY SHRI C.M. BORA (NOTARY). THE ASSESSEE ALSO PROD UCED GENERAL POWER OF ATTORNEY (GPA) OBTAINED FROM THE VENDORS OF THE SAID PROPERTY WHICH IS ALSO PRIOR TO 1.4.1997. THE ASSESSEE EXPLAINED THAT THE TOTAL TRANSACTIONS WERE TO THE EXTENT OF RS. 1,96,00,000/ - BUT THE SUM OF RS. 14 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., 1,36,00,000/- WAS PAID AND RS. 60,00,000/- WAS OUTS TANDING AS ON 31 ST MARCH 1997 WHICH WERE SUBSEQUENTLY PAID. IN THIS C ASE, THE ASSESSEE HAS FILED COPIES OF THE AGREEMENT TO SALE (PAGE NOS . 157 TO 161 (MARATHI) AND ENGLISH TRANSLATION OF WHICH IS FILED AT PAGE N OS. 168 A 1 TO 168 A 5 OF THE PAPER BOOK). AS PER THE AVERMENTS IN THE SA ID DOCUMENTS, IT IS SEEN THAT THE SAID PROPERTY WAS IN LITIGATION AS ON E SPECIAL CIVIL SUIT NO. 335/93 WAS FILED BEFORE THE CIVIL COURT IN NASIK BY ONE SHRI NANA GOVINDA KADAM & OTHERS. THERE WAS A STAY BY THE COURT FOR TRANSFERRING THE SAID PROPERTY. THE REQUIRED MUTATION ENTRIES WERE MADE IN THE REVENUE RECORD. AS PER THE COPIES OF THE NOTARY REGISTERED FILED IN THE COMPILATION, WE FIND THAT THE SAID AGREEMENT WAS EXECUTED IN FEB RUARY 1995 (DATE IS NOT VISIBLE). THE ASSESSEE PAID THE BALANCE AMOUNT OF RS. 60,00,000/- AFTER 1.4.1997. IN OUR OPINION, THE AGREEMENT PROD UCED BY THE ASSESSEE WAS IN RESPECT OF THE PROPERTY BEING SURVEY NO. 208 WITH SAYYAD HANEEF SAYYAD UMAR PHIRZADE, CANNOT BE DISBELIEVED TO SAY THAT THE SAID AGREEMENT IS NOT EXECUTED ON 15.2.1995. WE, THERE FORE, HOLD THAT TO THE EXTENT OF RS. 1,36,00,000/- NO ADDITION CAN BE MAD E. 14. NOW NEXT TRANSACTION IS IN RESPECT OF THE AGREE MENT TO SALE WITH DAMU KEDU CHAUHAN AND 3 OTHERS IN RESPECT OF S. NO. 23/1/2/3 SHOWING THE TOTAL CONSIDERATION OF RS. 12,81,500/-. THE LD . COUNSEL SUBMITTED THAT MERELY BECAUSE THE AGREEMENT IS NOTARIZED AND NOT REGISTERED, THE DOCUMENTS CANNOT BE REJECTED. ADMITTEDLY, THE SAI D DOCUMENTS WERE PRODUCED BY THE ASSESSEE IN THE POST SEARCH ENQUIRI ES. WE FIND THAT PAGE NOS. 163 TO 168 THAT THE STAMP PAPER OF RS. 20/- IS NOT EITHER ON THE NAME OF THE ASSESSEE OR THE VENDORS. MOREOVER, TH E DETAILS OF RS. 12,80,000/- ARE ALSO NOT MENTIONED IN THE AGREEMENT S WHEN THE SAID AMOUNT WAS PAID. WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF THE A.O FOR LIMITED VERIFICATION BY CALLING THE NOTARYS REGISTER & IF THE SAID AGREEMENT AS PER THE NOTARYS REGISTER IS FOUND TO BE EXECUTED ON 22.7.1996 THEN DATE OF TRANSACTION SHOULD BE TAKEN AS PRIOR TO 1.4.1997 AND NO ADDITION SHOULD BE MADE. THE NEXT TRANSAC TION IS IN RESPECT OF SHRI BHASKAR DEVARAM GHULE AND OTHERS OF RS. 65,05, 000/-. AS PER THE DATE ON THE SAID AGREEMENT, THE AGREEMENT WAS EXECU TED ON 28.4.1996, BUT THE POWER OF ATTORNEY IN THIS CASE HAS BEEN EX ECUTED MUCH MORE EARLIER, THAT IS ON 26.11.1993. EVEN WE ACCEPT TH E MODUS OPERANDI OF THE ASSESSEE THAT TO AVOID THE PAYMENT OF THE STAMP DUTY, HE IS TO ENTER INTO THE AGREEMENT BY EXECUTING THE SAME BEFORE TH E NOTARY AND AT THE 15 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., SAME TIME, HE IS TO TAKE THE POWER OF ATTORNEY IN H IS FAVOUR. THERE IS A SUBSTANTIAL GAP BETWEEN THE TWO DOCUMENTS THAT IS GENERAL POWER OF ATTORNEY AND ACTUAL AGREEMENT TO SALE. WE, THEREFO RE, RESTORE THIS ISSUE ALSO TO THE FILE OF THE A.O. TO DECIDE THE SAME AFR ESH AFTER VERIFYING THE NOTARY REGISTER AND ALSO CONSIDERING THE EXPLANATIO N OF THE ASSESSEE AS TO WHY THERE IS A SUBSTANTIAL TIME GAP BETWEEN THE DATE OF EXECUTION OF POA AND DATE OF THE AGREEMENT. 15. THE NEXT TRANSACTION IS IN RESPECT OF THE S. NO . 7095/2/1, LAY OUT -1 I.E. THE AGREEMENT WITH M/S. PRASAD DEVELOPERS. TH IS IS ONE OF THE TRANSACTIONS WHICH WAS CLAIMED BY THE ASSESSEE PRIO R TO 1.4.1997. THE TOTAL CONSIDERATION SHOWN IS RS. 93,900/-. AS CON TENDED BY THE LD. COUNSEL, IN THIS TRANSACTION, NO GPA WAS OBTAINED. AS PER THE AGREEMENT WITH M/S. PRASAD DEVELOPERS, ASSESSEE WAS TO GET 20 % OF THE SALE CONSIDERATION. IT IS ALSO CLAIMED BEFORE US THAT M OST OF THE PLOTS IN RESPECT OF THIS LAND DEAL ARE SHOWN PRIOR TO 31.3.1 997 BY REGISTERED DOCUMENTS. IF THE ASSESSEES CLAIM IS CORRECT, THE N NO ADDITION CAN BE MADE. WE, THEREFORE, RESTORE THIS ISSUE ALSO TO V ERIFY WHETHER, IN FACT, THE PLOT OF THIS SURVEY NO. WAS SOLD BY THE ASSESSE E TO M/S. PRASAD DEVELOPERS PRIOR TO 1.4.1997 AND IF IT IS SO, THEN NO ADDITION SHOULD BE MADE. THE ASSESSEE SHOULD PRODUCE EVIDENCE TO CORRO BORATE HIS CLAIM ON THE ISSUE OF DATE OF EXECUTION OF SAID AGREEMENT. ACCORDINGLY, GROUND NO. 3 IN A.Y. 1998-99 IS PARTLY ALLOWED FOR STATIST ICAL PURPOSES. 16. THE NEXT ISSUE IS THE ADDITION OF RS. 9,20,787/ - ON ACCOUNT OF NEGATIVE CASH AND THIS ISSUE ARISES FROM GROUND NO. 1 IN THE A.Y. 1998- 99. 17. THE FACTS PERTAINING TO THE ISSUE EMERGE FROM T HE RECORD ARE AS UNDER. DURING THE ASSESSMENT PROCEEDINGS, THE ASSE SSEE FILED THE CASH FLOW STATEMENT PERTAINS TO F.Y. 1997-98 RELEVANT TO THE A.Y. 1998-99. IN THE SAID STATEMENT, THE ASSESSEE HAD SHOWN CASH REC EIPT OF RS. 5,00,000/- ON 02.10.1997 FROM ONE SHRI J.K. PATEL A S AGAINST PLOT IN S. NO. 208 AND RS. 5,00,000/- ON 02.10.1997 FROM SHRI I.S. PATEL AGAIN AGAINST PLOT IN THE SAME SURVEY NO. AS OBSERVED BY THE A.O, NO EVIDENCE WAS FILED BY THE ASSESSEE TO PROVE RECEIPT OF RS. 10,00,000/- IN CASH. NO DOCUMENT WAS ALSO SEIZED SHOWING THE ASSESSEE HAS R ECEIVED SAID RS. 10,00,000/- ON 02.10.1997. THE ASSESSEE FILED COPI ES OF THE SALE DEED 16 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., OF THE PLOTS SOLD TO SHRI J.K. PATEL AND SHRI I.S. PATEL AND CLAIMED THAT THE AMOUNT OF RS. 10,00,000/- CREDITED IN THE CASH FLOW STATEMENT ON 02.10.1997 REPRESENTS ON MONEY RECEIVED IN CASH ON SALE OF PLOTS RECEIVED FROM THOSE TWO PERSONS. AS PER REGISTERED SALE DEED, THE PLOTS WERE SOLD ON 10.10.2000 TO BOTH THE PERSONS. NOTHI NG WAS MENTIONED IN THE SALE DEED IN RESPECT OF THE ON-MONEY OF RS. 1 0,00,000/- WHICH WAS CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE. THE A.O, THEREFORE, REJECTED THE CLAIM OF THE ASSESSEE IN RESPECT OF RS . 10,00,000/-. AFTER REMOVING THE SAID AMOUNT, THERE WAS A NEGATIVE CAS H BALANCE OF RS.9,20,787/-. THE A.O THEREFORE MADE ADDITION OF RS. 9,20,787/- AS THE ASSESSEE HAS ALSO SHOWN THE INVESTMENT & OTHER EXPE NDITURE IN THE CASH FLOW STATEMENT. THE LD CIT(A) CONFIRMED THE ADDITI ON. 18. WE HAVE HEARD THE PARTIES. ADMITTEDLY, IN THE REGISTERED SALEE DEED, THERE IS NO MENTION OF RS. 10,00,000/- WHICH WAS CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE AS ON-MONEY FROM TH E ABOVE TWO PURCHASERS. THE BURDEN IS ON THE ASSESSEE TO PROV E THAT AND ALSO TO DEMONSTRATE, IN FACT, THE ASSESSEE RECEIVED SAID A MOUNT FROM THOSE TWO PERSONS. IN FACT, THE REGISTERED SALE DEED GOES AG AINST THE ASSESSEE WHICH IS DOCUMENTARY EVIDENCE. IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A) ON THIS ISSUE. ACCO RDINGLY, SAME IS CONFIRMED. GROUND NO. 1 IN THE A.Y. 1998-99 IS DISM ISSED. 19. IN THE A.Y. 1998-99, THE ASSESSEE HAS CHALLENGE D THE JURISDICTION OF THE LD CIT(A) FOR ENHANCEMENT MADE BY USING HIS POW ERS U/S. 251(1) OF THE INCOME TAX ACT. 20. WE HAVE HEARD THE PARTIES. IN RESPECT OF THE O PENING STOCK OF THE LAND DECLARED BY THE ASSESSEE AS ON 1.4.1997 OF RS. 3,16,09,555/-, THE LD. CIT(A) WAS OF THE OPINION THAT, IN FACT, IT WAS UNEXPLAINED INVESTMENT OF THE ASSESSEE WHICH SHOULD HAVE BEEN BROUGHT TO T AX BY THE A.O U/S. 69 OF THE ACT. THE LD CIT(A) ISSUED NOTICE U/S. 251(2 ) OF THE ACT TO THE ASSESSEE WHY THE STOCK OF LAND DECLARED ON 1.4.199 7 SHOULD NOT BE TREATED AS ASSESSEES INCOME FOR A.Y. 1998-99. THE ASSESSEE ALSO FILED THE OBJECTION ON THE SAID NOTICE AND ALSO PERSONALL Y APPEARED ALONG WITH HIS CHARTERED ACCOUNTANT. SO FAR AS THE POWER & AU THORITY OF THE LD CIT(A) IS CONCERNED TO MAKE ENHANCEMENT, IN OUR OPI NION, SUB-SECTION (2) TO SEC. 251 PROVIDES FOR SUCH POWER OF THE LD CIT(A) SUBJECT TO 17 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., GIVING THE REASONABLE OPPORTUNITY TO THE ASSESSEE O N THE ISSUE OF THE ENHANCEMENT. IN THE PRESENT CASE, IT IS NOT DISPUT ED THAT THE ASSESSEE WAS GIVEN OPPORTUNITY OF BEING HEARD AND THIS IS NO T DENIED BY THE LD. COUNSEL ALSO. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE OBJECTION RAISED BY THE ASSESSEE AND ACCORDINGLY, GROUND NO. 2 IN THE A.Y. 1998- 99 IS DISMISSED. 21. THE NEXT ISSUE IS DISALLOWANCE U/S. 40A(3) AND THIS ISSUE ARISES FROM GROUND NO.4 IN A.Y. 1988-99. WE HAVE ALREADY DEALT WITH AND DECIDED THE ISSUE IN RESPECT OF THE ADDITION MADE B Y THE LD CIT(A) OF RS.3,16,09,555/- BY USING HIS POWERS OF ENHANCEMENT U/S. 251(2) OF THE ACT IN RESPECT OF THE OPENING STOCK OF LAND DECLAR ED BY THE ASSESSEE IN POST SEARCH PROCEEDINGS AS ON 01.4.1997. THE LD. C IT(A) TREATED THE OPENING STOCK OF THE LAND AS ON 01.4.1997 AS UNEXPL AINED INVESTMENT U/S. 69 OF THE ACT IN THE A.Y. 1998-99 AND BROUGHT TO TAX. SIMULTANEOUSLY, HE EVOKED THE PROVISIONS OF SEC. 40 A(3) AND MADE THE DISALLOWANCE TO THE EXTENT OF 20% OF RS.3,16,09,555 /- BY GIVING THE REASON THAT ALL THE TRANSACTIONS WERE IN THE CASH A ND THERE WAS A VIOLATION OF MONETARY LIMIT AND HENCE TO THAT EXTEN T, 20% OF THE VALUE OF THE OPENING STOCK IS TO BE ADDED. WHILE DECIDING T HE ISSUE OF THE ADDITION OF OPENING STOCK OF LAND AS ON 01.4.1997 DECLARED B Y THE ASSESSEE OF RS. 3,16,09,555/-, WE HAVE DELETED THE ADDITION IN RESP ECT OF THE FIVE TRANSACTIONS AND SO FAR AS THREE TRANSACTIONS ARE C ONCERNED, THE SAME ARE RESTORED TO THE FILE OF THE A.O FOR VERIFICATION PU RPOSE. WE, THEREFORE, DELETE THE ADDITION TO THE EXTENT OF FIVE TRANSACTI ONS AND PARTLY RESTORE THE ISSUE TO THE FILE OF THE A.O TO DECIDE THIS ISS UE AFRESH AFTER ADJUDICATING ON THE REMAINING THREE TRANSACTIONS WH ICH ARE RESTORED TO THE FILE OF THE A.O. IF IT IS FOUND THAT IN THE F. Y. 1997-98, THE ASSESSEE IN FACT HAS MADE THE PAYMENTS IN CASH IN EXCESS OF RS. 20,000/-, THEN THE A.O CAN DECIDE WHETHER THE DISALLOWANCE IS TO BE MA DE U/S. 40A(3) OF THE ACT OR NOT. ACCORDINGLY, ASSESSEES RESPECTIVE GR OUND IS PARTLY ALLOWED FOR THE STATISTICAL PURPOSES. 22. THE NEXT ISSUE IS IN RESPECT OF THE ENHANCEMENT ON ACCOUNT OF THE HOUSEHOLD EXPENSES AND THIS ISSUE ARISES FROM GROUN D NO.5 IN THE A.Y. 1998-99. THE MAIN THRUST OF THE ARGUMENT OF THE LD . COUNSEL IS THAT THE LD CIT(A) HAS NOT FOLLOWED THE MANDATORY PROCEDURE AS PER SEC. 251(2) OF THE ACT AS NO SHOW CAUSE NOTICE WAS GIVEN FOR EN HANCEMENT BY 18 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., ESTIMATION OF THE HOUSEHOLD EXPENDITURE. WE HAVE A LSO HEARD THE LD. D.R. 23. ON PERUSAL OF THE ORDER OF THE LD CIT(A), MORE PARTICULARLY PARA NO. 10, WE FIND THAT NOWHERE, THERE IS A MENTION THAT T HE PROCEDURE GIVEN IN SEC. 251(2) HAS BEEN FOLLOWED. IT APPEARS THAT NO N OTICE OF ENHANCEMENT WAS GIVEN ON THIS ISSUE. WE, THEREFORE, DO NOT FIN D ANY JUSTIFICATION TO SUSTAIN THE ADDITION MADE BY THE LD CIT(A) OF RS. 1 ,20,000/- AND ACCORDINGLY, THE SAME IS DELETED. IN THE RESULT, G ROUND NO.5 IS ALLOWED. 24. GROUND NO. 6 IN THE A.Y. 1998-99 IS IN RESPECT OF DISALLOWANCE OF RS.50,000/- IN CONNECTION WITH THE PAYMENT MADE FOR PROPERTY AT S. NO. 297/C OF PATHARDI, NASIK, BY EVOKING THE PROVISION S OF SEC. 40A(3) OF THE ACT. 25. THE LD CIT(A) HAS OBSERVED THAT DISALLOWANCE O F RS.1,84,300/- U/S. 40A(3) IN A.Y. 1999-2000 WHICH IS DELETED AS T HE SAME IS RELATED TO CASH PURCHASE OF PROPERTY FROM SHRI PARAS CHORDIYA (PROPERTY AT S.NO. 297/3) IN THE A.Y. 1998-99. IT IS FURTHER OBSERVED THAT FROM THE ACCOUNTS IT WAS SEEN THAT THE CASH PAYMENT OF RS. 2,50,000/- ONLY WAS MADE TOWARDS THE SAID PURCHASE OF LAND AND THERE IS A VI OLATION OF THE MONETORY LIMIT, HENCE THE SAME IS ADDED IN THE A.Y. 1998-99. NO SPECIFIC ARGUMENT WAS ADVANCED ON THIS ISSUE BY THE ASSESSEE. ADMITT EDLY, THE ASSESSEE IS INDULGING IN CASH TRANSACTIONS ONLY AND NOTHING HA S BEEN DEMONSTRATED BEFORE US HOW SAID ADDITION OF RS.50,000/- IS NOT JUSTIFIED. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD CIT(A) AND ACCORDINGLY, THE SAME IS CONFIRMED. GROUND NO. 6 IS DISMISSED. 26. THE ASSESSEE HAS TAKEN THE GROUND NOS. 7 TO 9 I .E. ON THE LEVY OF THE INTEREST U/S. 234A, 234B AND 234C. THE LD. COU NSEL SUBMITTED THAT THESE ARE CONSEQUENTIAL GROUNDS AND THE A.O MAY BE DIRECTED TO CORRECTLY CALCULATE INTEREST AFTER GIVING EFFECT TO THE TRIBU NAL ORDER. THE A.O. IS, THEREFORE, DIRECTED TO CORRECTLY COMPUTE THE INTERE ST TO BE LEVIED U/S. 234A, 234B AND 234C. WITH THIS INSTRUCTION, GROUND NOS. 7 TO 9 ARE DISPOSED OFF. 27. NOW WE TAKE UP THE ASSESSEES APPEAL FOR THE A. Y. 1999-2000 BEING ITA NO. 371/PN/08. 19 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., 28. THE GROUND NO. 1 IS IN RESPECT OF THE ENHANCEME NT OF HOUSEHOLD EXPENSES BY RS. 1,56,000/-. IN THE A.Y. 1999-2000, THE ASSESSEE HAS DECLARED RS. 2,04,000/- TOWARDS THE HOUSEHOLD EXPEN SES (RS. 17,000/- PER MONTH). THE LD CIT(A) ESTIMATED THE SAME AT RS . 30,000/-. WE FIND THAT THE NOTICE OF ENHANCEMENT IS NOT ISSUED TO THE ASSESSEE WHICH IS MANDATORY U/S. 251(2) OF THE ACT, HENCE, THERE IS A VIOLATION OF SAID CONDITION, AND ACCORDINGLY, THE ADDITION IS DELETE D AND THE GROUND NO. 1 IS ALLOWED. 29. THE GROUND NOS. 2 TO 4 ARE IN RESPECT OF LEVY O F INTEREST U/S. 234A, 234B AND 234C. THE LD. COUNSEL SUBMITTED THAT THES E ARE CONSEQUENTIAL GROUNDS AND THE A.O MAY BE DIRECTED TO CALCULATE TH E CORRECT INTEREST. WE, THEREFORE, DIRECT THE A.O TO VERIFY WHETHER THE INTEREST IS CORRECTLY LEVIED OR NOT. ACCORDINGLY, GROUND NOS. 2 TO 4 ARE DISPOSED OFF. 30. NOW WE TAKE UP ASSESSEES APPEAL FOR A.Y. 2000 -01 BEING ITA NO. 372/PN/2008 FOR THE A.Y. 2000-01. 31. THE GROUND NO.1 IS IN RESPECT OF THE ADDITION M ADE OF RS. 23,61,000/- ON ACCOUNT OF ALLEGED CASH PAYMENT TOWA RDS PURCHASE OF LAND. DURING THE COURSE OF THE SEARCH AND SEIZURE OPERATION, REGISTERED DEVELOPMENT AGREEMENT DATED 4.12.1999 IN RESPECT OF THE LAND OF 22 PLOTS, HAVING TOTAL AREA OF 4128.12 SQ. MTRS. WAS SEIZED. AS PER THE SEIZED DEVELOPMENT AGREEMENT, WHICH WAS BETWEEN SHR I. SURESH JANARDAN PAWAR AND SHRI VISHNU G. PAGARE & OTHERS, SELLERS AND THE CONSENTER BY SHRI KANTILAL CHUNNILAL SHAMSHUKHA. THE TOTAL CONSIDERATION SHOWN IN THE DEVELOPMENT AGREEMENT I S OF RS.16,68,848/- WHICH IS AT THE RATE OF RS. 400/- PER SQ.MTR. THE A.O HAS OBSERVED THAT THE TRANSACTIONS IN THE NAME OF SHRI SURESH J. PAWA R ARE OWNED BY THE ASSESSEE AND THEY ARE SHOWN BY HIM IN HIS CASH FLOW STATEMENT. THE A.O HAS NOTED THAT THE TRANSACTIONS FOUND IN THE BANK A /C. NO. 100112 WITH NDCC BANK, ZP BRANCH, NASIK WHICH WAS IN THE NAME O F SHRI. SURESH J. PAWAR ARE ACCEPTED BY THE ASSESSEE AS HIS OWN TRANS ACTIONS BY SHOWING THE SAME IN HIS CASH FLOW STATEMENTS. AS NOTED BY T HE A.O, THE ASSESSEE ALSO ADMITTED THAT THE DEVELOPMENT AGREEMENT WAS OF BENAMI NATURE VIDE HIS LETTER DATED 17.3.2006. FOR THE PURPOSE O F PAYMENT OF STAMP DUTY, THE VALUATION WAS MADE AT RS. 32,15,253/- IN THE SAID DEVELOPMENT AGREEMENT AS AGAINST THE CONSIDERATION SHOWN AT RS. 16,48,848/-. AS 20 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., PER THE SEIZED DOCUMENT, PAGE NO.1 OF ANNEXURE A 2 8, THE FOLLOWING DETAILS ARE NOTED : DATE AMOUNT (IN RUPEES) 24 MAY 1999.1 51,000/- 24 JUNE 1999.1 12,49,000/- 24 OCTOBER 1999.1 9,00,000/- 8 FEBRUARY 2001.1 2,09,000/- TOTAL 24,09,000/- LESS (-) 48,000/- 23,61,000/- BEFORE THE AMOUNT OF RS. 48,000/- IT IS MENTIONED T HAT THE SAME WAS RETURNED ON 16.6.1999. THE AMOUNT OF RS. 23,61,000 /- IS SHOWN AS DEDUCTION FROM THE TOTAL CONSIDERATION OF RS. 31,30 ,585/- WHICH IS AS PER THE CALCULATIONS MADE ON THE BACK SIDE OF PAGE NO. 1 OF ANNEXURE A 28 AND BALANCE IS SHOWN AT RS. 7,69,585/-. ON THE BAS IS OF THE SEIZED DOCUMENTARY EVIDENCE, I.E. PAGE NOS. 59 TO 80 OF AN NEXURE A-19 AND PAGE NO. 1 OF ANNEXURE-28, THE A.O. CONCLUDED THAT THE CORRECT REAL CONSIDERATION WAS OF RS. 31,30,585/- AND NOT RS. 16 ,48,848/- AS SHOWN IN THE REGISTERED DOCUMENTS. HENCE, TO THE EXTENT O F RS.14,81,737/-, THE CONSIDERATION WAS UNDER-STATED BY THE ASSESSEE AS NOTED BY THE A.O. SO FAR AS THE CASH PAYMENTS MENTIONED ABOVE RS. 23,61, 000/- WHICH WERE FOUND NOTED ON SEIZED PAGE NO. 1 OF ANNEXURE -28, T HE A.O SOUGHT THE EXPLANATION OF THE ASSESSEE AS THE SAID AMOUNT WA S NOT APPEARING IN THE CASH FLOW STATEMENT RELEVANT TO F.Y. 1999-2000 . THE ASSESSEE FILED THE REPLY STATING THAT AGREEMENT FOR THE SAID PROPE RTY WAS MADE ON 29.9.95 FOR THE CONSIDERATION OF RS. 32,71,775/- AN D THE PAYMENT WAS MADE PRIOR TO 31.3.1997. THE ASSESSEE ALSO CLAIMED THAT THE RISE IN THE PRICE OF THE LAND WAS ALLOWED AND THE ADDITIONAL AM OUNT OF RS.7,61,585/- WAS PAID BY CHEQUES DATED 10.7.2001 AND 27 JULY 20 01. THE ASSESSEE STATED THAT THE TOTAL COST OF THE SAID AND WAS RS. 40,41,360/- (RS. 32,71,755/- + RS. 7,69,585/-). IN SUM AND SUBSTAN CE, THE CONTENTION O THE ASSESSEE EVEN IF THE ALLEGED AGREEMENT IN RESP ECT OF THE SAID TRANSACTION WAS DATED 29.9.95, BUT, BY MISTAKE FOR GIVING THE FIGURES TO ASSESSEES ADVOCATE FOR PREPARING THE ORIGINAL DRAF T, THE PAYMENTS WERE SHOWN IN 1999. THE A.O. MADE THE ADDITION OF RS. 2 3,61,000/- AS UNEXPLAINED INVESTMENT. THE LD CIT(A) CONFIRMED THE SAME. 21 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., 32. WE HAVE HEARD THE PARTIES AND PERUSED THE RECOR D. THE LD COUNSEL ARGUES THAT THE AGREEMENT WAS ORIGINALLY ENTERED I NTO ON 29.9.95 FOR THE CONSIDERATION OF RS. 32,71,775/- AND AT THE TIM E OF THE AGREEMENT, THE ENTIRE CONSIDERATION WAS PAID. THE REGISTERED DEVELOPMENT AGREEMENT DATED 4.12.1999 (PAGE NOS. 61 TO 79) FOR THE SAME PROPERTY, THE NOTINGS WERE MADE FOR THE PURPOSE OF THE ADVOCA TE BUT SINCE IN THE DEVELOPMENT AGREEMENT LESSER CONSIDERATION WAS SHOW N, HENCE THE TRANSACTION IS NOT MATCHING. HE ARGUES THAT THE E NTIRE PAYMENT WAS MADE PRIOR TO 1.4.1997 AND HENCE, NO ADDITION CAN B E MADE. WE ARE UNABLE TO ACCEPT THE ARGUMENT ADVANCED ON BEHALF OF THE ASSESSEE. IT IS NOT DISPUTED THAT THE TRANSACTION BELONGED TO THE ASSESSEE AND THE AGREEMENT IS ALSO REGISTERED ON 4.12.99. THE ASSES SEE ALSO ADMITTED THE NOTINGS IN THE SEIZED PAPER WHICH WERE TOWARDS THE PAYMENTS MADE TO THE SELLER. THE ASSESSEE HAS ALSO ADMITTED THAT I T WAS THE BENAMI TRANSACTION AND THIS FACT IS ALSO NOT DISPUTED. TH E SHORT ISSUE REMAINS FOR OUR CONSIDERATION, THEREFORE, IS THAT EVEN IF THE A GREEMENT IS REGISTERED ON 4.12.99, THEN WHETHER THE AMOUNT OF AGREED CONSI DERATION AS MENTIONED IN THE DOCUMENT WAS PAID PRIOR TO 1.4.199 7. AS PER THE ARGUMENT OF THE ASSESSEE THE SEIZED DOCUMENT IS TO BE READ AT ENTIRETY. IN RESPECT OF THIS PARTICULAR TRANSACTION, AS PER T HE NOTINGS ON THE SEIZED DOCUMENT, THREE PAYMENTS ARE MADE IN 1999 AND ONE P AYMENT IS SHOWN IN FEB 2000. HENCE, WE HAVE TO PRESUME THAT THE SA ID PAYMENTS, IN FACT, ARE MADE AS MENTIONED IN THE NOTINGS ON THE SEIZED PAPER. WE FIND NO REASON TO TAKE THE DIFFERENT VIEW ON THE ISSUE AND WE, ACCORDINGLY, CONFIRM THE ORDER OF THE LD CIT(A) ON THIS ISSUE. I N THE RESULT, GROUND NO.1 IS DISMISSED. 33. GROUND NO.2 IS IN RESPECT OF THE ADDITION OF RS . 4,72,200/- BY EVOKING THE PROVISION OF SEC. 40A(3) FOR ALLEGED CA SH PAYMENT DURING F.Y. 1999-2000. THIS ADDITION IS MADE BY ENHANCEMENT B Y THE LD CIT(A). IN RESPECT OF THE TRANSACTION RELATING TO DEVELOPMENT AGREEMENT WHICH IS GROUND NO. 1 IN THIS APPEAL, THE LD CIT(A) CONFIRME D THE ADDITION OF RS.23,61,000/-. HE EVOKED THE PROVISION OF SEC. 40 A(3) FOR VIOLATING THE CASH LIMIT OF RS. 20,000/- AND HE MADE THE ADDITION OF RS. 4,72,200/-. 34. WE HAVE HEARD THE PARTIES. THE ONLY ARGUMENT O F THE LD. COUNSEL IS THAT NO NOTICE TO ENHANCEMENT WAS GIVEN BY THE L D CIT(A) AND HENCE, THIS ADDITION IS NOT JUSTIFIED. THE STATEMENT OF T HE LD COUNSEL IS NOT CONTROVERTED BY THE DEPARTMENT. NOTHING IS THERE A LSO ON THE RECORD TO 22 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., SHOW THAT THE NOTICE OF ENHANCEMENT WAS GIVEN BY T HE LD CIT(A) ON THIS ISSUE TO THE ASSESSEE AS PROVIDED IN SEC. 251(2) OF THE ACT. THE PROVISIONS OF SEC. 251(2) ARE MANDATORY AND AS THER E IS A FAILURE ON THE PART OF THE LD. CIT(A) TO GIVE THE REASONABLE OPPO RTUNITY TO THE ASSESSEE, WE DO NOT FIND ANY JUSTIFICATION TO SUSTA IN THIS ADDITION. ACCORDINGLY, THE SAME IS DELETED. GROUND NO. 2 IS ALLOWED. 35. GROUND NO. 3 IS IN RESPECT OF THE ADDITION OF R S. 4,50,000/- MADE BY THE A.O IN THE A.Y. 2001-02, BUT THE LD CIT(A) H AS SUSTAINED THE SAME IN THE A.Y. 2000-01. AS PER THE SEIZED DOCUMENT FR OM THE OFFICE PREMISES OF THE ASSESSEE AT NASIK (ANNEXURE A- 18) (PAGE NO.14). IT WAS FOUND THAT THE SUM OF RS. 4,50,000/- WAS PAID IN CA SH TO ONE SHRI NERE ON 22.9.99, BUT THE SAME WAS NOT REFLECTED IN THE C ASH FLOW STATEMENT FOR F.Y. 1999-2000 RELEVANT TO THE A.Y. 2000-01. THE A SSESSEE STATED BEFORE THE A.O THAT SHRI NERE WAS ASSOCIATED WITH HIM IN T HE TRANSACTIONS RELATING TO HIM OF S. NO. 208 AND LAND AT S. NO.212 . HE FURTHER STATED THAT HE WAS PAID RS. 3.25 LACKS OUT OF THE SAID LA ND TRANSACTION. THE ASSESSEE ALSO PRODUCED COPY OF THE DEVELOPMENT AGRE EMENT DATED 16.10.2000 AND SALE DEED DATED 16.10.2000 AND SHRI NERE, ONE OF THE CONSENTING PARTY ALONG WITH THE ASSESSEE. AS NOTED BY THE A.O, THE CONTENTION OF THE ASSESSEE WAS NOT CORRECT AS IT WA S FOUND THAT THE ASSESSEE PAID RS. 4,50,000/- TO SHRI. NERE ON ACCOU NT OF SOME EXPENDITURE ON 22 ND SEPTEMBER 1999. THE A.O. REJECTED THE CLAIM OF TH E ASSESSEE AND MADE ADDITION OF RS. 4,50,000/-. WHEN THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD CIT(A) IN THE A.Y. 2001-02, BUT MADE SAME ADDITION IN THE A.Y. 2000-01 ON THE BASIS OF NOTINGS FOUND IN THE SEIZED DOCUMENTS. 36. WE HAVE HEARD THE PARTIES. THE LD COUNSEL REIT ERATED THE ARGUMENT MADE BEFORE THE AUTHORITIES BELOW. IT IS ARGUED THAT MR. NERE WAS PAID COMMISSION OF RS. 63,500/- IN THE F.Y. 199 9-2000 AND RS. 20,000/- IN THE F.Y. 2000-01 FOR SALE OF PLOTS FROM S. NO. 208 AND THOSE PAYMENTS WERE DULY RECORDED IN THE BOOKS OF ACCOUNT . IT IS SUBMITTED THAT MR. NERE WAS PAID RS. 4,08,500/- ONLY IN AGGRE GATE AND NOT RS.4,50,000/- AS NOTED ON THE SEIZED PAPER. IN OUR OPINION, ONCE THE DOCUMENTARY EVIDENCE IS FOUND AND SEIZED FROM THE A SSESSEE, THE BURDEN IS ON THE ASSESSEE TO PROVE THAT IN FACT, EVEN IF T HE PAYMENTS ARE NOTED ON THE SEIZED DOCUMENTS, BUT THE SAME ARE NOT SO. NOTHING HAS BEEN BROUGHT BEFORE US ALSO TO CONTROVERT THE FINDINGS O F THE A.O. WE FIND NO 23 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., REASON TO INTERFERE WITH THE ORDER OF THE LD CIT(A) . ACCORDINGLY, THE SAME IS CONFIRMED AND GROUND NO. 3 IS DISMISSED. 37. GROUND NO.4 IS IN RESPECT OF ADDITION FOR ALLEG ED LOW HOUSEHOLD WITHDRAWALS OF RS. 1,92,000/-. WE HAVE HEARD THE P ARTIES. WE FIND THAT THE LD CIT(A) HAS NOT GIVEN THE NOTICE OF ENHANCEME NT AS REQUIRED U/S. 251(2) OF THE ACT. WE, THEREFORE, DO NOT FIND ANY REASON TO SUSTAIN THE SAID ADDITION. ACCORDINGLY, THE SAME IS DELETED AN D GROUND NO. 4 IS ALLOWED. 38. SO FAR AS GROUND NOS. 5 TO 7 ARE CONCERNED, TH ESE ARE IN RESPECT O CHARGING OF INTEREST U/S. 234A, 234B AND 234C. THE SAME ARE CONSEQUENTIAL AND THE A.O IS DIRECTED TO COMPUTE TH E SAME AFTER GIVING EFFECT TO THE ORDER OF THE TRIBUNAL. ACCORDINGLY T HE SAID GROUNDS ARE DISPOSED OFF. 39. NOW WE TAKE UP THE APPEAL 373/PN/2008 (A.Y. 200 1-02). 40. THE GROUND NO. 1 IS IN RESPECT OF THE ADDITION OF RS. 2,28,000/- MADE BY THE CIT(A) BY WAY OF ENHANCEMENT TOWARDS LO W HOUSEHOLD EXPENDITURE. WE HAVE ALREADY DELETED THE IDENTICAL ADDITION IN THE PRECEDING YEARS FOR VIOLATION OF PROVISION OF SEC. 251(2). FOR THE SAME REASON, WE DELETE THE ADDITION MADE BY THE LD CIT(A ) AND GROUND NO.1 IS ALLOWED. 41. SO FAR AS GROUND NOS. 2 & 3 ARE CONCERNED, THOS E ARE IN RESPECT OF THE LEVY OF INTEREST U/S. 234A, 234B AND 234C, WHIC H ARE CONSEQUENTIAL. THE A.O IS DIRECTED TO CALCULATE THE INTEREST AFTE R GIVING EFFECT TO THE ORDER OF THE TRIBUNAL. ACCORDINGLY, GROUND NOS. 2 & 3 ARE DISPOSED OFF. 42. NOW WE TAKE UP ITA NO. 374/PN/2008 (A.Y. 2002-0 3). 43. THE GROUND NO. 1 IS IN RESPECT OF ADDITION OF R S.4,44,200/- WHICH WAS MADE ON THE BASIS OF NOTINGS FOUND IN THE SEIZE D DIARY. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, THE DIARY W AS SEIZED FROM THE OFFICE OF THE ASSESSEE AT NASIK (ANNEXURE A-31). IN THE SAID DIARY, THE FOLLOWING TRANSACTIONS WERE FOUND RECORDED : 24 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., SL.NO PAGE NO. DATE PARTICULARS AMOUNT RS. P. 1. 44 18.7.2001 KANTILAL SHAMSUKHA, (S.NO. 72, PLOT NO.11) 11,000/- 2. 68 26.11.2001 SURESH 3,00,000/- 3. 68 26.11.2001 RAJU FOR SUMO 95,000/- 4. 68 26.11.2001 PAID TO DHARNI 20,000/- 5. 69 10.12.2001 PAID TO MADHAVARAO JADHAV 19,200/- 6. 70 31.12.2001 RECEIVED FROM VASU- SETH 10,000/- 7. 70 1.1.2002 PAID BHISHI 10,000/- TOTAL 4,65,200/- 44. SO FAR AS THE AMOUNT AT SERIAL NO. 1 AT RS. 11, 000/- IS CONCERNED, THE A.O. FOUND THAT THE CLAIM OF THE ASSESSEE WAS C ORRECT. SO FAR AS OTHER RECORDED TRANSACTIONS ARE CONCERNED, THE CONT ENTION OF THE ASSESSEE IS THAT THOSE ARE DUMP NOTINGS AND NOTINGS ON PAGE NO. 68 WERE MADE BY OFFICE BOY AND THOSE NOTINGS HAD NOTHING TO DO WITH THE ASSESSEE. THE ASSESSEE ALSO CLAIMED THAT HE WAS NOT CONCERNED WIT H ANY BHISHI AND HENCE, THERE IS NO QUESTION OF MAKING PAYMENT AS F OUND NOTED ON 1.1.2002. THE A.O. REJECTED THE EXPLANATION OF THE ASSESSEE AND MADE THE ADDITION OF RS. 4,44,200/- WHICH WAS CONFIRMED BY THE LD CIT(A). 45. WE HAVE HEARD THE PARTIES. BEFORE US, IT WAS A RGUED THAT THE NOTINGS FOUND IN THE DIARY WERE CASUAL NOTINGS. T HOSE ARE IN MARATHI LANGUAGE. HE SUBMITTED THAT THE AUTHOR OF THE DIAR Y WAS NOT EXAMINED. AT THE RELEVANT TIME, THE ASSESSEE WAS STAYING IN M UMBAI, AND HENCE, NO ADDITION IS JUSTIFIED. IN THIS CASE, THOUGH THE AD DITION IS CONFIRMED BY THE LD CIT(A), BUT HE GAVE THE BENEFIT OF THE TELESCOPI NG IN RESPECT OF THE ADDITION MADE TOWARDS THE ON MONEY FROM SHRI I.S . PATEL AND SHRI J.K. PATEL MADE IN THE A.Y. 1998-99. THE ASSESSEE HAS F ILED THE XEROX COPIES OF THE RELEVANT PAGES OF THE SEIZED DIARY (PAGES 46 TO 48). AS PER THE OVERALL NOTINGS, THE SAID DIARY DOES NOT APPEAR TO BE EVEN ROUGH DIARY 25 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., MAINTAINED BY THE ASSESSEE. THERE ARE SOME NOTINGS IN THE MARATHI (PAGE NO.47), BUT THE NOTINGS ARE VERY VAGUE. WE, FURTHER, FIND THAT NOWHERE IT IS MENTIONED THAT PAID OR RECEIVED. MOREOVER, THERE IS A NOTING OF SOME MOBILE NO. AS WELL AS NOTINGS OF THE PERSONS VISITED WHO HAD PHONED ETC., MERELY BECAUSE SOME NOTINGS ARE F OUND ON ANY DIARY, IT CANNOT BE SAID THAT THE SAID NOTINGS REFLECT THE TR ANSACTIONS OF THE ASSESSEE UNLESS WRITING OR NOTING SUGGEST UNRECORDE D TRANSACTION OF THE ASSESSEE. IN OUR OPINION, THERE IS NO JUSTIFICATIO N TO SUSTAIN THE ADDITION. ACCORDINGLY, THE SAME IS DELETED AND THE GROUND NO. 1 IS ALLOWED. 46. SO FAR AS GROUND NO.2 IS CONCERNED IT IS IN RES PECT OF ALLEGED LOW HOUSEHOLD EXPENDITURE AND THE SAID ADDITION IS MADE BY THE LD CIT(A) BY WAY OF ENHANCEMENT. WE HAVE ALREADY DELETED THE I DENTICAL ADDITION IN THE PRECEDING YEARS AND FOR THE SAME REASON, WE DEL ETE THE ADDITION IN THIS YEAR ALSO. THE GROUND NO. 2 IS ALLOWED. 47. NOW WE TAKE UP THE APPEAL BEING ITA NO. 375 & 3 76/PN/2008, FOR A.YS. 2003-04 AND 2004-05. IN BOTH THE APPEALS, TH E GROUND NO.1 IS IN RESPECT OF ENHANCEMENT OF HOUSEHOLD EXPENDITURE. T HE LD CIT(A) MADE THE ADDITION OF RS. 3,00,000/- IN THE A.Y.2003-04 A ND RS. 3,36,000/- IN THE A.Y. 2004-05. WE HAVE ALREADY DECIDED THE IDEN TICAL ISSUE IN THE PRECEDING YEARS AND HAVE DELETED THE ADDITION/ENHAN CEMENT BY THE LD CIT(A). FOLLOWING OUR REASONINGS IN THE PRECEDING YEARS, WE DELETE THE ADDITION/ENHANCEMENT IN THESE YEARS ALSO MADE BY TH E CIT(A) TOWARDS ALLEGED LOW HOUSEHOLD EXPENDITURE. ACCORDINGLY, GR OUND NO. 1 IN BOTH THE APPEALS IS ALLOWED. 48. THE GROUND NO.2 IN A.Y. 2004-05 IS IN RESPECT O F THE ADDITIONS SUSTAINED BY THE LD CIT(A) OF RS. 29,71,280/- ON AC COUNT OF CASH FOUND DURING SEARCH OPERATION. DURING THE COURSE OF THE SEARCH AND SEIZURE ACTION, CASH OF RS. 49,82,530/- WAS FOUND IN THE P OSSESSION OF THE ASSESSEE, OUT OF WHICH, CASH TO THE EXTENT OF RS. 4 8,22,500/- WAS SEIZED. THE ASSESSEE HAS NOT MAINTAINED THE REGULAR BOOKS O F ACCOUNT WITH RESPECT TO HIS BUSINESS ACTIVITY, BUT SUBSEQUENT TO THE SEARCH ACTION, THE ASSESSEE PREPARED THE CASH BOOK AND CASH FLOW STATE MENT FOR ALL ASSESSMENT YEARS. THE ASSESSEE TRIED TO JUSTIFY SA ID CASH BY FILING A CASH FLOW STATEMENT THAT AS ON THE DATE OF SEARCH, THE C ASH BALANCE WITH THE ASSESSEE WORKED OUT AT RS. 48,22,500/-. THE A.O. R EJECTED THE EXPLANATION OF THE ASSESSEE. AFTER TAKING INTO ACC OUNT THE ADDITIONS MADE 26 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., ON ACCOUNT OF UNEXPLAINED CASH OF RS. 23,61,000/-, RS. 9,63,000 AND RS. 4,44,200/- IN THE A.YS. 2000-01, 2001-02 AND 2002-0 3 RESPECTIVELY, THE A.O CAME TO THE CONCLUSION THAT THE CORRECT CASH BA LANCE AS ON THE DATE OF SEARCH WORKED OUT AT RS. 10,54,300/- AS PER THE CASH FLOW STATEMENTS. THE A.O, THEREFORE, GAVE SET OFF OF RS. 10,54,300/ - AND TREATED RS. 39,28,230/- AS UNEXPLAINED CASH AND ON PROTECTIVE BASIS ADDED TO THE INCOME OF THE ASSESSEE IN THE A.Y. 2004-05. WHEN T HE MATTER REACHED BEFORE THE LD CIT(A), TO THE EXTENT OF THE ADDITION S, DELETED I.E. RS. 5,12,750/- IN THE A.Y. 2001-02 AND RS. 4,44,200/- I N THE A.Y. 2002-03, THE LD CIT(A) INCREASED THE SAID AMOUNT BY RS. 9,56 ,950/-, TREATING THE SAME AS EXPLAINED CASH AND FINALLY SUSTAINED THE AD DITION TO THE EXTENT OF RS.29,71,280/- ON SUBSTANTIVE BASIS. 49. THE LD COUNSEL VEHEMENTLY ARGUED THAT THE ASSES SEE IN THE BOOKS WRITTEN AFTER THE SEARCH ACCOUNTED ALL THE CASH F OUND BUT THE REASON BEST KNOWN TO THE A.O, HE DID NOT ACCEPT THE ACCOUNTING MADE BY THE ASSESSEE. THE LD CIT(A) GAVE FURTHER BENEFIT OF RS . 9,56,950/- AND REDUCED THE ADDITION TO RS. 29,71,280/-. HE ARGUES THAT IF ON THE CHARGE OF UNEXPLAINED CASH PAYMENTS ADDITIONS ARE ALREADY MADE, THEN FOR SUCH UTILIZATION OF THE FUNDS, NO FURTHER ADDITION CAN B E MADE. HE PLEADED FOR DELETING THE ADDITION. WE HAVE ALSO HEARD LD. D.R. ON THIS ISSUE. 50. THERE IS NO DISPUTE ON THE FACT THAT THE ASSES SEE HAS NOT MAINTAINED THE REGULAR BOOKS OF ACCOUNT AND THE BOO KS OF ACCOUNT ARE PREPARED ONLY AFTER THE SEARCH AND SEIZURE OPERATIO N. IN OUR OPINION, THE BURDEN IS ON THE ASSESSEE TO DEMONSTRATE THAT TO TH E EXTENT OF RS. 29,71,280/-, IN FACT, EVEN AS PER THE CASH FLOW STA TEMENT AND BOOKS OF ACCOUNT, THE CASH WAS AVAILABLE WITH THE ASSESSEE A T THE TIME OF SEARCH. IN OUR OPINION, THIS ISSUE NEEDS RE-CONSIDERATION AS THE NECESSARY FACTS ARE NOT CLEARLY COMING OUT FROM THE ORDERS OF THE A UTHORITIES BELOW. WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF THE A. O FOR FRESH ADJUDICATION. WE, ACCORDINGLY, SET ASIDE THE ORDER OF THE LD CIT (A) ON GROUND NO.2 AND DIRECT THE A.O TO CONSIDER THE CONTENTION OF TH E ASSESSEE AND ALSO TO CONSIDER THE CASH FLOW STATEMENT AS WELL AS THE CAS H BALANCE IN THE BOOK OF ACCOUNT PREPARED BY THE ASSESSEE ON THE DATE OF SEARCH. NEEDLESS TO SAY, THE ASSESSEE SHOULD BE GIVEN REASONABLE OPPORT UNITY OF BEING HEARD. 51. THE NEXT ISSUE IS ADDITION OF RS. 5,00,000/- O N ACCOUNT OF JEWELLERY AND THIS ARISES FROM GROUND NO. 3 IN THE A.Y. 2004- 05. DURING THE COURSE 27 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., OF SEARCH, GOLD AND DIAMOND ORNAMENTS HAVING VALUE OF RS. 8,46,490/- WERE FOUND WITH THE ASSESSEE. THE GOLD ORNAMENTS W ERE TO THE EXTENT OF 364.800 GMS. AND DIAMOND ORNAMENTS WERE TO THE EXT ENT OF 226.450 GRMS. THE A.O MADE THE ADDITION OF RS. 5,00,000/-. 52. WE HAVE HEARD THE PARTIES. THE LD COUNSEL ARGU ED THAT THE ASSESSEE IS ENTITLED FOR THE BENEFIT OF THE CBDT CI RCULAR NO. 1916 DATED 11.5.1994. HE SUBMITS THAT THE ASSESSEE HAD FOUR M EMBERS IN HIS FAMILY, I.E. THE ASSESSEE HIMSELF, HIS 2 SONS AND W IFE. HE, THEREFORE, PLEADED THAT THE ASSESSEE MAY BE GIVEN THE BENEFIT OF THE CBDT CIRCULAR. WE FIND FORCE IN THE ARGUMENT OF THE LD. COUNSEL. MOREOVER, THE CLAIM OF THE ASSESSEE IS SUPPORTED BY THE DECISION OF THE I TAT, MUMBAI IN THE CASE OF HARAKCHAND N. JAIN, 61 TTJ 223 (MUM.). WE FIND THAT THE TOTAL JEWELLERY SEIZED DURING THE COURSE OF SEARCH AS UND ER : (A) GOLD ORNAMENTS 364.800 GM S. (B) DIAMOND ORNAMENTS 221.450 GMS. TOTAL : 586. 250 GMS. AS PER THE CBDT CIRCULAR REFERRED ABOVE, MARRIED FE MALE FAMILY MEMBER IS ENTITLED FOR THE SET OFF OF 500 GMS. AND EACH M ALE MEMBER OF THE FAMILY IS ENTITLED FOR THE SET OFF OF 100 GMS. AS PER THE CONTENTION OF THE ASSESSEE, THERE ARE THREE MALE MEMBERS AND ONE MAR RIED FAMILY I.E. WIFE OF THE ASSESSEE. HENCE, THE ASSESSEE IS ENTITLED FO R THE BENEFIT OF UPTO 800 GMS. AS THE SEIZED JEWELLERY AND ORNAMENTS ARE LESS THAN 800 GMS. BY GIVING THE BENEFIT OF CIRCULAR NO. 1916 DATED 11 .5.1994, WE DELETE THE ADDITION SUSTAINED BY THE LD CIT(A). ACCORDINGLY, GROUND NO. 3 IS ALLOWED. 53. NOW WE TAKE UP REVENUES APPEAL BEING ITA NOS. 383, 384, 385, 386, 387, 388 AND 389/PN/2008 AND RELEVANT A.YS. AR E 1998-99 TO 2004- 2005. THE FIRST ISSUE IS THE ADDITIONS MADE BY THE A.O. U/S. 69C OF THE ACT AS UNDER : A.Y. AMOUNT RS. 1998-99 19,32,103/- 1999-00 8,81,011/- 28 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., 2000-01 1,63,67,611/- (1,59,81,232/- & RS.3,86,379/-) 2001-02 32,38,451/- 2002-03 13,08,00/- 2003-04 85,992/- 2004-05 41,93,072/- 54. THE ASSSESSEE HAS SHOWN THE OPENING STOCK-IN-TR ADE OF THE PROPERTIES/LANDS AS ON 1.4.1997 TO THE EXTENT OF RS . 3,16,09,555/-. THE ASSESSEE HAD CLAIMED THE PRORATE DEDUCTION OF THE C OST OF LAND AGAINST THE SALES OF THE SAID LAND OR PLOTS MADE AND DECLAR ED IN THE A.YS. 1998-99 TO 2004-05. IN THE VDIS DECLARATION FILED BY THE A SSESSEE, ONE ADVANCE FOR THE LAND BEARING SURVEY NO. 329 AT RS. 2,50,000 /- WAS SHOWN. IN THE ORIGINAL BALANCE SHEET ALSO, THE ASSESSEE HAS SHOWN RS. 20,43,000/- AS A PLOT ADVANCE AS AGAINST THE SAME SURVEY NO. 329 AND ALSO AGRICULTURAL LAND OF RS. 23,07,000/-. THE ASSESSEE CLAIMED THAT HE HAD MADE THE INVESTMENT PRIOR TO 1.4.1997, THE PERIOD WHICH IS B EYOND THE JURISDICTION OF THE A.O TO CONSIDER WHILE MAKING ASSESSMENTS U/ S. 153A. HE, THEREFORE, MADE THE DISALLOWANCE APPLYING THE PROVI SO TO SEC. 69 C OF THE ACT BY MAKING THE DISALLOWANCE TO COST OF LAND AND PRO RATA EXPENDITURE CLAIMED BY THE ASSESSEE. WHEN THE MATTER REACHED B EFORE THE LD CIT(A), HE WAS OF THE VIEW THAT PROVISO TO SEC. 69C IS NOT APPLICABLE TO THE ASSESSEES CASE AS THE SAID PROVISO WAS NOT IN THE STATUTE IN THE A.Y. 1998-99 AS THE SAME WAS INTRODUCED AND INSERTED BY THE FINANCE (NO.2) ACT 1998 W.E.F. 1 ST APRIL 1999. HE DELETED THE ADDITIONS MADE BY THE A.O. EVOKING THE PROVISIONS OF SEC. 69C IN ALL THE ASSES SMENT YEARS. 55. NOW THE REVENUE HAS RAISED THE GRIEVANCE AGAINS T THE ACTION OF THE LD CIT(A) DELETING THE ADDITIONS MADE BY THE A.O BY APPLYING THE PROVISO TO SEC. 69C TO THE PRORATE COST OF THE LANDS WHICH WERE SOLD IN THE RESPECTIVE ASSESSMENT YEARS. THERE ARE TWO ISSUES TO BE CONSIDERED (1) WHETHER THE LD CIT(A) IS JUSTIFIED IN HOLDING THAT THE INVESTMENT MADE BY THE ASSESSEE IN THE STOCK OF THE PROPERTIES/LAND SH OWN AS ON 1.4.1997 IS COVERED U/S. 69 AND NOT U/S. 69C AS THE SAME AMOUNT S TO INVESTMENT AND (2) THE PROVISO TO SEC. 69C IS NOT APPLICABLE AS TH E SAME WAS BROUGHT ON THE STATUTE W.E.F. 1.4.1999 AND ASSESSEES INVESTME NT IN THE STOCK IN TRADE OF LAND/PROPERTIES IS PRIOR TO INSERTION OF T HE SAID PROVISO. 56. SEC. 69C AFTER THE INSERTION OF PROVISO READS A S UNDER : 29 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., 69C. WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURR ED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE [ASSESSING] OFFICER, SAT ISFACTORY, THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FI NANCIAL YEAR:] [PROVIDED THAT, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OT HER PROVISION OF THIS ACT, SUCH UNEXPLAINED EXPENDITURE WHICH IS DEEMED TO BE THE INCOME OF THE ASSESSEE SHALL NOT BE ALLOWED AS A DEDUCTION UNDER ANY HEAD OF INCOME.] 57. SO FAR AS THE PRESENT ASSESSEE IS CONCERNED, I T IS NOT DISPUTED THAT HE IS IN THE BUSINESS OF REAL ESTATE AND LAND DEVEL OPMENT. AS PER THE FACTS ON RECORD, HE PURCHASES THE LAND, CARRIES OUT THE DEVELOPMENTS LIKE MAKING THE LAY OUT, PLOTTING ETC., AND SELL THE SAM E AS DISCUSSED EARLIER. THE ASSESSEE CLAIMED THAT THE EXPENDITURE ON THE PU RCHASE OF LANDS IS ALLOWABLE AS THE DEDUCTION ON PRO RATA BASIS AGAINS T THE SALE PRICE WHENEVER THE SAID LANDS ARE SOLD. THE A.O. WAS OF THE OPINION THAT AS THE ASSESSEE WAS NOT THE INVESTOR BUT HE WAS IN THE BUSINESS OF DEVELOPING AND TRADING OF THE LANDS, HENCE WHATEVER PURCHASE PRICE HE HAS INCURRED FOR ACQUIRING THE STOCK OF LANDS DECLA RED BY THE ASSESSEE AS ON 1.4.1997 IS COVERED U/S. 69C OF THE ACT. IN OUR OPINION, THE VIEW TAKEN BY THE A.O IN RESPECT OF THE APPLICABILITY OF SEC. 69C IS THE CORRECT VIEW AS NOWHERE IT IS THE CASE THAT HE IS THE INVE STOR AND NOT IN THE BUSINESS OR DEVELOPMENT OF LANDS. SEC. 69C SPECIFI CALLY DEALS WITH THE EXPENDITURE AND SEC. 69 DEALS WITH THE INVESTMENT. 58. NOW THE NEXT QUESTION IS WHETHER THE PROVISO IN SERTED TO SEC. 69C IS APPLICABLE TO THE ASSESSEE, MORE PARTICULARLY IN THE CONTEXT OF THE EXPENDITURE INCURRED FOR ACQUIRING STOCK OF THE LA NDS WHICH WAS DECLARED BY THE ASSESSEE AS ON 1.4.1997. ADMITTEDLY, IN THE PRESENT CASE, THE STOCK OF THE LANDS DECLARED BY THE ASSESSEE AS ON 1 .4.1997 WAS NEVER OFFERED FOR TAXATION NOR THE SOURCE OF THE SAID AMO UNT WAS EXPLAINED. THE ASSESSEE WAS GIVEN RELIEF IN HIS APPEALS DUE TO THE REASON THAT THERE ARE LIMITATIONS IN THE CONTEXT OF THE PERIOD ON THE POWERS OF THE A.O. AS PER PROVISIONS OF SEC. 153A(1)(B) TO ASSESS OR RE- ASSESS THE INCOME OF THE SEARCHED PERSON BEYOND THE PERIOD OF SIX ASSESS MENT YEARS IMMEDIATELY PRECEDING THE A.Y, RELEVANT TO THE PREV IOUS YEAR IN WHICH THE SEARCH IS CONDUCTED. AS THE ASSESSEE SUCCEEDED IN GETTING THE RELIEF AS HIS TRANSACTIONS ARE PRIOR TO THE PERIOD PROVIDED U /S. 153A(1)(B), IT DOES NOT MEAN THAT ALL HIS TRANSACTIONS IN LAND ARE DIS CLOSED TRANSACTIONS, BUT 30 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., THE SAME REMAINED UNEXPLAINED AND IN FACT, COVERED WITHIN THE PROVISO TO U/S. 69C, BUT CANNOT BE BROUGHT TO TAX. SO FAR AS THE PROVISO TO SEC. 69C IS CONCERNED, THE SAME IS INTRODUCED BY FINANCE (NO.2) ACT 1998 W.E.F. 1.4.1999 AND EFFECTIVELY, THE SAME IS APPLIC ABLE FROM THE A.Y. 1999-2000. IT IS WELL SETTLED RULE IF INTERPRETATI ON IF THE LEGISLATURE HAS SPECIFIED THE DATE WHILE INTRODUCING OR AMENDING AN Y STATUTORY PROVISIONS, THEN THE SAID PROVISION WILL BE APPLICA BLE FROM THE DATE SPECIFIED BY THE LEGISLATURE. IN OUR OPINION, THE PROVISO TO SEC. 69C IS A SUBSTANTIVE PROVISION AND CAN NOT HAVE RETROSPECTIV E APPLICATION AS IT AFFECTS SUBSTANTIVE RIGHT OF THE PERSON. WE HAVE ALREADY HELD THAT TO THE EXTENT OF THE 5 TRANSACTIONS THOSE ARE PRIOR TO 1.4 .1997 AND 3 TRANSACTIONS WE HAVE SET ASIDE TO THE FILE OF A.O FOR VERIFICATION. IT IS ALSO WELL SETTLED PRINCIPLE THAT IF THE TRANSACTION IS DONE INTO A PARTICULAR FINANCIAL YEAR, THEN THE LAW APPLICABLE TO THAT F.Y . WILL GOVERN. ADMITTEDLY, THE PROVISO TO SEC. 69C IS APPLICABLE FROM THE A.Y. 1999- 2000, THE SAME WILL NOT APPLY TO THE COST INCURRED BY THE ASSESSEE FOR ACQUIRING THE STOCK OF LAND PRIOR TO 1.4.1997. WE , THEREFORE, CONFIRM THE VIEW TAKEN BY THE LD CIT(A) THAT NO DISALLOWANCE CA N BE MADE BY APPLYING PROVISO TO SEC. 69C TO THE PRO RATA COST OF THE LANDS SOLD BY THE ASSESSEE IN THE A.YS. BEFORE US OUT OF THE STOCK OF LAND HELD BY HIM AS ON 1.4.1997. 59. IN THE RESULT, WE DISMISS THE RELEVANT GROUNDS MORE PARTICULARLY, GROUND NO. 1 TAKEN BY THE REVENUE IN ALL THE APPEAL S. 60. THE NEXT ISSUE ARISES FROM THE REVENUES APPEAL S IS ADDITION BY DISALLOWANCE MADE U/S. 40A(3) AND THIS ISSUE ARISES IN ALL THE A.YS. THE A.O. HAS WORKED OUT THE DISALLOWANCE U/S. 40A(3) ON THE BASIS OF THE DEDUCTIONS CLAIMED BY THE ASSESSEE IN THE PROFIT & LOSS A/C. AS UNDER : A.Y. AMOUNT DISALLOWED REMARK U/S. 40A(30 RS. 1998-99 3,86,420/- NO ADDITION BY A.O 1999-2000 1,84,300/- RELATE TO TRANSACTIONS IN F.Y. 1998-99 2000-01 2,91,400/- DISALLOWANCE ON DEDUCT- ION WHEREAS SAME IS MAD E ON PAYMENT IN A.Y. 1999-2000 BY ASSESSEE 31 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., HIMSELF AND RETAINED BY THE A.O. 2001-02 6,47,690/- NOT ADDED BY A.O 2002-03 1,51,456/- - 2003-04 41,182/- - 2004-05 1,06,575/- - 61. AS PER THE FACTS ON RECORD, MOST OF THE TRANSAC TIONS INVOLVING THE PURCHASE OF LANDS WERE MADE BY THE ASSESSEE IN CAS H. IN THE OPINION OF THE A.O, THE AMOUNTS WERE EXCEEDING RS. 20,000/- AT A TIME. THE A.O, THEREFORE, EVOKED THE PROVISION OF SEC. 40A(3) AND WORKED OUT THE DISALLOWANCE. WE WILL GO YEAR-WISE AS UNDER FOR DE CIDING THE ISSUE: (A) SO FAR AS A.Y. 1998-99 IS CONCERNED, THE A.O WO RKED OUT THE DISALLOWANCE TO THE EXTENT OF PRO RATA COST OF LAND CLAIMED BY THE ASSESSEE IN THE PROFIT & LOSS A/C. ADMITTEDLY, THE TRANSACTIONS WERE NOT IN THE PREVIOUS YEAR RELEVANT TO THE A.Y. 1998- 99 BECAUSE THE PRORATE COST OF THE LAND CLAIMED BY THE ASSESSEE WA S IN RESPECT OF THE COST OF STOCK OF LAND AS ON 1.4.1997. IN OUR O PINION, THE LD CIT(A) HAS RIGHTLY DELETED THE ADDITION. (B) A.Y. 1999-2000 IN THIS YEAR, THE A.O. MADE THE DISALLOWANCE TO THE EXTENT OF RS. 1,84,300/- BY APPLYING SEC. 40 A(3). IN THE SAID YEAR, THE ASSESSEE HAD CLAIMED THE PRO RATA DE DUCTION OF COST AT RS.8,81,011/- WHICH WAS OUT OF THE LAND SOLD HEL D AS STOCK-IN- TRADE AS ON 1.4.1997. AS THERE IS NO TRANSACTION I N THE A.Y. 1999- 2000 PERTAINING TO THE COST OF RS. 8,81,011/-, THE DISALLOWANCE WAS NOT JUSTIFIED. WE, THEREFORE, CONFIRM THE ORDER OF THE LD CIT(A) DELETING THE SAID ADDITION. (C) A.Y. 2000-01 IN THIS YEAR, THE A.O MADE THE ADDITION OF RS.2,91,400/-. IT IS SEEN THAT THE ASSESSEE HAD MA DE PURCHASES OF THE LAND IN THE F.Y. 1998-99 FOR RS. 14,57,000/- AN D PAYMENT WAS MADE IN CASH. NO PLAUSIBLE EXPLANATION IS OFFERED BY THE ASSESSEE WHY THE PAYMENTS WERE MADE IN VIOLATION OF SEC. 40A (3). WE, THEREFORE, REVERSE THE ORDER OF THE CIT(A) AND REST ORE THE ORDER OF A.O. (D) A.Y. 2001-02 THOUGH THE A.O HAS MADE THE DISALLOWANCE U/S. 40A(3) AT RS. 6,47,690/-, BUT NO ADDITION IS MADE A S THE A.O HAS 32 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., ALREADY MADE THE ADDITION BY APPLYING PROVISION TO SEC. 69C TO THE PRO RATA COST OF LAND CLAIMED BY THE ASSESSEE. ADM ITTEDLY, THE TRANSACTIONS ARE PRIOR TO 1.4.1999, HENCE, NO DISAL LOWANCE CAN BE MADE U/S. 40A(3). WE, ACCORDINGLY, CONFIRM THE ORD ER OF THE LD CIT(A). (E) A.Y. 2002-03 IN THIS YEAR, THE A.O. MADE THE DISALLOWANCE OF RS. 1,51,456/- U/S. 40A(3). AS PER THE FACTS ON RECORD, THE ASSESSEE HAD PURCHASED THE LAND IN THE F.Y. 1998-99 BEARING S.NO. 113/115 OF CHERPOLI FOR RS. 7,57,283/- AND THE ENTI RE PAYMENT WAS MADE IN CASH. THERE ARE NO CLARITY OF FACTS FOR MA KING THE DISALLOWANCE BY A.O. THEREFORE, WE SUPPORT THE OR DER OF THE LD CIT(A) FOR DELETING THE SAME. (F) A.Y. 2003-04 THE A.O MADE THE DISALLOWANCE IN RESPECT OF THE PRO RATA COST OF THE LAND SOLD IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2003-04. WE HAVE ALREADY HELD THAT PROVISO TO SEC. 69C CANNOT BE APPLIED TO THE TRANSACTIONS PRIOR TO 1.4. 1999. THE A.O HAS ALSO MADE THE DISALLOWANCE BY APPLYING SEC. 40A (3) IN RESPECT OF THE PURCHASE TRANSACTION OF THE LAND RELATING TO THE F.Y. 1998-99 RELEVANT TO THE A.Y. 1999-2000. EVEN IF THE TRANSA CTION DOES NOT RELATE TO THE A.Y. 2003-04, BUT ADMITTEDLY AS ASSES SEE COULD NOT EXPLAINED SOURCE OF SAID EXPENDITURE, SAME IS TREAT ED AS ASSESSEES INCOME IN A.Y. 1999-00. PROVISO TO SEC. 69C IS IN NATURE OF NON- OBSTANE CLAUSE WHICH PUT CAPPING FOR ALLOWING SAID EXPENDITURE AS DEDUCTION. WE THEREFORE REVERSE ORDER OF LD. CIT(A ) AND UPHOLD DISALLOWANCE. G) A.Y. 2004-05 IN THIS YEAR, THE ASSESSEE HAS CLAIMED THE PRO RATA DEDUCTION OF RS. 41,93,072/- AS THE PRO R ATA COST OF LAND SOLD IN THE PREVIOUS YEAR RELEVANT TO THE A.Y. 2004 -05. THOUGH THE A.O CALCULATED THE DISALLOWANCE TO BE MADE U/S. 40A (3), BUT NO SEPARATE ADDITION WAS MADE. IN RESPECT OF THE PURC HASE OF THE LAND BEARING S.NO. 113/115 OF CHERPOLI, DISTRICT THANE, THE A.O MADE THE DISALLOWANCE ON THE DEDUCTION OF RS. 5,32,876/- CLAIMED BY THE ASSESSEE. THE LD CIT(A) HAS OBSERVED THAT FROM THE DETAILS SUBMITTED BY THE ASSESSEE, THE DISALLOWANCE HAS BEE N WRONGLY WORKED OUT ON THE AMOUNT OF RS. 5,32,876/-. AS THE PAYMENTS WERE MADE BY A/C PAYEE CHEQUE/ D.D. EXCEPT RS. 25,0 00/- ON 33 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., 3.9.2002 AND ON THE SAID AMOUNT THE DISALLOWANCE IS ALREADY MADE BY THE ASSESSEE. IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD. CIT(A) FOR A.Y. 2004-05 DELETING T HE DISALLOWANCE MADE BY THE A.O. THE SAME IS CONFIRMED. WE, ACCORDINGLY, DISMISS THE RELEVANT GROUNDS TAKEN BY THE REVENUE IN THE A.Y. 1998-99, 1999-00, 2001-02, 2002-03, AND 20 04-05 AND ALLOW THE GROUND NO. 2 IN THE A.Y. 2000-01 & A.Y. 2003-04 . 62. THE NEXT ISSUE IS THE ADDITION ON ACCOUNT OF DE POSIT IN THE BANK A/C. ALLEGED TO BE THE BENAMI ACCOUNT OF THE ASSESSEE. THE A.O. MADE THE FOLLOWING ADDITIONS IN RESPECT OF BANK A/C. FOUND I N THE NAME OF HIS MOTHER-IN-LAW : A.Y. 2001-02 RS.5,13,553/- A.Y. 2002-03 RS.4,44,200/- A.Y. 2003-04 RS. 7,172/- A.Y. 2004-05 RS. 350/- 63. SO FAR AS A.YS. 2003-04 & 2004-05 ARE CONCERNED , THE ADDITIONS ARE MADE TOWARDS THE INTEREST CREDITED TO THE SAID ACCOUNT. DURING THE COURSE OF THE SEARCH OPERATION, .S.B. A/C. WITH THE BANK OF BARODA NO. 6866 IN NASIK WHICH WAS IN THE JOINT NAME OF SMT. S HIVANI RATNA KAMALCHAND, MOTHER-IN-LAW OF THE ASSESSEE AND MRS. KAMALCHAND KHEMANI, WIFE OF THE ASSESSEE WAS FOUND. IN SAID B ANK A/C. TOTAL CASH DEPOSITS OF RS. 5,12,750/- WERE NOTICED IN THE F.Y. 2000-01, WHICH DETAILS ARE GIVEN ON PARA NO. 8 OF THE ASSESSMENT ORDER. TH E ASSESSEE CONTENDED THAT THE SAID BANK A/C. WAS OF HIS MOTHER-IN-LAW BU T DUE TO HER OLD AGE AND PARALYTIC CONDITION OF HER HEALTH, ASSESSEES W IFE WAS MADE JOINT A/C. HOLDER. IT WAS ALSO CONTENDED THAT APPLICATION FOR ADDITION OF NAME WAS SEPARATELY SUBMITTED BY MRS. KAMAL KHEMANI, AS A ME ASURE OF PRECAUTION IN CASE OF DEATH THAT SAVING BANK A/C. DOES NOT GE T LOCKED. THE ASSESSEE ALSO CONTENDED THAT THE SUM OF RS. 1,13,7 50/- DEPOSITED IN THE SAID BANK A/C. REPRESENTS REFUND OF SHARE APPLICATI ON MONEY IN THE PUBLIC ISSUE OF TIPS LTD. THE ASSESSEE DENIED HAVING ANY DEPOSIT MADE BY HIM IN THE SAID BANK A/C. THE A.O. REJECTED THE EXPLAN ATION OF THE ASSESSEE AND MADE THE ADDITION OF RS.5,13,553/- INCLUDING TH E INTEREST THEREIN. THE LD CIT(A) DELETED THE ADDITION BY ACCEPTING THE EXPLANATION OF THE ASSESSEE THAT THE SAID BANK A/C. WAS NEVER OWNED BY THE ASSESSEE AS THE BENAMI ONE. THE LD CIT(A) HAS OBSERVED THAT ASSESS EES WIFES NAME 34 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., WAS ADDED AS A JOINT A/C. HOLDER ON 29.4.2003 AND S MT. RATNA SHIVANI EXPIRED ON 14.7.2003. NO INCRIMINATING MATERIAL WAS FOUND AGAINST THE ASSESSEE. MOREOVER, THE TRANSACTIONS IN THE SAID A CCOUNT ARE PRIOR TO 29.4.2003. IN OUR OPINION, THE LD CIT(A) HAS RIGHT LY DELETED THE ADDITION IN THE A.Y. 2001-02. FOLLOWING OUR REASONING IN TH E A.Y. 2001-02, WE CONFIRM THE ORDER OF LD. CIT(A) IN A.YS. 2002-03, 2 003-04 AND 2004-05. IN THE RESULT, THE RESPECTIVE GROUND NO.3 IN ALL TH E 4 APPEALS ARE DISMISSED. 64. THE NEXT ISSUE IS THE ADDITION OF RS. 4,44,200/ - MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED SOURCES OF EXPENSES WHICH WAS DELETED BY THE LD CIT(A) AND THIS ISSUE ARISES IN THE A.Y. 2002-03 . WE HAVE ALREADY DEALT WITH THE SAID ISSUE IN THE ASSESSEES APPEAL, MORE PARTICULARLY IN THE A.Y.. 2001-02 BEING GROUND NO.1. THE ISSUE IN CON TROVERSY WAS IN RESPECT OF THE DIARY SEIZED DURING THE COURSE OF SE ARCH FROM THE OFFICE PREMISES OF THE ASSESSEE. THERE WERE CERTAIN NOTIN GS IN MARATHI. WE HAVE ALREADY ACCEPTED THE PLEA OF THE ASSESSEE THAT THERE WAS NO JUSTIFICATION TO MAKE THE ADDITION ON THE BASIS OF THE SAID SEIZED DIARY (A- 31). THE LD CIT(A) DID NOT ACCEPT THAT IT WAS DUMP DOCUMENT. HE, THEREFORE, ON PRINCIPLE CONFIRMED THE SAID ADDITIO N BUT, ACCEPTING THE ALTERNATE PLEA OF THE ASSESSEE, GAVE THE BENEFIT OF TELESCOPING. AS ON MERIT ITSELF, WE HAVE DELETED THE ADDITION. THE GR OUND TAKEN BY THE REVENUE DOES NOT SURVIVE AND THE SAME IS DISMISSED. 65. IN THE RESULT, ASSESSEES APPEALS FOR A.Y. 1999 -2000, 2001-02, 2002-03, & 2003-04 ARE ALLOWED AND APPEALS FOR THE A.YS. 2001-01 IS PARTLY ALLOWED, AND APPEALS FOR THE A.Y. 1998-99 AN D 2004-05 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AND REVENUES APP EAL FOR A.YS. 1998-99, 1999-2000, 2001-02, 2002-03, AND 2004-05 ARE DISMIS SED AND APPEAL FOR THE A.Y. 2000-01& 2003-04 ARE PARTLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31ST O CTOBER 2012. SD/- SD/- (G.S. PANNU) ACCOUNTANT MEMBER (R.S.PADVEKAR ) JUDICIAL MEMBER PUNE, DATED THE 31ST OCTOBER, 2012 35 ITA NOS. 370 TO 376 & 383 TO 389/PN/08 CHANDULLAL SADHURAM KHEMANI AY98-99,99-00 &2000-01 ETC., US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT (CENTRAL),NAGPUR 4. THE CIT(A)-I, NAGPUR 5. THE D.R. B BENCH, PUNE 6. GUARD FILE /- TRUE COPY-/ BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE