SHANKAR LAL KHANDELWAL, Jaipur V. ACIT, Jaipur

ITA 391/JPR/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7198 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 29-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K L MOOLCHANDAN I; R K KHUTETA
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Depreciation; Search and seizure; Document seized; Principle of natural justice; Source of fund; Additional evidence; Corroborative evidences; Documents seized
• Section: 40A(3); 143(3); 11A; 153A; 194C; 147; 145

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.391/ JP/2011 ASSESSMENT YEAR 2007-08 PAN: ADRPK 5003 F SHRI SHANKAR LAL KHANDELWAL VS. THE ACIT A-2, RANA PRATAP NAGAR CENTRAL CIRCLE- 1 JHOTWARA, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ITA NO.431/ JP/2011 ASSESSMENT YEAR 2007-08 PAN: ADRPK 5003 F THE DCIT VS. SHRI SHANKAR LAL KHANDELWAL CENTRAL CIRCLE- 1 A-2, RANA PRATAP NAGAR JAIPUR JHOTWARA, JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI K.L. MOOLCHANDANI & SHRI R.K. KHUTETA DEPARTMENT BY : SHRI SUNIL MATHUR DATE OF HEARING: 20-07-2011 DATE OF PRONOUNCEMENT: 12-08-2011 ORDER PER N.L. KALRA, AM:- THE ASSESSEE AS WELL AS REVENUE HAS FILED THE APPEA LS AGAINST THE ORDER OF THE LD. CIT(A), CENTRAL, JAIPUR DATED 22-0 2-2011 FOR THE ASSESSMENT YEAR 2007-08. 2 2.1 THE FIRST GROUND OF THE ASSESSEE IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAD LEGALLY AND FACTUALLY ER RED IN CONFIRMING DISALLOWANCE OF RS.12,73,345/- OUT O F TOTAL DISALLOWANCE OF RS. 19,71,053/- AS MADE BY THE AO U/S 40A(3) OF THE ACT @ 20% OF RS.98,55,265/- ALLEGEDLY ON ACCOUNT OF THE CASH OUT-GOINGS FOR EARNING BUSINESS INCOME WITHOUT APPRECIATING THE LEGAL SPIRIT OF THE STATUE ON THE POINT AND ALSO WITHOUT APPRECIATING THE FACTS OF T HE CASE AND THE ACTUAL NATURE OF SUCH OUTGOINGS ETC IN RIGHT PERSPECTIVE. THE LEARNED CIT (A) HAD CONFIRMED THE ADDITION OF RS.12,73,345/- ON THE SAME GROUNDS AS MENTIONED BY THE AO WITHOUT APPRECIATING THE LEGAL AND FACTUAL ASPECTS OF THE CASE. AS THE DISALLOWANCE SO CONFIRMED BY THE LD CIT(A) IS BAD IN LAW DESERVES TO BE DELETED. 2.2 THE ASSESSEE FILED THE RETURN OF INCOME ON 01-0 7-2008 IN RESPONSE TO NOTICE U/S 153A VIDE WHICH INCOME OF RS. 31,25,448/ - WAS DECLARED. SEARCH PROCEEDINGS WERE CONDUCTED AT THE BUSINESS AND RESI DENTIAL PREMISES OF THE ASSESSEE ON 16 TH NOV. 2007. THE BRIEF FACTS IN THIS CASE ARE THE SA ME AS GIVEN IN OUR ORDER WHILE DISPOSING OFF THE APPEAL FOR THE ASSESSMENT YEAR 2008- 09.WE DO NOT FEEL IT NECESSARY TO REPRODUCE THE NAT URE OF SOURCE OF INCOME OF THE ASSESSEE AND THE TRANSACTIONS BEING DONE IN BENAMI NAMES. THE AO AT PAGE 4 OF HIS ORDER HAS GIVEN THE DETAILS OF THE P ROPERTIES PURCHASED DURING THE YEAR. AT THE TIME OF PURCHASE OF THE PROPERTIES , THE ASSESSEE HAS MADE THE PAYMENTS THROUGH CHEQUES AND IN RESPECT OF CERTAIN PROPERTIES, THE PAYMENTS HAVE BEEN MADE THROUGH CASH. IN RESPECT OF CASH PAY MENT, THE AO 3 DISALLOWED 20% OF THE EXPENSES INCURRED IN CASH FOR PURCHASE OF THE PROPERTIES AND THE DISALLOWANCE AS MADE BY THE AO I S TO THE EXTENT OF RS. 19,71,053/-. BEFORE THE AO, THE ASSESSEE MADE THE S AME CONTENTIONS AS HAVE BEEN RAISED ON THIS ISSUE, AS MENTIONED BY THE AO I N HIS ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2008-09 AND SUCH CONTENTIONS HA VE BEEN REPRODUCED BY US WHILE DISPOSING OFF THE APPEAL OF THE ASSESSEE F OR THE ASSESSMENT YEAR 2008-09. 2.3 BEFORE THE LD. CIT(A), THE ASSESSEE EXPLAINED T HAT THE PAYMENTS WERE MADE IN CASH FOR THE PURCHASE OF THE PROPERTIES. TH E CASH PAYMENTS INCLUDE THE EXPENSES INCURRED FOR STAMP PAPER AND REGISTRAT ION CHARGES. THE LD. CIT(A) AFTER CONSIDERING VARIOUS ARGUMENTS OF THE L D. AR AND CONSIDERING THE COMMENTS OF THE AO REDUCED THE ADDITION U/S 40A (3) OF THE ACT TO RS. 12,73,345/- AS AGAINST RS. 19,71,053/- MADE BY THE AO AFTER OBSERVING AS UNDER:- 2.5 HOWEVER, VARIOUS ARGUMENTS OF THE A.R ON FACT UAL MISTAKE OF PAYMENT BEING MADE BY CHEQUE INSTEAD OF CASH AND PA YMENT MADE FOR STAMP PAPER AND THE REGISTRATION CHARGES WHICH ARE EXEMPT UNDER RULE 6DD, ARE TO BE CONSIDERED. THE COPY OF THE SUBMISSI ONS WAS GIVEN TO THE A.O. ALSO FOR HIS COMMENTS AND THE FACTUAL POSITION WAS DISCUSSED IN HIS PRESENCE. I) AS REGARDS PAYMENT FOR PLOT NO. 27, KRISHNA N AGAR, THE ARGUMENT OF A.R IS FOUND CORRECT THAT OUT OF RS. 32 ,61,290/-, PAYMENT OF RS. 6,70,000/- WAS MADE BY ACCOUNT PAYEE CHEQUE AND PAYMENT OF RS. 4 40,000/- + RS. 16,290/- ARE TO THE GOVERNMENT AGAIN ST STAMP PAPERS AND REGISTRATION CHARGES AND FURTHER RS. 5,000/- WAS IN CURRED FOR CONSTRUCTION OF WALL. A.O. HAS ALSO ACCETPTED THIS FACT IN THE REMAND REPORT. THUS RS. 7,31,290/-IS NOT HIT BY PROVISIONS OF SECTION 40A(3) AND THEREFORE, DISALLOWANCE OF RS. 1,46,258/- IS DELETE D. II) AS REGARDS PURCHASE OF PLOT NO. 31, KALYANP URI IS CONCERNED, THE A.O. HAS CONSIDERED RS. 4,03,800/- A S CASH PAYMENT. HOWEVER, A.RS ARGUMENT IS CORRECT THAT IT INCLUDES RS. 45,200/- PAID TO THE GOVERNMENT FOR STAMP DUTY REGISTRATION AND IS N OT COVERED U/S 40A(3)R.W. RULE 6DD. THUS DISALLOWANCE OF RS. 9040/ - IS DELETED. DISALLOWANCE OF RS. 410/- IS DELETED WHICH HAS BEEN MADE OUT OF CASH PAYMENT OF RS. 2050/-, AS THIS CASH PAYMENT IS BELO W RS. 20,000/-. III) PAYMENT OF RS. 20,00,000/- FOR FLAT NO. 50 5, HARI KRIPA HAS BEEN TREATED BY THE A.O. IN CASH. HOWEVER, SUBMISSION MA DE BY THE A.R. BEFORE THE UNDERSIGNED IN PRESENCE OF A.O. WAS FOUN D CORRECT ON PERUSAL OF THE DOCUMENTS SUBMITTED BY A.R. THAT THIS PAYMEN T IS BY CHEQUE AND DISALLOWANCE OF RS. 4 LAKHS IS DELETED. IV) OUT OF PAYMENT OF RS. 18,38,125/- TREATED BY A.O. AS CASH PAYMENT FOR PURCHASE OF PLOT NO. 92, RAGHUNATHPUR, FROM PERUSAL OF DETAILS THE CLAIM OF THE A.R IS FOUND CORRECT THAT RS. 7 LAKHS WAS PAID THROUGH CHEQUE AND RS. 10,000/- WAS FURTHER EXPENDI TURE. THUS RS. 7.10 LAKHS IS HELD TO BE NOT HIT BY PROVISIONS OF SECTIO N 40A (3). THEREFORE THE ADDITION OF RS. 1,42,000/- IS DELETED. 2.5.1 THE A.O. HAS ACCEPED ALL THESE FACTS IN THE REMAND REPORT. 2.6 IN BRIEF ADDITION OF RS. 6,97,708/- IS DELETE D ON FACTUAL BASIS AND REMAINING ADDITION OF RS. 12,73,345/- IS HEREBY CON FIRMED. 5 2.4 THE LD. AR HAS FILED THE WRITTEN SUBMISSIONS BE FORE US. THE WRITTEN SUBMISSIONS ARE THE SAME AS HAS BEEN GIVEN IN THE C ASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09. 2.5 WE HAVE HEARD BOTH THE PARTIES. FOLLOWING OUR O RDER FOR THE ASSESSMENT YEAR 2008-09, WE HOLD THAT THE DISALLOWA NCE U/S 40A(3) OF THE ACT IS NOT BE MADE BECAUSE THE BOOKS OF ACCOUNT HAV E BEEN REJECTED AND INCOME IS TO BE ESTIMATED. HENCE, NO SEPARATE ADDIT ION U/S 40A(3) OF THE ACT IS NEED. 3.1 THE SECOND GROUND OF APPEAL OF THE ASSESSEE IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAD LEGALLY AND FACTUALLY ERR ED IN CONFIRMING ADDITION OF RS. RS.34,02,387/- BY DISALLOWING THE EXPENSES DEBITED UNDER CONSTRUCTION EXPENSES & WIP EXPENSES OUT OF TOTAL DISALLOWANCE OF RS. 1,00,00,000/- AS MADE BY THE AO WITHOUT APPRECIATING THE FACTS OF THE CASE IN RI GHT PERSPECTIVE. WHILE MAKING SUCH DISALLOWANCE, THE LD. AO HAD OPINED THAT SUCH EXPENSES WERE NOT PROPERLY VOUCHED AND VERIFIABLE AND ALSO THERE WAS DEFAULT U/S 194-C READ WITH SECTION 40(A) (IA) OF T HE ACT. HOWEVER, THE LD. AO DID NOT SPECIFY AND QUANTIFY THE AMOUNTS INVOLVED IN SUCH DEFAULTS ARTICULATELY AND MADE LUMP SUM ADDITION OF RS. 1CRORE WITHOUT TAKING CARE OF G.P. RESULTS WORKED OUT AFTER SUCH IRRATIONAL ADDITION. THE LEARNED CIT (A) ALSO FOLLOWED THE SUIT OF THE AO AND RESTRICTED SUCH DISALLOWANCE TO 15% OF THE EXPENSES AMOUNTING RS.2,26,82,581/- AS DEBITED UNDER THIS HEAD WITHOUT ANY BASIS. THE ADDITION SO CONFIRMED BY THE LD CIT(A) IS BAD IN LAW AND DESERVES TO BE DELETED. 6 3.2 THE REVENUE IN GROUND NO. 1 IS ALSO AGGRIEVED A GAINST REDUCING THE ADDITION TO RS. 34,02,327/- AS AGAINST RS. 1.00 CRO RE MADE BY THE AO. 3.3 DURING THE YEAR UNDER REFERENCE, THE ASSESSEE H AS CLAIMED FOLLOWING EXPENSES. 1. BUILDING CONSTRUCTION RS. 1,87,96,063/- 2. WIP EXPENSES RS. 33,63,318/- 3. FURNITURE LABOUR CHARGES RS. 5,23,200/- TOTAL RS., 2,26,82,581 ACCORDING TO THE AO, THE EXPENSES ARE NOT VERIFIABL E. THE LOANS RAISED FROM THE BANK HAVE BEEN GIVEN TO THE SISTER CONCERN WITH OUT INTEREST AND THEREFORE, INTEREST IS NOT ALLOWABLE. THERE ARE CERTAIN EXPENS ES FOR WHICH ASSESSEE WAS REQUIRED TO DEDUCT THE TAX AT SOURCE AND THEREFORE, SUCH EXPENSES ARE NOT ALLOWABLE IN VIEW OF SECTION 40(A)(IA) OF THE ACT. ACCORDINGLY THE AO MADE THE DISALLOWANCE OF RS. 1.00 CRORE. 3.4 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE REDUCED THE DISALLOWANCE TO RS. 34,02,387/- AFTER O BSERVING AS UNDER:- 3.3 I HAVE CONSIDERED THE SUBMISSION O F THE A.R AND HAVE PERUSED THE ASSESSMENT ORDER AND RELEVANT RECORD. T HE REASONING GIVEN BY THE A.O. THAT THE APPELLANT HAS NOT DEDUCTED TDS AN D PROVISIONS OF SECTION 40(A)(IA) ARE ATTRACTED, IS NOT CORRECT, AS THE APP ELLANT IS INDIVIDUAL AND PROVISIONS OF SECTION 194C IN CASE OF INDIVIDUAL HA VING TURNOVER MORE THAN RS. 40 LAKHS CAME INTO EFFECT FOR PAYMENTS MAD E AFTER 1.6.07 AND ACCORDINGLY PROVISIONS OF SECTION 194C ARE NOT ATT RACTED AND THEREBY THERE WILL NOT BE ANY DISALLOWANCE U/S 40(A)(IA). 7 MOREOVER OTHER ARGUMENT OF THE A.O. FOR MAKING DISALLOWANCE IS REGARDING INTEREST FREE ADVANCES. I AGREE WITH THE SUBMISSION OF THE A.R. THAT INTEREST FREE LOAN TAKE N ARE SUFFICIENT IN THE CASE OF APPELLANT TO MAKE INTEREST FREE ADVA NCES AND THUS OCCASION FOR DISALLOWING INTEREST PAID ON INTEREST BEARING FUNDS WILL NOT ARISE. TOTAL LOANS AND ADVANCES INCLUDING ADVANCES FOR ASSETS AS PER BALANCE SHEET ARE RS. 120.24 LAKHS WH ICH INCLUDES ADVANCE FOR PLOT OF RS. 3 LAKHS + RS. 27.23 LAKHS + RS. 2 LAKHS. = RS. 32.23 LAKHS, AND CLOSING BALANCE OF RS.88. 01 LAKHS. ON THE OTHER HAND, THE INTEREST FREE FUND FROM M/S GUMAN F URNITURE AND SERVICES PVT. LTD IS RS. 117.63 LAKHS, FROM GUMAN K HANDELWAL IS RS. 22.23 LAKHS AND FROM SH. SUSHIL JHALANI IS RS. 41.22 LAKHS, WHICH ADDS UP TO 181.08 LAKHS. FURTHER APPELLANTS OWN CAPITAL TO THE EXTENT OF RS. 103.13 LAKHS IS ALSO AVAILABLE . 3.3.1 HOWEVER, IT IS UNDISPUTED THAT BOOKS OF ACCOUNT WERE NOT MAINTAINED BY THE APPELLANT DURING THE COURSE OF HI S BUSINESS . IT WAS ONLY AFTER THE SEARCH AND SEIZURE OPERATIO N THAT APPELLANT THROUGH ITS A.R. PREPARED THE MEMORANDUM OF BOOKS OF ACCOUNTS ON THE BASIS OF WHATEVER DOCUMENTS WERE AV AILABLE AT THAT POINT OF TIME. ACCORDINGLY, IT IS QUITE EVIDEN T THAT THE MEMORANDUM BOOKS OF ACCOUNTS NOW PREPARED AFTER THE SEARCH AND SEIZURE OPERATION, BEING NOT PREPARED IN THE RE GULAR COURSE OF BUSINESS, CANNOT BE RELIED UPON FULLY AND CAN NOT BE SAID TO BE REGULAR BOOKS OF ACCOUNTS. HENCE THERE BEING NO REGULAR AND PROPER BOOKS OF ACCOUNT, THERE IS NO NECESSITY FOR A.O. TO EXPLICITLY MENTION ABOUT REJECTION OF BOOKS OF ACCO UNTS AND MOREOVER, THE VERACITY OF THE EXPENDITURE IS NOT VE RIFIABLE. IT IS ALSO UNDISPUTED THAT BILLS AND VOUCHERS WERE NOT PR ODUCED FOR VERIFICATION BEFORE THE A.O. 8 3.3.2 THOUGH THE A.O HAS NOT FURTHER PROBED INTO THE MATTER, HOWEVER, UNDERSIGNED HAS OCCASION TO PERUSE THE CONSTRUCTION EXPENSES DEBITED BY THE APPELLANT. ON GOING THROUGH THE CHART FURNISHED BEFORE THE A.O. AND NOW FURNISHED ALONGWITH WRITTEN SUBMISSION AS E-1, IT IS NOTICED THAT CONSTRUCTION EXPENSES IN RESPECT OF DIFFERENT PLOTS SOLD DURING THE YEAR HAVE BEEN SHOWN AT HIGHLY VARYING RATE START ING FROM RS. 75.14 PER SQ.FT, TO RS. 210.99 PER SQ.FT, RS. 220 .87 PER SQ.FT, RS. 302.50 PER SQ.FT, RS. 345.12 PER SQ.FT, RS. 465.85 PER SQ.FT, RS. 509.66 PER SQ. FT, RS. 703.78 PER SQ. FT, RS. 856. 40 PER SQ. FT, RS. 908.13, PER SQ. FT, RS. 1064.94 PER SQ.FT , RS. 12 42.51 PER SQ.FT TO AS HIGH AS RS. 1433.93 PER SQ.FT. NO ANY BILLS/VOUCHERS IN SUPPORT OF THESE EXPENSES WERE FURNISHED BEFORE THE A.O. IT IS UNDISPUTED FACT THAT BILLS AND VOUCHERS FOR CONSTRU CTION EXPENSES AND FOR THAT MATTER ANY OTHER EXPENSES ARE NOT AVAI LABLE WITH THE APPELLANT. DURING THE COURSE OF APPELLATE PROCEEDIN GS, IT TRANSPIRED THAT THESE EXPENSES HAVE BEEN TAKEN PURE LY ON ESTIMATED BASIS. 3.3.3 AS ALREADY MENTIONED, THE COST OF CONSTR UCTION PER SQ.FT TAKEN IN RESPECT OF THESE PLOTS IS VARYIN G FROM AS LOW AS RS. 75.14 PER SQ.FT TO AS HIGH AS RS. 1433.93 PER S Q.FT. THERE IS NO PROPER EXPLANATION FOR SUCH A WIDE VARIATION, EX CEPT THAT THE GENERAL EXPLANATION OF LOW COST HAVING LOWER QUALIT Y CONSTRUCTION, WITHOUT SPECIFYING THE NUMBER OF ROOM S CONSTRUCTED, CARPET AREA, BUILT-UP AREA, NATURE OF FLOORING I.E SIMPLE PLASTER, KOTA STONE, OR MOSAIC OR MARBLE OR VITRIFIED TILES, NATURE OF ROOF I.E STONES SLABS OR RCC; NATURE OF C EILING I.E PLASTERED OR POP; SINGLE STOREY OR DUPLEX; NUMBER OF TOILETS OR OTHER DETAILS, WHICH CAN JUSTIFY LOWER RATE RS. 75 .14 PER SQ.FT ON ONE SIDE AND HIGHER RATE OF RS. 1433.93 PER SQ.FT O N OTHER SIDE. 9 CONSIDERING THESE FACTS AND CIRCUMSTANCES OF THE C ASE AND THE LEGAL POSITION AS MENTIONED ABOVE, THE DIS ALLOWANCE IS CALLED FOR IN THE INSTANT CASE NOT ON ALL THE REAS ONS MENTIONED BY THE A.O. BUT ONLY ON VERY FEW REASONS GIVEN BY A.O . AND ALSO THE VARIOUS OTHER REASONS MENTIONED HEREINABOVE BY THE UNDERSIGNED. NOW COMING TO THE REASONABILITY OF EST IMATION, THE A.R HAS RIGHTLY POINTED OUT THAT CONSIDERING THE DI SALLOWANCE OF RS. 100 LAKHS DONE BY THE A.O., G.P. RATE WILL GO UPTO 48.70%., WHICH IS NOT POSSIBLE IN THIS TRADE. THE A.O. HAS M ADE THE DISALLOWANCE WITHOUT BRINGING ANY OTHER ADVERSE MAT ERIAL ON RECORD. MOREOVER, A.O. HAS MADE DISALLOWANCE ON PUR ELY ADHOC BASIS. BESIDES ABOVE, THE A.O. HAS ALSO NOT FOLLOWE D ANY CONSISTENCY WHILE MAKING DISALLOWANCE IN DIFFERENT ASSESSMENT YEARS OF THE SAME APPELLANT AND MOREOVER NO REASONS HAVE BEEN GIVEN FOR TAKING DIFFERENT STAND IN DIFFERENT YEAR. THUS DISALLOWANCE IS HIGHLY EXCESSIVE AND PURELY ON ADHO C BASIS WHICH IS JUSTIFIABLY NEEDS TO BE REDUCED. CONSIDER ING THAT BOOKS OF ACCOUNTS HAVE NOT BEEN MAINTAINED IN THE REGULAR COURSE AND THE EXPENSES HAVE BEEN DEBITED MAINLY ON ESTIMATED BASIS AND OTHER DEFECTS AS MENTIONED BY THE UNDERSIGNED IN TH E EARLIER PARAGRAPHS, CERTAIN REASONABLE DISALLOWANCE NEED TO BE CALLED FOR ON THIS ACCOUNT. IN OTHER CASES OF THIS GROUP T HE INTEREST FREE ADVANCES GIVEN WAS FOUND TO BE MORE THAN THE INTERE ST FREE LOANS AVAILABLE AND ACCORDINGLY THE DISALLOWANCE OUT OF C ONSTRUCTION AND WIP EXPENSES AT HIGHER RATE WAS UPHELD CONSIDER ING PART INTEREST DISALLOWANCE INCLUDABLE IN THE OVERALL DIS ALLOWANCE. HOWEVER IN THE INSTANT CASE OF THE APPELLANT, THE I NTEREST FEE ADVANCES GIVEN ARE NOTICED TO BE LESS THAN THE INTE REST FREE LOAN TAKEN, THEREBY NOT REQUIRING INTEREST DISALLOWANCE. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES, IT WILL BE APPROPRIATE TO RESTRICT THE DISALLOWANCE TO THE EXTENT OF 15% OUT OF THE EXPENSES 10 CLAIMED AS DONE IN APPEAL OF APPELLANT FOR EARLIER YEARS, WHICH COMES TO RS 34,02,387/- AND BALANCE OF RS 65,97,61 3/- IS DELETED. 3.5 BEFORE US, THE LD. AR HAS FILED THE FOLLOWING WRITTEN SUBMISSIONS. IN APPEAL, WHILE APPRECIATING THE ABOVE FACTS, TH E LD. CIT (A) PROCEEDED TO EXAMINE THE ABOVE FACTS AS POINTED OUT IN THE WRITTEN SUBMISSION AND WAS IN AGREEMENT WITH MOST OF THE PO INTS AS CONTENDED BY THE APPELLANT. HE WAS OF THE VIEW THAT MOST OF THE PAYMENTS AND EXPENSES LIKE INTEREST PAYMENTS ETC. WERE PROPERLY VOUCHED A ND VERIFIABLE AND CALLED FOR NO INTERFERENCE. LIKE-WISE, THERE ALSO A PPEARED NO DEFAULT WITHIN THE MEANING OF SECTION 194, 194C, 40(A)(IA) ETC. AS ALLEGED BY THE AO. AS SUCH NO ADDITION WAS CALLED FOR ON THIS ACCOUNT AS WELL. HE WAS HOWEVER OF THE VIEW THAT THE EXPENSES INCURRED ON CONSTRUCT ION WORKS WERE NOT PROPERLY VERIFIABLE AND THERE WAS VAST VARIATION IN THE COST OF CONSTRUCTION SHOWN FOR DIFFERENT SITES. FOR THE PURPOSE, HE HAD ALSO QUOTED RATES OF CERTAIN SITES TO ARRIVE AT SUCH FINDINGS AND ACCORD INGLY CONCLUDED THAT THESE EXPENSES BEING NOT PROPERLY VOUCHED. ACCORDIN GLY, HE HAD DISALLOWED 15% OF THE EXPENSES CLAIMED (PAGE NO. 10 TO 13 OF THE APPEAL ORDER), AND CONFIRMED ADDITION OF RS.34,02,387 /- AS AGAINST RS. 1,00,00,000/- MADE BY THE AO. WHILE CONFIRMING SUCH ADDITION @ 15% OF THE EXPENSES CLAIMED, THE LD. CIT (A) DID NOT DISCU SS THE VOLUME OF THE TURN-OVER AND THE TRADING RESULTS ETC. AND ALSO DID NOT ASSIGN ANY REASON TO ESTIMATE SUCH DISALLOWANCE @ 15%. APPARENTLY CONFIR MING OF SUCH ADDITION ON A GENERAL PLEA OF THE COST VARIATION AT DIFFERENT SITES WITHOUT POINTING OUT ANY SPECIFIC DISCREPANCY OR DEFECT AND ALSO WITHOUT BRINGING ANY MATERIAL ON RECORD TO SHOW THE EXPENDITURE OF D ISALLOWABLE NATURE IS PATENTLY BAD IN LAW AND DESERVES TO BE DELETED SU MMARILY. IN THE CIRCUMSTANCES, THE ADDITION OF RS.34,02,387 /- AS CONFIRMED BY THE CIT (A) IS BROADLY DISPUTED ON FOLLOWING COUNTS: (I) IT IS A SETTLED LAW THAT WITHOUT POINTING OUT ANY S PECIFIC DISCREPANCY OR DEFECT, THE PROVISIONS OF SECTION 145 OF THE ACT CO ULD NOT BE INVOKED. AND WITHOUT INVOKING PROVISIONS OF SECTION 145(3), THE TRADING RESULTS COULD NOT BE DISTURBED BY MAKING DISALLOWANCE IN LUMP SUM PERCENTAGE THAT TOO WITHOUT ANY BASIS. THUS SUCH DISALLOWANCE IS CONTRA RY TO THE JUDICIAL DISCIPLINE. (II) FOR MAKING SUCH DISALLOWANCE AT SUCH EXORBITANT PERCENTAGE , THE AUTHORITIES BELOW HAD OVER-LOOKED A VERY VITAL POIN T OF AVERAGE COST OF CONSTRUCTION. DURING THE YEAR UNDER CONSIDERATION, THE CONSTRUCT ED AREA 11 WAS 24740 SQ. FT. AS EVIDENT FROM THE SALE DEEDS. T HE AVERAGE COST OF CONSTRUCTION COMES TO RS. 521/- PER SQ. FT. THE DETAILED CHART SHOWING CONSTRUCTION IN EACH PROPERTY WAS SUBMITTED IN RESP ECT OF EACH PROPERTY AS LYING AT PAGE NO. 45 OF THE PB. IF THE ADDITION AS CONFIRMED BY THE LD. CIT (A) IS CONSIDERED THAN THE AVERAGE COST WOULD BE RS .384/- PER SQ. FT. WHICH IS PRACTICALLY IMPOSSIBLE. THE PWD BSR RATES AND CP WD RATES ETC WERE ALSO IN THE VICINITY OF RS.500/- TO 600/-PER SQ. FT . DURING THE YEAR UNDER CONSIDERATION (COPY OF CERTIFICATE ISSUED BY ARCHIT ECTS AT PAGE NO. 46 & 47 OF PB). IN THE CIRCUMSTANCES, THE CONSTRUCTION EXPE NSES AS SHOWN BY THE APPELLANT WERE VERY FAIR AND REASONABLE AND CALLED FOR NO INTERFERENCE WITHOUT ANY BASIS (III) FOR MAKING SUCH DISALLOWANCE, THE LEARNED CIT (A) D ID NOT TAKE NOTE OF THE TRADING RESULTS. ON STUDY OF THE TRADING ACTIVI TIES, IT WOULD BE NOTED THAT THE APPELLANT HAD ALREADY SHOWN N.P. OF RS.27 ,44,101/- ON THE SALES OF RS.2,61,70,000/- GIVING N.P. OF 10.48% WHICH W OULD RATHER APPEAR TO BE EXCESSIVE IN VIEW OF THE PREVALENT TREND OF N.P. IN THIS LIN E OF BUSINESS AND WARRANTED NO INTERFERENCE AT ALL. HOWEVER AFTE R TAKING INTO ACCOUNT THE ADDITION OF RS.34,02,387 /- AS CONFIRMED BY THE HONORABLE CIT(A), SUCH N.P. WOULD GO UP TO RS.61,46,488/- GIVING N.P. RATE OF 23.49% WHICH IS APPARENTLY ABNORMAL AND UN-COMPARABLE WITH ANY OF THE ASSESSEE IN THIS LINE OF BUSINESS. IT IS A MATTER OF COMMON PRUDENCE THAT WHERE THE INCOME IS DETERMINED ON ESTIMATION BASIS, THE BEST METHOD OF ESTIMATION SHOULD BE APPLIED, WHICH MUST BE VERY CLOSE TO THE REALITY. THE HOUSE OF LORDS POINTED IT OUT IN SON INSURANCE OFFICE VS CLARKS 1912 AC 443 THAT WHERE IT BECOMES NECESSARY TO MAKE ESTIMATES B Y INCOME-TAX DEPARTMENT, THE METHOD SHOULD BE ADOPTED, WHICH APP ROXIMATES MOST NEAR TO THE TRUTH. (IV) THE SCENARIO OF THE TRADING RESULTS WOULD BECOME ALL THE MORE A BSURD WHEN THE ADDITION OF RS. 3,00,000/-/- ON ACCOUNT OF THE ALLEGED SUPPRESSED SALES AS DISCUSSED IN THE COMING PARAS IS FURTHER TAKEN INTO ACCOUNT TO VISUALIZE THE TRADING RESULTS OF THE AP PELLANT. IF ALL THESE ADDITIONS ARE TAKEN TOGETHER FOR ANALYZING THE TRAD ING RESULTS OF THE APPELLANT, YOUR HONORS WOULD APPRECIATE THAT IN THA T CASE, N.P. WOULD TOUCH THE FIGURES OF 24.63% WHICH IS RATHER IMPOSSI BLE IN ANY TRADE. THE LEARNED CIT (A) HOWEVER DID NOT TAKE NOTE OF ALL TH ESE FACTS AND FIGURES WHILE CONFIRMING THIS ADDITION. (V) WITHOUT PREJUDICE TO THE ABOVE FACTS, IT WOULD ALSO BE NOTED THAT WHILE QUANTIFYING THE AMOUNT OF THE DISALLOWANCE UNDER TH IS HEAD AT RS.34,02,387 /-, THE LEARNED CIT (A) HAD COMMITTED CALCULATION MISTAKE BY TAKING THE ENTIRE AMOUNT OF THE EXPENSES DEBITE D UNDER THE HEADS OF CONSTRUCTION EXPENSES AS WELL AS THE EXPENSES DEBI TED UNDER WIP (WHICH INCLUDED INTEREST PAYMENTS OF RS.33,63,318/-) WHILE DISCUSSING THE NATURE OF THE EXPENSES OF THE INTEREST EXPENSES DEBITED UN DER THE HEAD OF WIP, THE LEARNED CIT(A) HAD GIVEN SPECIFIC FINDING THAT SUCH INTEREST EXPENSES 12 WERE FULLY ALLOWABLE AND DID NOT CALL FOR ANY DISAL LOWANCE. HOWEVER, WHILE QUANTIFYING THE DISALLOWANCE OF THE EXPENSES DEBITED UNDER THE HEAD OF CONSTRUCTION EXPENSES, THE FINDINGS REGARDING IN TEREST EXPENSES WERE OVER-LOOKED AND THE FIGURES OF THE INTEREST AMOUNT OF RS. 33,63,318/-) AS DEBITED UNDER WIP WAS ALSO TAKEN INTO TO ACCOUNT TO WORK OUT THE DISALLOWANCE. THUS THE DISALLOWANCE SO QUANTIFIED HAD BEEN OVER- WORKED BY RS.5,04,498/- WHICH NEEDED TO THE REDUCED ACCORDINGLY. IN VIEW OF ABOVE DISCUSSIONS, THE ADDITION AS CONFI RMED BY THE LEARNED CIT (A) ON THIS ACCOUNT IS NOT FACTUALLY AND LEGALL Y MAINTAINABLE AND DESERVES TO BE DELETED. 3.6 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ER OF THE AO. IT HAS BEEN POINTED OUT THAT THE ASSESSEE HAS NOT PRODUCED NECESSARY VOUCHERS FOR VERIFICATION OF THE EXPENDITURE. THE ONUS WAS ON TH E ASSESSEE TO HAVE EXPLAINED THE ALLOWABILITY OF THE EXPENSES AND GENU INENESS OF THE EXPENDITURE DEBITED. THE LD. DR POINTED OUT THAT TH E COST OF CONSTRUCTION EXPENSES ARE VARYING FROM ONE PROPERTY TO ANOTHER PROPERTY AND IN SOME CASES, THE COST OF CONSTRUCTION IS ABNORMALLY HIGH. IT WAS THEREFORE, URGED THAT THE AO WAS JUSTIFIED IN DISALLOWING THE EXPEN DITURE OF RS. 1.00 CRORE. 3.7 WE HAVE HEARD BOTH THE PARTIES. PAGE NO. 45 OF THE PAPER BOOK CONTAINS THE DETAILS OF THE PROPERTIES WHICH HAVE B EEN SOLD DURING THE YEAR AND IT ALSO CONTAINS THE COST INCURRED BY THE ASSES SEE FOR MAKING CONSTRUCTION ON THESE PROPERTIES. THE CONSTRUCTED AREA IS ALSO B EING MENTIONED. THE COST OF CONSTRUCTION CLAIMED MORE THAN RS. 700/- PER SQ. YARD IS AS UNDER:- AREA COST OF CONSTRUCTION PER SQ. FT. 109, BALVIHAR 573.572 400 1433.93 13 109, BALVIHAR 363.253 400 908.13 119, BALVIHAR 745.459 700 1064.94 118, BALVIHAR 1055.666 1500 703.78 122, BALVIHAR 712.071 900 791.19 122, BALVIHAR 1118.259 900 1242.51 121, BALVIHAR 865.397 1000 856.40 THE TOTAL CONSTRUCTION AMOUNT IS TO THE EXTENT OF R S. 1,28,97,831/- AND THE AVERAGE COMES TO RS. 521.3 PER SQ. FT. AS PER THE CHART GIVEN BY THE ARCHITECT, THE COST OF CONSTRUCTION DURING 2007 VAR IED FROM RS. 600/- TO RS. 700/- PER SQ. FT..THE CHART AT PAGE 25 ALSO SHOWS T HE PROFIT EARNED BY THE ASSESSEE ON SALE OF THE PROPERTIES. THE PROFIT HAS VARIED FROM 10% TO 11%. THERE IS ONLY ONE PROPERTY IN WHICH THE ASSESSEE HA S SHOWN THE LOSS OF 2%. THE SALE PRICE OF THIS PROPERTY IS RS. 5.00 LACS. T HE CONSTRUCTED AREA IS 1000 SQ. FT. BUT NO CONSTRUCTION COST HAS BEEN SHOWN. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IS NOT HAVING THE VOUCHERS IN RESPECT OF THE EXPENSES DEBITED. IT IS TRUE THAT INTEREST IS AN ALLOWABLE EXPENDITURE A ND NO DISALLOWANCE CAN BE MADE ON ACCOUNT OF THE EXPENDITURE DEBITED IN RESPE CT OF THE INTEREST. THERE HAS BEEN NO SPECIFIC EXPLANATION AS TO WHY THE CONS TRUCTION COST IN RESPECT OF CERTAIN PROPERTIES IS MORE THAN THE NORMAL COST OF CONSTRUCTION. THE ASSESSEE HAS GIVEN THE GENERAL EXPLANATION. IT MAY ALSO BE P OSSIBLE THAT IN ABSENCE OF REGULAR BOOKS OF ACCOUNT, THE ASSESSEE IS NOT HAVIN G THE EXACT DETAILS OF THE EXPENSES IN RESPECT OF PARTICULAR PROPERTY. HOWEVER , NO EXPLANATION HAS BEEN GIVEN IN RESPECT OF LOSS SHOWN FOR ONE PROPERTY SOL D AT RS. 5.00 LACS. 14 LOOKING TO THE LOSS SHOWN IN ONE PROPERTY AND THE F ACT THAT THERE HAVE BEEN NO EXPLANATIONS FOR SUBSTANTIAL COST OF CONSTRUCTIO N PER SQ. FT. IN RESPECT OF TWO PROPERTIES, WE FEEL THAT IT WILL BE FAIR AND RE ASONABLE TO ESTIMATE THE N.P. RATE AT 12% ON SALE OF RS. 2,61,70,000/- AS AGAINST N.P. RATE OF 10.49% SHOWN BY THE ASSESSEE. THUS THE ADDITION OF RS. 3,9 6,300/- IS CONFIRMED. 4.1 THE THIRD GROUND OF APPEAL RAISED BY THE ASSESS EE IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAD LEGALLY AND FACTUALLY ERR ED IN CONFIRMING ADDITION ON ACCOUNT OF TAXI EXPENSES OF RS. RS.4,87,244/- OUT OF TOTAL ADDITION OF RS. 8,12,077/- AS MADE BY THE AO BY DISALLOWING 30% OF THE TAXI EXPENSES AND RS.9,65,149/- BY DISALLOWING DEPRECIATION ON VEHICLES ON THE PLEA TH AT SUCH EXPENSES WERE NOT PROPERLY VOUCHED AND VERIFIABLE AND THE DEPRECIATION WAS NOT CLAIMED ORIGINALLY. HOWEVER, THE LD. CIT(A) HAD RESTRICTED SUCH DISALLOWANCE ON TAXI EXPENSES BY 20% AND ALLOWED RELIEF OF RS. 3,24,833/- AND CONFIRMED THE BALANCE AMOUNT OF RS.4,87,244/- SIMILARLY THE DEPRECIATION WAS ALSO ALLOWED TO THE EXTENT OF TAXI INCOME WORKED OUT AS ABOVE. APPARENTLY SUCH WORKING OF TAXI INCOME IS FACTUALLY AND LEGALLY INCORRECT AND IS BAD IN LAW. ACCORDINGLY THE SAME DESERVES TO BE QUASHED. 4.2 THE AO NOTICED THAT THE ASSESSEE HAS SHOWN GROS S RECEIPTS OF RS. 25,69,777/- AND CLAIMED TAXI RUNNING EXPENSES OF RS . 24,36,221/-. THUS NET INCOME OF RS. 1,33,556/- HAS BEEN DISCLOSED. THE AS SESSEE FAILED TO PRODUCE ANY EVIDENCE IN RESPECT OF THE EXPENSES. THE AO DIS ALLOWED 1/3 RD OF THE 15 EXPENSES. THE ASSESSEE CLAIMED DEPRECIATION IN P & L A/C AT RS. 9,65,149/-. ACCORDING TO THE AO, THE ASSESSEE HAS PLIED THE TAX IES WHICH ARE HAVING PRIVATE REGISTRATION. THE DEPRECIATION WAS NOT CLAI MED IN THE ORIGINAL RETURN. THE AO ACCORDINGLY DID NOT ALLOW THE CLAIM OF DEPRE CIATION. 4.3 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE LD. AR OF THE ASSESSEE DIRECTED THE AO TO ADOPT INCOME FROM TAXIE S AT NIL AFTER ALLOWING DEPRECIATION BY OBSERVING AS UNDER:- 5.3 I HAVE CONSIDERED THE ARGUMENT OF THE A.R. AND HAVE PERUSED THE ASSESSMENT ORDER AND RELE VANT RECORD. IN ABSENCE OF VOUCHERS AND OTHER DETAILS, T HE A.O. WAS JUSTIFIED IN MAKING DISALLOWANCE OUT OF TAXI RUNNIN G EXPENSES. HOWEVER, THE DISALLOWANCE IS QUITE EXCESSIVE AND IN VIEW OF THE DISCUSSION MADE IN APPEAL ORDER A.Y 2005-06, THE S AME IS RESTRICTED TO 20%, WHICH COMES TO RS. 4,87,244/-. THE CLAIM OF DEDUCTION OF DEPRECIATION OF THE TAXI BUSINESS CAN ONLY BE ALLOWED TO THE EXTENT THAT THE TAXI INCOME DOES NOT BECOME NEGATIVE AND EXCESS CLAIM OF DEPRECIATION IS DISALL OWED IN VIEW OF DECISION OF HONBLE ITAT, JODHPUR BENCH IN THE C ASE OF M/S SUNCITY ALLOYS PVT. LTD, AS DISALLOWED IN DETAIL IN APPEAL AS PER FOR A.Y 2005-06 IN APPELLANTS OWN CASE IN APPEAL N O. 570/09- 10 DATED 29.12.10. DEPRECIATION CANNOT BE DISALLOW ED ON TAXIS, MERELY BECAUSE THEY ARE NOT REGISTERED AS TAXIS, WH EN FACT OF USE OF THE VEHICLE FOR TAXI PURPOSE HAS NOT BEEN CO NTROVERTED BY THE A.O. THE ARGUMENT OF THE A.R OF ESTIMATING THE INCOME ON THE BASIS OF 44AE IS REJECTED, AS 44AE IS APPLICABL E FOR ESTIMATING THE INCOME OF TRUCKS/GOODS CARRIAGES. AF TER RESTRICTING THE DISALLOWANCE TO 20%, (RS.4,87,244/- ), THE NET PROFIT BEFORE DEPRECIATION WILL BE RS. 6,20,800/- H OWEVER, THE CLAIM OF DEPRECIATION OF RS. 9,65,149/-/- BEING MOR E THAN THE NET PROFIT (BEFORE DEPRECIATION) AS MENTIONED ABOVE , THE CLAIM OF DEPRECIATION IS RESTRICTED TO THE TAXI INCOME ( BEFORE DEPRECIATION) AS ABOVE AND NET TAXI INCOME (AFTER C ONSIDERING 16 DEPRECATION) IS HELD TO BE NIL. APPELLANT GETS THE RESULTANT RELIEF. 4.4 BEFORE US, THE LD. AR HAS FILED THE WRITTEN SUB MISSIONS AS UNDER:- IN APPEAL PROCEEDINGS ALSO, THE LD. CIT (A) DID N OT VENTURE TO EXAMINE THE INCOME AND EXPENDITURE ACCOU NT AS FURNISHED BY THE APPELLANT IN RESPECT OF THESE TAXIS AND PROCEED ED TO DECIDE THIS POINT ON THE SAME FOOTINGS AS DONE BY THE LD. AO AND OPINED THAT SUCH DISALLOWANCE AS MADE BY THE AO WAS QUITE EXCESSIVE AND ACCORDING LY REDUCED THE PERCENTAGE OF SUCH DISALLOWANCE TO 20% FROM 1/3 RD AS MADE BY THE AO FOR THE SAME REASONS AS MENTIONED BY HIM IN THE APPEAL ORDER FOR A.Y. 2005- 06. HOWEVER ON READING OF THE RELEVANT EXTRACT FROM THE APPEAL ORDER OF THE A.Y. 2005-06 (PAGE NO.23 &24) YOUR HONORS WOULD OBSERVE THAT IN THE SAID ORDER ALSO THE LD. CIT (A) DID NOT POINT OUT ANY SPECIFIC DISCREPANCY OR DEFECT IN THE DETAILS OF THE INCOME & EXPENDITUR E A/C AS FURNISHED BY THE APPELLANT IN THIS REGARD. THUS THE LD. CIT (A) HAD REJECTED THE RESULTS AS SHOWN BY THE APPELLANT IN THIS REGARD WITHOUT ANALY ZING THE PROFIT RESULTS AND ALSO WITHOUT POINTING OUT THE SPECIFIC DISCREPA NCIES OR DEFECTS OR THE VOLUME OF AMOUNT INVOLVED IN THE SO CALLED UNVERIFIABLE VOUCHERS ETC. THOUGH THE DETAILS OF HEAD-WISE EXPENSES WERE DULY SUBMITTED AND WERE VERY MUCH AVAILABLE WITH THEM. IN ABSENCE OF SUCH A N EXERCISE, THE ADDITION SO CONFIRMED IS BAD IN LAW AND DESERVES TO BE DELETED FOR THE FOLLOWING REASONS: (I) ON PERUSAL OF THE INCOME & EXPENDITURE A/C AS F URNISHED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT AND APPEA L PROCEEDINGS, IT WOULD BE NOTED THAT ON TOTAL RECEIPTS OF RS. 25,05, 550/- NET PROFIT SHOWN WAS RS.1,33,556/- (BEFORE DEPRECIATION) GIVING N.P. RATE OF 5.33% WHICH WOULD APPEAR TO BE VERY FAIR AND REASONABLE IN VIE W OF THE PAST HISTORY OF THE CASE AND ALSO HAVING CONSIDERED THE HEAVY PAYME NTS UNDER THE HEAD OF INTEREST ON CAR LOANS AND INSURANCE ETC. DURING T HIS YEAR, SUCH INTEREST PAYMENTS WERE TO THE TUNE RS.1,47,490/- AND INSURAN CE PREMIUM PAID OF RS. 87,265/-. AFTER TAKING INTO ACCOUNT THESE EXPEN SES WHICH ARE FULLY VOUCHED AND VERIFIABLE, THE N.P. WOULD COME TO RS. 3,68,311/- GIVING N.P. OF 14.70% WHICH IS VERY MUCH COMPARABLE IN THIS LINE OF BUSINESS. HOWEVER, THE AUTHORITIES BELOW DID NOT LOOK INTO TH ESE DETAILS AND STRAIGHT-AWAY PROCEEDED TO MAKE ADDITIONS ON ADHOC BASIS BY APPLYING GENERAL PERCENTAGE OF DISALLOWANCE WITH THE PET-FIN DINGS OF UN-VOUCHED EXPENSES. HERE IT WOULD BE RELEVANT TO MENTION THAT IF THE ADDITION AS CONFIRMED BY THE LD CIT (A) IS TAKEN INTO ACCOUNT T HEN THE N.P. (BEFORE INSURANCE AND INTEREST) WOULD WORK OUT @ 27.66% WHICH IS APPARENTLY ABNORMAL AND EXCESSIVE. 17 NOW COMING TO THE CLAIM MADE ON ACCOUNT OF DEPRECIA TION: THE AO HAD DISCUSSED THIS DISALLOWANCE AT PAGE NO. 9 & 10 OF THE ASSESSMENT ORDER AND DISALLOWED THE DEDUCTION OF RS .9,65,149/- ON THE PLEA THAT ORIGINALLY SUCH DEDUCTION WAS NOT CLAIMED HENCE NOT ALLOWABLE. WHILE MAKING SUCH DISALLOWANCE, HE HAD ALSO REFEREE D THE CITATION OF HONORABLE ITAT, JODHPUR BENCH, JODHPUR IN THE CASE OF M/S SUNCITY ALLOYS, PVT. LTD. JODHPUR, AND ALSO TO THE JUDGMENT OF HONORABLE APEX COURT IN THE CASE M/S SUN ENGINEERING WORKS, PVT. L TD.(1992) 198 ITR 297(SC). IN APPEAL, THE LD. CIT (A), AFTER CONSIDERING THE A BOVE REFERRED JUDGMENT OF HONORABLE ITAT, ALLOWED DEPRECIATION TO THE EXTENT OF INCOME WORKED OUT FROM THIS SOURCE DETERMINING NET ASSESSA BLE INCOME FROM THIS SOURCE AT NIL . HOWEVER, THE FINDINGS MADE BY THE LEARNED CIT (A ) WHILE ALLOWING SUCH DEPRECIATION TO THE EXTENT OF POSITIV E INCOME DETERMINED HAVE BEEN AGITATED BY THE DEPARTMENT, THE APPELLANT HAS ALSO OBJECTED SUCH FINDINGS AS LD. CIT (A) DID NOT TAKE NOTE OF THE FOLLOWING FACTS WHICH HAVE DIRECT BEARING ON THE FATE OF SUCH DISALLOWANC E: (I) THE DEDUCTION OF THE DEPRECATION IS A STATUTORY DEDUCTION WHICH IS REQUIRED TO BE ALLOWED SUO-MOTTO. (II) THE LEARNED AO & CIT (A) HAD MISQUOTED THE JUDICIAL CITATIONS WHILE DISALLOWING THE DEPRECIATION. IT APPEARS THAT THEY HAVE MIS- INTERPRETED THE REAL SPIRIT OF THE JUDGMENT AS PROP OUNDED BY THESE JUDICIAL AUTHORITIES. FOR READY REFERENCE, WE MAY R E-PRODUCE THE KEY ESSENCE OF SUCH JUDGMENT AS UNDER FOR YOUR KIND PERUSAL AND RECORD: IN THE CASE OF M/S SUN ENGINEERING WORKS, PVT. LTD. (1992) 198 ITR 297 (SC) HONORABLE SUPREME COURT HAVE OBSER VED AS UNDER:- RE-ASSESSMENT- SCOPE- ONCE AN ASSESSMENT IS VALIDLY RE- OPENED ONLY THE PREVIOUS UNDER-ASSESSMENT IS SET AS IDE AND NOT THE ORIGINAL ASSESSMENT PROCEEDINGS; PARTICULARLY I F IT HAS ACQUIRED FINALITY- ASSESSEE CAN NOT CLAIM RE-COMPUT ATION OF INCOME OR RE-DOING OF AN ASSESSMENT OR AGITATE A FR ESH CLAIM UNRELATED TO ESCAPED INCOME OR WHICH WAS OTHER-WIS E REJECTED IN ORIGINAL ASSESSMENT- ITO CAN NOT MAKE AN ORDER O R RE- ASSESSMENT INCONSISTENT WITH THE ORIGINAL ORDER OF ASSESSMENT IN RESPECT OF MATTERS WHICH ARE NOT SUBJECT- MATTER OF THE PROCEEDINGS U/S 147- PROCEEDINGS U/S 147 CAN NOT BE ALLOWED TO BE CONVERTED INTO REVISIONAL OR REVIEW PROCEEDI NGS AT THE INSTANCE OF THE ASSESSEE 18 FROM THE READING OF THE ABOVE EXTRACTS, YOUR HONORS WOULD APPRECIATE THAT IN THE PRESENT CASE, IN ABSENCE OF REGULAR BOOKS OF ACCOUNT, NO INCOME FROM TAXI BUSINESS WAS SHOWN. TH IS IS FOR THE FIRST TIME THAT SUCH INCOME WAS SHOWN IN THE RETURN FILED IN COMPLIANCE TO NOTICE ISSUED U/S 153A OF THE ACT. TH US THE DEPRECIATION HAS BEEN CLAIMED IN RESPECT OF THE INC OME WHICH WAS NEVER A SUBJECT MATTER OF ASSESSMENT PROCEEDINGS HE NCE-FORTH, AND NO FINALITY WAS ACQUIRED SO FAR ON THIS POINT IN ANY MANNER. THUS THE OBSERVATION OF HONORABLE SUPREME COURT IN THE A BOVE REFERRED CASE SUPPORTS THE CLAIM OF THE APPELLANT. MORE-OVER THIS CLAIM IS NOT INCONSISTENT WITH THE ORIGINAL ORDER AS SAID IN COME AND DEPRECIATION THEREON HAD NOT BEEN CLAIMED HENCE BEF ORE, SO THERE IS NO QUESTION OF ANY REVIEW OR REVISION OF THE SAID D EDUCTION AS PROPOUNDED BY THE HONORABLE S.C. IN THE CIRCUMSTAN CES, THE FACTS OF THE PRESENT CASE ARE SQUARELY COVERED BY THE ABO VE FINDINGS OF THE HONORABLE APEX COURT. THE AO HAD RATHER MIS-QUO TED THE ABOVE CITATION IN HIS FAVOR WHICH DIRECTLY SUPPORTE D OUR CLAIM AS EXPLAINED HEREINABOVE. SIMILARLY THE CITATION OF HONORABLE BOMBAY HIGH COU RT IN THE CASE OF K.SUDHAKAR S, SAUBHASH VS ITO (241) ITR 865 (MUM) AS RELIED UPON BY THE AO HAS NO BEARING AT ALL IN T HE PRESENT CASE. IN THIS CASE POINT REGARDING CLAIM OF REFUND ON ACCOUNT OF THE PAYMENT ADVANCE TAX RESULTED BY REVI SING THE RETURN AT LOWER INCOME WAS DECIDED. THUS THESE FACT S ARE ENTIRELY DIFFERENT THAN THOSE OF PRESENT CASE. SIMILARLY IN THE CASE OF SUNCITY ALLOYS ALSO, THE P OINT DECIDED WAS REGARDING UN-CLAIMED DEPRECIATION IN TH E ORIGINAL RETURN. BUT IN THE PRESENT CASE OF THE APPELLANT IT IS NOT THE CASE OF UN-CLAIMED DEDUCTION AS ENVISAGED BY THE HONORABLE MEMBERS OF ITAT. IN OUR CASE, THE INCOME HAD BEEN CLAIMED FOR THE FIRM TIME ON WHICH CLAIM WAS MADE WHICH IS NOT IN-CONSISTENT TO THE INCOME SHOWN IN ORIGINAL RETURN. THUS THIS JUDGMENT RATHER SUPPORTS THE CLAIM OF THE APPELLANT. HOWEVER, THE AUTHORITIES BE LOW HAVE MIS- CONSTRUED THE SPIRIT OF THESE JUDGMENTS AND HAVE IN TERPRETED THESE IN THEIR FAVOR WITHOUT ANY LOGIC OR REASONING. IN VIEW OF ABOVE DISCUSSIONS, THE CLAIM OF DEPRECIA TION IS LEGALLY MAINTAINABLE AND SHOULD BE ALLOWED AND CARR Y FORWARD OF LOSS ON THIS ACCOUNT BE ALLOWED. 19 4.5 ON THE OTHER HAND, THE LD. DR DREW OUR ATTENTIO N TO GROUNDS OF APPEAL NO. 3 RAISED BY THE REVENUE. THE ASSESSEE HAS NOT M AINTAINED THE ACCOUNTS AND THEREFORE, ESTIMATED DISALLOWANCE OUT OF THE EX PENSES WAS WARRANTED. THE ASSESSEE HAS RUN THE CAR HAVING PRIVATE REGISTR ATION NUMBER AS TAXI AND THEREFORE, THE MARGIN OF PROFIT IN THE CASE OF THE ASSESSEE SHOULD BE MORE AS COMPARED TO PROFIT EARNED BY THE PARTIES WHO ARE DO ING THE TAXI BUSINESS. IT WAS THEREFORE, SUBMITTED THAT THE LD. CIT(A) WAS NO T JUSTIFIED IN REDUCING THE DISALLOWANCE OUT OF TAXI BUSINESS. 4.6 WE HAVE HEARD BOTH THE PARTIES. IN THE ASSESSME NT YEAR UNDER CONSIDERATION, THE ASSESSEE WAS HAVING SIX TAXIES. THE EXPENSES ON THE DIESEL ARE TO THE EXTENT OF RS. 11,18,687/-. THE DIESEL EX PENSES ARE FAVOURABLY COMPARABLE WITH THE RECEIPTS TO THE EXTENT OF RS. 2 4,63,750/-.LOOKING TO THE NUMBER OF TAXIES, THE EXPENDITURE INCURRED ON DRIVE RS SALARY CANNOT BE CONSIDERED AS ABNORMAL. IT IS TRUE THAT THE ASSESSE E HAS CONSIDERED THAT TAXIES HAVE BEEN RUN FOR AROUND 256 DAYS OUT OF 365 DAYS O F THE YEAR. THERE IS NO BASIS FOR ADOPTING THE DAYS FOR WHICH TAXIES HAVE B EEN PLIED. THIS HAS BEEN BASICALLY TAKEN ON ESTIMATE BASIS. AFTER CLAIM OF T HE DEPRECIATION, THE ASSESSEE HAS CLAIMED LOSS OF AROUND RS. 8.30 LACS. IT IS NOTICED FROM THE CHART FILED BY THE ASSESSEE THAT IT HAS ADOPTED RAT E OF RS. 3/- PER KM FOR ONE QUALIS. THE RATE SHOWN IS ABNORMALLY ON LOWER SIDE. WE ARE LEFT WITH NO 20 ALTERNATIVE BUT TO ESTIMATE THE INCOME FROM TAXI BU SINESS AFTER CONSIDERING THE ALLOWABILITY OF DEPRECIATION. LOOKING TO THE NU MBER OF TAXIES, WE FEEL THAT IT WILL BE FAIR AND REASONABLE TO ESTIMATE INC OME FROM TAXI BUSINESS AT RS. 1.25 LACS AFTER ALLOWING DEPRECIATION. HENCE, G ROUND NO. 3 OF THE ASSESSEE IS DISMISSED WHILE GROUND NO. 3 OF THE REV ENUE IS PARTLY ALLOWED. 5.1 THE GROUND NO. 4 OF THE ASSESSEE IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAD LEGALLY AND FACTUALLY ER RED IN CONFIRMING ADDITION OF RS. RS.13,06,000/- OUT O F TOTAL ADDITION OF RS. 28,79,500/- AS MADE BY THE AO ON ACCOUNT OF ALLEGED UNEXPLAINED CASH DEPOSITS IN THE BANK ACCOUNT OF SHRI DILIP KUMAWAT, SHRI GOPAL SAINI AND SHRI RAKESH GUPTA (RS.18,98,500/-, RS.3,61,000/- & RS.6,20,000/- RESPECTIVELY) ON THE BASIS OF CONFESSIONAL STATEMENT RECORDED AT THE TIM E OF SEARCH OPERATIONS. HOWEVER, IN APPEAL THE LD. CIT(A) HAD ALLOWED RELIEF OF RS.8,00,500/- IN THE CASE OF SHRI DILIP KUMAWAT, RS.1,73,000/- IN THE CASE OF GOPAL SAINI AND RS. 6,00,000/- IN THE CASE OF RAKESH GUPTA, (TOTALING RS.15,73,500/-) ON THE BASIS OF FACTS AND CONFIRMED BALANCE AMOUNT OF RS.13,06,000/- WITHOUT APPRECIATING THE FACTS OF SUCH CREDIT AS EXPLAINED BY THE APPELLANT. THUS THE ADDITION OF RS.13,06,000/- SO CONFIRMED BEING BAD IN LAW DESERVES TO BE DELETED. 5.2 THE AO NOTICED THAT THERE ARE CASH DEPOSITS IN THE BANK ACCOUNT IN THE NAME OF BENAMI NAMES. THE CASH DEPOSITS IN THE BANK ACCOUNT OF BENAMI NAMES IS TO THE EXTENT OF RS. 28,79,500/-. ACCORDIN G TO THE AO, THE ASSESSEE HAS FILED NO SATISFACTORY EXPLANATION FOR INTRODUCI NG THE BLACK MONEY IN THE 21 NAME OF BENAMI BANK ACCOUNTS. THEREFORE, THE ADDITI ON OF RS. 28,79,500/- WAS MADE. 5.3 BEFORE THE LD. CIT(A), THE ASSESSEE FILED THE A DDITIONAL EVIDENCE. BEFORE THE LD. CIT(A), THE ASSESSEE FILED PARTYWISE EXPLANATION OF SOURCE OF DEPOSITS IN THE BANK ACCOUNT. FOR READY REFERENCE, IT WILL BE USEFUL TO REPRODUCE THE SUBMISSIONS GIVEN BEFORE THE LD. CIT( A). 2.2 DILIP KUMAWAT:- SBBJ (A/C NO. 01190012467 & 5 1014106649) TOTAL DEPOSITS RS. 755500/- DATE AND MODE OF AMOUNT DEPOSITED IN BANK A/C DATE AMOUN T MODE SOURCE OF AMOUNT DEPOSITED IN BANK ACCOUNT COPY OF BANK STATEMENT 04.04.06 6000 CASH CASH DEPOSIT OF RS. 6000/- IS OUT OF CASH OF RS. 2,00,000/- WITHDRAWAL FROM BANK OF BARODA ON 03.04.2006; SOURCE:- OUT OF CHEQUE OF RS. 31,00,000/- RECEIVED FROM SHANKAR KHANDELWAL ON 31.03.06. THE COPY OF ACCOUNT OF DILIP KUMAWAT IN BOOKS OF SHANKAR KHANDELWAL IS AT PAGE 97 OF PAPER BOOK OUT OF CASH OF RS. 2,00,000/- WITHDRAWAL FROM BANK OF BARODA ON 03.04.2006; (E-7) SOURCE:- OUT OF CHEQUE OF RS. 31,00,000/- RECEIVED FROM SHANKAR KHANDELWAL ON 31.03.06. (E-7) 05.05.06 6000 CASH OUT OF CASH OF RS. 2,00,000/- WITHDRAWAL FROM BANK OF BARODA ON 03.04.2006 SOURCE:- OUT OF CHEQUE OF RS. 31,00,000/- RECEIVED FROM SHANKAR KHANDELWAL ON 31.03.06. (E-7) 23.05.06 500000 CASH OUT OF CASH OF RS. 5,00,000/- WITHDRAWAL FROM BANK OF BARODA ON 12.04.2006 -DO- 05.06.06 3000 CASH -DO- -DO- 05.07.06 5000 CASH -DO- -DO- 19.07.06 200000 CASH -DO-..DATED 15.4.06 -DO- 22 01.03.07 17500 CASH OUT OF CASH OF RS. 7,00,000/- WITHDRAWAL FROM BANK OF BARODA ON 08.02.2007 OUT OF CHEQUE OF RS. 7,00,000/- RECEIVED FROM GOPAL LAL SAINI ON 08.02.2007. THE COPY OF ACCOUNT OF DILIP KUMAWAT IN BOOKS OF GOPAL LAL SAINI IS AT PAGE 81 OF PAPER BOOK OUT OF CASH OF RS. 7,00,000/- WITHDRAWAL FROM BANK OF BARODA ON 08.02.2007; (E-8) SOURCE:- TIKAM KHANDELWAL RECEIVED LOAN FROM ICICI BANK RS. 1572000/-; WHICH WAS DISBURSED IN THE BANK ACCOUNT OF GOPAL SAINI. OUT OF THIS SHRI GOPAL SAINI PAID RS. 7,00,000/- TO SHRI DILIP KUMAWAT E-12 . 29.03.07 18000 CASH OUT OF CASH OF RS. 20,000/- RECEIVED FROM GUMAN FURNITURE & SERVICES PVT LTD ON 26.03.2007. THE COPY OF ACCOUNT OF DILIP KUMAWAT IN BOOKS OF GUMAN FURNITURE & SERVICES PVT LTD IS AT PAGE 84 OF PAPER BOOK TOTAL 755500 SHRI SHANKER KHANDELWAL RECEIVED LOAN OF RS. 31.00 LACS, WHICH WAS DEPOSITED IN THE A/C OF SHRI DILIP KUMAWAT IN BANK OF BARODA ON 31.03.20 06 (E-7). THE PROOF OF LOAN IS ENCLOSED HEREWITH PAGE 11 & 11A OF LETTER DATED 21/01/2011. 2.3 GOPAL SAINI :- BANK OF BARODA (A/C NO. 29570100 004647) TOTAL DEPOSITS RS. 361000 DATE AND MODE OF AMOUNT DEPOSITED IN BANK A/C DATE AMOUNT MODE SOURCE OF AMOUNT DEPOSITED IN BANK ACCOUNT COPY OF BANK STATEMENT 14.08.06 10000 CASH OUT OF CASH WITHDRAWAL FROM BANK IN PREVIOUS DATES. 03.10.06 7000 CASH OUT OF CASH OF RS. 6,00,000/- RECEIVED FROM GUMAN KHANDELWAL ON 21.09.2006. THE COPY OF ACCOUNT OF GOPAL LAL SAINI IN BOOKS OF GUMAN KHANDELWAL IS AT PAGE 68 OF PAPER BOOK 16.10.06 6000 CASH OUT OF CASH OF RS. 6,00,000/- RECEIVED FROM GUMAN KHANDELWAL ON 21.09.2006. THE COPY OF ACCOUNT OF GOPAL LAL SAINI IN BOOKS OF GUMAN KHANDELWAL IS AT PAGE 68 OF PAPER BOOK THE COPY OF ACCOUNT OF GOPAL LAL SAINI IN BOOKS OF GUMAN KHANDELWAL IS AT PAGE 68 OF PAPER BOOK 30.10.06 150000 CASH -DO- -DO- 01.11.06 9000 CASH -DO- -DO- 13.11.06 80000 CHEQUE (I)GOPAL SAINI MADE THE PAYME NT OF RS. 80000/- TO M/S R S SOURCE OF PAYMENT RS. 80000/- ON 30/10/2006:- 23 EDUCATION ON 30/10/2006, WHICH RECEIVED BACK ON 13.11.2006. E- 13 & 14, (II)COPY OF A/C OF RS EDUCATION IS AT E-19 IN THE BOOKS OF GOPAL SAINI. DEPOSIT OF RS. 150000/- ON 30/10/2006 OUT OF CASH OF RS. 6,00,000/- RECEIVED FROM GUMAN KHANDELWAL ON 21.09.2006. THE COPY OF ACCOUNT OF GOPAL LAL SAINI IN BOOKS OF GUMAN KHANDELWAL IS AT PAGE 68 OF PAPER BOOK 13.11.06 70000 CHEQUE (I)GOPAL SAINI MADE THE PAYME NT OF RS. 70000/- TO M/S R S EDUCATION ON 1/11/2006, WHICH RECEIVED BACK ON 13.11.2006. E-13 & 14 (II)-DO- -DO- 13.11.06 20000 CASH OUT OF CASH OF RS. 6,00,000/- RECEIVED FROM GUMAN KHANDELWAL ON 21.09.2006. THE COPY OF ACCOUNT OF GOPAL LAL SAINI IN BOOKS OF GUMAN KHANDELWAL IS AT PAGE 68 OF PAPER BOOK 16.11.06 10000 CASH -DO- -DO- TOTAL 362000 2 .4 RAKESH GUPTA :- UCO BANK (A/C NO 17960100050164) TOTAL DEPOSITS RS. 6,20,000/ DATE AND MODE OF AMOUNT DEPOSITED IN BANK A/C DATE AMOUNT MODE SOURCE OF AMOUNT DEPOSITED IN BANK ACCOUNT COPY OF BANK STATEMENT 24.01.07 20000 CASH OUT OF PREVIOUS WITHDRAWALS AND SAVINGS 02.03.07 600000 CHEQUE RECEIVED FROM KHANDELWAL BUILDING MATERIAL SUPPLIERS. COPY OF I. TAX RETURN OF RENU KHANDELWAL PORP OF KHANDELWAL BUILDING MATERIAL SUPPLIERS COPY OF BANK STATEMENT OF RENU KHANDELWAL CONFIRMATION TOTAL 620000 3) FROM THE ABOVE CHART THE SOURCE OF CASH/CHEQUE D EPOSITED IN BANK ACCOUNT OF ABOVE NAMED PERSONS AS MENTIONED ABOVE IS CLEARLY V ERIFIABLE AND IN MOST OF CASES THE 24 SAME WAS DEPOSITED OUT OF FUNDS RECEIVED FROM THE A SSESSEE, HIS RELATIVES OR HIS SISTER CONCERN WHICH WAS UNDER PROCEEDINGS BEFORE ASSESSIN G OFFICER, THEREFORE THE AMOUNT DEPOSITED BY ABOVE NAMED PARTIES CANNOT BE TREATED AS INCOME OF THE ASSESSEE. THE COPY OF ACCOUNT WITH UCO BANK, COPY OF I. TAX R ETURN OF RENU KHANDELWAL PROP OF KHANDELWAL BUILDING MATERIAL SUPPLIERS AND COPY OF BANK STATEMENT IN RESPECT TO DEPOSIT OF RS. 6.00 LACS IS ENCLOSED HEREWITH PAGE 12 TO 16 OF LETTER DATED 21/01/2011. 6.4 ONE SET OF ALL WRITTEN SUBMISSIONS FILED BY THE A.R FROM TIME TO TIME ALONWITH PAPER BOOK WAS GIVEN TO THE A.O. AND A.O. WAS REQUESTED TO SEND HIS REMAND REPORT ON THE ADDITIONAL EVIDENCE FILED BY T HE A.R. OF THE APPELLANT. THE A.O HAS OBJECTED TO THE ADMISSION OF ADDITIONAL EVI DENCE AS WAS DONE BY THE A.O. IN THE EARLIER YEARS. APART FROM IT THE A.O. HAS SU BMITTED THE REPORTS ON MERITS ALSO. 5.4 SUCH ADDITIONAL EVIDENCES WERE MADE AVAILABLE T O THE AO WHEN THE AO WAS REQUIRED TO SEND THE REMAND REPORT. THE AO O BJECTED TO THE ADMISSION OF THE ADDITIONAL EVIDENCE. THE AO ALSO S UBMITTED REPORTS ON MERIT BEFORE THE LD. CIT(A). THE LD. CIT(A) AFTER C ONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND CONSIDERING THE REM AND REPORT OF THE AO REDUCED THE ADDITION TO RS. 1307 LACS AFTER OBSERVI NG AS UNDER:- 6. 5 I HAVE CONSIDERED THE SUBMISSION OF LD. A .R, REMAND REPORT OF THE A.O. AND HAVE PERUSED THE MATERIAL ON RECORD . AS REGARDS ISSUE OF ADMISSION OF ADDITIONAL EVIDENCE IS CONCERNED THE F ACTS ARE SAME AS IN EARLIER YEARS APPEAL OF THE APPELLANT,(I.E APPEAL NO. 570/ 09-10 FOR A.Y 2005-06 ORDER DATED 29.12.10) WHEREIN THE ADMISSION OF ADDITIONAL EVIDENCE WAS ALLOWED CONSIDERING THE PECULIAR FACTS OF THE CASE AND LEGA L POSTION ON THIS ISSUE. FOR THE REASONS DISCUSSED THEREIN, ADDITIONAL EVIDENCE IS A DMITTED IN THIS YEAR ALSO. 6.6 THE ADDITIONS MADE BY THE A.O ARE DISCUSSED HEREUNDER:- I) SH. DILIP KUMAWAT :- BANK OF BARODA- TOTAL DE POSITS RS. 11,43,000/- :- THE CLAIM OF THE APPELLANT REGARDING CASH OF RS. 3,90,000/- DEPOSITED ON 22.12.06 BEING OUT OF WITHDRAWAL OF RS 4 LAKHS MADE ON 27.9.06 IS 25 NOT ACCEPTED AS THERE IS NO EVIDENCE THAT SAME CASH WHICH WAS WITHDRAWN THREE MONTHS BACK WAS DEPOSITED NOW. THE CASH FLOW HAS AL READY BEEN REJECTED BY THE A.O. A.O. HAS ALSO BROUGHT THIS POINT ON RECORD. R EGARDING REMAINING AMOUNT OF RS. 7 LAKHS + RS. 50,000/- + RS 3,000/- IS CONCERNE D, THE FIRST TWO AMOUNT WAS DEPOSITED THROUGH CHEQUE WHICH WAS VERIFIED BY TH E A.O FROM THE BANK STATEMENT OF THE APPELLANT AND MOREOVER, THE A.O. HAS NOT MAD E ANY ADVERSE COMMENT ABOUT THEM AFTER VERIFICATION, IN HIS REMAND REPORT. ACC ORDINGLY, ADDITION OF RS. 3, 90,000/- IS CONFIRMED AND RS.7, 53,000/- IS DELETED . II) SH. DILIP KUMAWAT :- SBBJ- : RS. 7,55,500/- :- THE CLAIM OF THE APPELLANT OF THE CASH DEPOSIT OF RS. 5 LAKHS ON 23. 5.06 AND RS. 2 LAKH ON 19.7.06 WAS OBJECTED BY THE A.O. CONSIDERING THAT THERE WAS GAP OF ONE AND HALF MONTH AND THREE MONTHS RESPECTIVELY. CONSIDERING THESE FA CTS, IT IS HELD BY ME THAT THESE TWO CASH DEPOSITS ARE NOT EXPLAINED. SIMILARLY CASH DEPOSIT OF RS. 3,000/- AND RS. 5,000/- ON 5.6.06 AND 5.7.06 IS ALSO HELD AS UNEXPL AINED ON THE SAME LOGIC. HOWEVER, REMAINING AMOUNT OF RS. 6,000/- + RS. 6,00 0/- DEPOSITED ON 4.4.06 AND 5.5.06 AND FURTHER AMOUNT OF RS. 17,500/- AND RS. 1 8,000/- DEPOSITED ON 1.3.07 AND 29.3.07 ARE FOUND TO BE EXPLAINED BY THE A.O. A S NO ADVERSE COMMENTS HAVE BEEN GIVEN IN THE REMAND REPORT. ACCORDINGLY, IN BR IEF, ADDITION OF RS. 7,08,000/- IS CONFIRMED AND BALANCE REMAINING RS. 47,500/- IS DELETED. III) SH. GOPAL SAINI- BANK OF BARODA RS. 3,6 1,000/- :- OUT OF THE ABOVE, A.O. HAS NOT MADE ANY ADVERSE COMMENT ABOUT RS. 80,000/- + RS. 70,000/- BEING THROUGH CHEQUE AND VERIFIED BY THE A.O. AND F URTHER ABOUT RS. 10,000/- + RS. 7,000/- + RS. 6,000/- DEPOSITED IN CASH FROM WI THDRAWAL FROM BANK ACCOUNT. ACCORDINGLY, ADDITION OF RS. 1,73,000/- IS DELETED AND REMAINING AMOUNT OF RS. 1,89,000/ BEING HELD TO BE UNEXPLAINED IS CONFIRMED , IN VIEW OF THE FACT THAT THERE IS GAP OF MORE THAN ONE MONTH IN THE CONTENDED WITH DRAWALS BY WHICH DEPOSIT IS TRIED TO BE EXPLAINED BY THE A.R. IV) SH. RAKESH GUPTA:- THE A.O. IN HIS REMAND REPORT HAS MADE NO ADVERSE COMMENT ABOUT RS. 6 LAKHS DEPOSITED THROUGH CHEQUE AND ACCORDINGLY, 26 SAME IS ACCEPTED. THE SOURCE OF RS. 20,000/- DEPOSI TED IN CASH STATED TO BE OUT OF PREVIOUS WITHDRAWALS IS NOT ACCEPTED IN VIEW OF ANY EVIDENCE FILED IN THIS REGARD. 6.7 IN BRIEF, RS 15,73,500/- IS DELETED AND BALANC E RS 13,07,000/- ( OR RS. 13,06,000/-, AS PER THE A.OS ORDER ) IS CONFIRMED. BEFORE US, THE LD. AR HAS FILED THE FOLLOWING WRIT TEN SUBMISSIONS. IN APPEAL, HAVING CONSIDERED THE DETAILED WRITTE N SUBMISSION (AS LYING IN THE PB) THE CIT (A) HAD GIVEN CREDIT OF TH E CASH WITHDRAWALS APPEARING IN THESE BANK ACCOUNTS AND ALSO THE DEPOS ITS SHOWN THROUGH CHEQUES OR BY TRANSFER ETC. NO CREDIT WAS HOWEVER G IVEN FOR CASH DEPOSITS ON THE PLEA THAT THE CASH BOOKS AS PRODUCED IN SUPP ORT OF SUCH CASH DEPOSITS WERE REJECTED BEING UN-VERIFIABLE AND UN-RELIABLE . ACCORDINGLY CONFIRMED THE FOLLOWING ADDITIONS ON THIS PLEA: 1. SHRI DILIP KUMAWAT RS. 10,98,000/- 2. SHRI GOPAL LAL SAINI RS. 1,89,000/- 3. SHRI RAKESH GUPTA RS. 20,000/- FROM THE ABOVE DISCUSSIONS, IT WOULD BE NOTED THAT THE AUTHORITIES BELOW HAVE TURNED DOWN THE CLAIM OF THE APPELLANT O N THE LONE PLEA THAT THE BOOKS BEING UNVERIFIABLE AND UNRELIABLE COULD N OT BE CONSIDERED IN SUPPORT OF SUCH EXPLANATION. APPARENTLY SUCH FINDIN GS ARE DEVOID OF MERITS AND WITHOUT ANY MATERIAL ON RECORD SHOWING AS TO HO W SUCH BOOKS ARE NOT RELIABLE AND VERIFIABLE. HERE IT WOULD BE PERTINENT TO NOTE THAT THESE BOOKS WERE PREPARED ON THE BASIS OF THE BANK STATEMENTS A ND INSTRUMENTS OF SALE AND PURCHASE OF THE PROPERTIES. ON THE FACE OF SUCH DOCUMENTARY EVIDENCES, TREATING SUCH BOOKS AS UNVERIFIABLE AND UN-RELIABLE WOULD SOUND TO BE RIDICULOUS; PARTICULARLY WHEN NO SPECIF IC INSTANCE OF ANY UNVERIFIABLE AND UNRELIABLE ENTRIES IS FORTH-COMING . APPARENTLY SUCH FINDINGS ARE FACTUALLY AND INCORRECT AND DESERVE TO BE QUASHED AND THE ADDITION SO CONFIRMED BY THE LD. CIT(A) NEED TO BE DELETED. 5.5 ON THE OTHER HAND, THE LD. DR DREW OUR ATTENTIO N TO GROUNDS OF APPEAL NO 4 RAISED IN THE APPEAL OF THE REVENUE. THE REVEN UE IS AGGRIEVED AGAINST DELETION OF ADDITION OF RS. 1.73 LACS IN THE NAME O F SHRI GOPAL SAINI. THERE WAS BANK DEPOSIT OF RS. 3.62 LACS IN THE NAME OF SH RI GOPAL SAINI AND LD. 27 CIT(A) THE DELETED THE ADDITION OF RS. 1.73 LACS. I N RESPECT OF RELIEF TO THE EXTENT OF RS. 1573,500/-, THE REVENUE IS AGGRIEVED ONLY AGAINST RS. 1.73 LACS. 5.6 THE LD. DR STATED THAT CASH FLOW STATEMENT IN T HE HANDS OF THE PERSONS IN WHOSE NAME, THE ASSESSEE HAS OPENED THE BANK ACC OUNT AND HAS DONE TRANSACTIONS, ARE NOT VERIFIABLE AND THE DEPOSITS I N THE BANK ACCOUNT CANNOT BE CONSIDERED AS EXPLAINED. 5.7 WE HAVE HEARD BOTH THE PARTIES. WHILE DISPOSING OFF THE APPEAL FOR THE ASSESSMENT YEAR 2008-09, WE HAD HELD THAT CASH FLOW STATEMENT IN RESPECT OF THE PERSONS IN WHOSE NAME, THE ASSESSEE HAS MADE TH E TRANSACTIONS, ARE EXPLAINABLE UNLESS IT IS ESTABLISHED BY THE REVENUE THAT RECEIPTS IN THE CASH FLOW STATEMENT ARE NOT VERIFIABLE. WHEN THE ASSESSE E HAS NOT MAINTAINED THE BOOKS OF ACCOUNT IN THE NAME OF SUCH BENAMI PERSONS THEN THE CASH FLOW STATEMENT WAS REQUIRED TO BE MADE TO EXPLAIN THE DE POSITS IN THE BANK ACCOUNT. THEREFORE, WE FEEL THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 13.07 LACS. HENCE TH E GROUND NO. 4 OF THE ASSESSEE IS ALLOWED WHILE THE GROUND NO. 4 OF THE R EVENUE IS DISMISSED. 6.1 GROUND NO. 5 OF THE ASSESSEE IS AS UNDER:-- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAD LEGALLY AND FACTUALLY ERR ED IN CONFIRMING THE ADDITION OF RS.3,00,000/- ON ACCOUNT OF ALLEGED SUPPRESSION OF SALE & PURCHASES 28 IN RESPECT OF PROPERTY 417A, GANESH NAGAR ON THE BASIS OF SEIZED DOCUMENTS PAGE 25/23 OF ANNEXURE A-25 SEIZED FROM 59, MANSAROWER COLONY, KALWAR ROAD, JHOTWARA. WHILE DOING SO THE AO HAD HEAVILY RELIED UPON THE DEAF AND DUMB DOCUMENT IN VIOLATION OF THE PRINCIPLES OF EVIDENT ACT. IN FACT THE PAPERS CONTAINING ROUGH JOTTINGS DO NOT CONTAIN EVIDENTIARY VALUE UNTIL AND UNLESS SUPPORTED BY ANY CORROBORATIVE DOCUMENTARY EVIDENCE. IN THE PRESENT CASE, NO SUPPORTING DOCUMENTARY CORROBORATIVE DOCUMENTARY EVIDENCE WAS FORTHCOMING. IN THE CIRCUMSTANCES, SUCH PAPER DID NOT CONTAIN ANY EVIDENTIARY VALUE. HOWEVER, THE AUTHORITIES BELOW HAVE OVER LOOKED THIS VITAL LEGAL ASPECT OF THE CAS E AND HAVE MADE AND CONFIRMED THIS ADDITION, WHICH BEING BAD IN LAW DESERVES TO BE DELETED SUMMARILY. WITHOUT PREJUDICE TO SUCH CONTENTION, IT WOULD ALSO BE WORTH MENTIONING HERE THAT WHILE MAKING SUCH ADDITION, THE AUTHORITIES BELOW HAVE OVER-LOOKED TH E VITAL FACT AND PRINCIPLE OF WORKING OF THE ADDITION AL INCOME ON ACCOUNT OF THE SO CALLED INCRIMINATING DOCUMENT. THEY HAD PROCEEDED TO MAKE ADDITION OF THE ENTIRE TURN-OVER AS UNDISCLOSED INCOME, WHEREAS IN THE BODY OF THE ASSESSMENT ORDER ITSELF THEY HAVE MENTIONED THAT THERE HAD BEEN SUPPRESSED PURCHASES AND SALES. MEANING THEREBY THERE HAD BEEN SALES AND PURCHASES OUT- SIDE BOOKS SO DUE CREDIT FOR SUCH SUPPRESSED PURCHASES OUGHT TO BE GIVEN WHILE WORKING OUT NET INCOME EARNED FOR CARRYING OUT SUCH UNRECORDED TURN-OVER. THUS THE AUTHORITIES HAVE LEGALLY ERRED IN MAKING ADDITION OF THE ENTIRE TURN-OVER INSTEAD OF TAKING THE MARGIN OF PROFIT ONLY AS UNDISCLOSED INCOME. APPARENTLY SUCH WORKING IS DEVOID OF MERITS AND DESERVES TO BE QUASHED IN LIMINE. THIS VIEW FINDS SUPPORT FROM NUMBER OF JUDICIAL CITATIONS AS WELL WHICH WOULD BE MENTIONED IN THE DETAILED WRITTEN SUBMISSION IN DUE COURSE OF PROCEEDINGS. 29 6.2 DURING THE YEAR UNDER REFERENCE, THE ASSESSEE H AS SOLD ONE PROPERTY NAMELY 417A- GANESH NAGAR. THE ASSESSEE HAS SHOWN T HE SALE PROCEEDS AT RS. 10.00 LACS. ACCORDING TO THE AO, THE ACTUAL SAL ES CONSIDERATION IS RS. 13.00 LACS. THE AO HAS REFERRED TO SEIZED PAPER NO. 23 TO 25 OF ANNEXURE- A-25. THE ASSESSEE STATED THAT SEIZED PAPERS ARE ES TIMATED AS DUMP PAPER. ACCORDING TO THE AO, THE PAPER CONTAINS FIGURES WHI CH REPRESENTED THE SALE CONSIDERATION RECEIVED ON SALE OF PARTICULAR PROPER TY. HENCE, A SUM OF RS. 3.00 LACS WAS ADDED TO THE INCOME OF THE ASSESSEE. 6.3 BEFORE THE LD. CIT(A) , THE ASSESSEE HAS FURNIS HED THE SUBMISSIONS WHICH HAVE BEEN CONSIDERED BY THE LD. CIT(A) WHILE PASSING THE APPELLATE ORDER FOR THE ASSESSMENT YEAR 2005-06. FOLLOWING TH E FINDING RECORDED IN THE APPELLATE ORDER FOR THE ASSESSMENT YEAR 2005-06, TH E LD. CIT(A) UPHELD THE ADDITION OF RS. 3.00 LACS. 6.4 BEFORE US, THE LD. AR HAS FILED THE WRITTEN SUB MISSIONS. THE GENERAL WRITTEN SUBMISSIONS HAVE BEEN CONSIDERED WHILE DISP OSING OFF THE APPEAL FOR THE ASSESSMENT YEAR 2008-09. HENCE, THOSE WRITTEN S UBMISSIONS ARE NOT REPRODUCED. HOWEVER, THE WRITTEN SUBMISSIONS GIVEN FOR THE RELEVANT PROPERTY ARE AS UNDER:- 30 (II) NOW COMING TO THE CORRECTNESS OF THE CHART AS DRAWN BY THE LD. AO AT PAGE NO. 12 OF THE ASSESSMENT ORDER, YOUR HONORS WOULD NOTE THAT THE PROPERTIES FOR WHICH ADDITION OF RS.3,00000/- WAS MADE IS SHOWN AT S.NO .19 AS 417, GANESH NAGAR. ON CAREFUL STUDY OF THE JOTTINGS ON THESE PAPERS, Y OUR HONORS WOULD NOTE THAT THERE IS NO MENTION OF ANY SUCH PROPERTY I.E. PLOTS NO. 417, GANESH NAGAR IN SUCH JOTTINGS. THIS FACT IS EVIDENT FROM THE COPY OF THE SAID PAPER AS LYING IN THE PAPER BOOK. IN ABSENCE OF ANY SPECIFIC/AND CATEGORICAL M ENTION OF ANY PROPERTY IN THE JOTTINGS, YOUR HONORS WOULD AGREE THAT NO VALID ADD ITION CAN BE MADE. MORE-OVER IT WOULD BE WORTH MENTIONING THAT IN THE JOTTINGS A S RELIED UPON FOR MAKING THE ALLEGED ADDITION, THERE IS MENTION OF PROPERTY GANESH NAGAR VISTAR- 13X 5 & GANESH COLONY- 18X3. APPARENTLY, SUCH NARRATION DOES NOT CONVEY ANY MEANING AND DOES NOT TALLY WITH THE PROPERTY TAKEN BY THE AO I.E. 417, GANESH NAGAR. THE DIGITS OF 13, 5, 18, & 3 ARE ALSO AMBIGUOUS AS THE APPELLANT NEITHER OWNED SO MANY PLOTS UNDER SUCH SCHEME, NOR THERE AP PEARED ANY RELEVANCE WITH THE SALE PRICE OF ANY OF SUCH PLOT. THUS THE NARRAT ION AS APPEARING ON SUCH DEAF AND DUMB PAPER AS HAD BEEN RELIED UPON BY THE AUTHO RITIES BELOW ARE AMBIGUOUS AND CONVEY NO EXACT MEANING OF THE TRANSACTION. THU S IN THE GIVEN CIRCUMSTANCES, THE SAID JOTTINGS CAN SAFELY BE TAKEN A DEAF AND DU MB AS CONTENDED BY THE APPELLANT. IN FACT THE SO CALLED PLOT (FOR WHICH THE AO HAD M ADE THE ADDITION) WAS PURCHASED IN JUNE, 2006 FOR RS. 5,00,000/- AND SOLD IN JAN., 2007 FOR RS. 10,00,000/- AFTER CONSTRUCTION . HOWEVER, WHILE MAKING THE ADDITION, THE LD. AO DID NOT TAKE NOTE OF ALL THESE FACTS REGARDING DATE OF PURCHASE AND THE CONSTRUCTION WORKS CARRIED OUT ON THE SAID PLOT. HE HAD STRAIGHT AWAY PROCEEDED TO CALCULATE THE SALE CONSIDERATION ON THE BASIS OF AMBIGUOUS JO TTINGS AS POINTED OUT ABOVE. THUS SUCH WORKING OF THE ADDITION IS APPARENTLY AND PATENTLY INCORRECT. 6.5 THE LD. AR FURTHER SUBMITTED THAT IN CASE THE A DDITION IS MADE UNDER THE HEAD CONSTRUCTION EXPENSES AND THE SUPPRESSED SALES ARE CONSIDERED THEN THE N.P. RATE WILL COME TO 24.63% AND IT IS NEXT IM POSSIBLE TO ACHIEVE N.P. RATE 24.63% ON THE DEALINGS IN THE REAL ESTATE BUSI NESS. 6.6 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ERS OF THE AUTHORITIES BELOW AND HE HAS ALSO RELIED UPON THE WRITTEN SUBMI SSIONS WHICH HAVE BEEN GIVEN BY HIM WHILE ARGUING THE APPEAL FOR THE ASSES SMENT YEAR 2008-09. 31 6.7 WE HAVE HEARD BOTH THE PARTIES. WE HAVE PERUSED PAGE NO. 23 AND 25 OF ANNEXURE- A-25. THERE IS NO MENTION OF PROPERTY OF GANESH NAGAR. THERE IS MENTION OF GANESH NAGAR VISTAR AND THE FIGURES MENTIONED ARE 3 X 5. THE WORD SOLD IS ALSO NOT MENTIONED. SIMILARLY, THERE IS MENTION OF GANESH COLONY AND FIGURES MENTIONED AGAINST GANESH COLONY ARE 18 X 3. THE WORD SOLD IS ALSO NOT MENTIONED. THUS THE FIGURE OF 1 3 TAKEN BY THE AO IS NOT ASCERTAINABLE FROM SEIZED PAPER NO. 23 AND 25 OF AN NEXURE- A-25. HENCE THE ADDITION OF RS. 3.00 LACS IS DELETED. 7.1 GROUND NO. 6 OF THE ASSESSEE IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. AO. HAD LEGALLY AND FACTUALLY ERRED I N MAKING ADDITION OF RS.1,67,61,125/-OUT OF TOTAL ADDITION OF RS. 2,49,31,125/- AS MADE BY THE AO ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN THE PROPERTIES. THE LD. CIT (A) HAD CONFIRMED THESE ADDITIONS MADE BY AO MAINLY ON THE BASIS OF INVALID CONFESSIONAL STATEMENT AS RECORDED AT THE TIME OF SEARCH OPERATIONS AND CONFIRMED ADDITIONS OF RS.1,67,61,125/- WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE IN RIGHT PERSPECTIVE. THE ADDITIONS SO CONFIRMED ARE BAD IN LAW AND DESERVE TO BE DELETED. 7.2 THE REVENUE IN GROUND NO.5 IS AGGRIEVED AGAINST DELETION OF ADDITION OF RS. 66.20 LACS AS AGAINST ADDITION MADE BY THE A O AT RS. 2,49,31,125/-. 7.3 THE AO HAS MADE ADDITION ON ACCOUNT OF UNDISCLO SED INVESTMENT IN VARIOUS PROPERTIES. THE AO IN HIS ORDER HAS MENTION ED THE ADDITION MADE ON 32 ACCOUNT OF EACH PROPERTY AND THEREFORE, IT WILL BE USEFUL TO REPRODUCE THE ADDITION AS MADE BY THE AO IN RESPECT OF DIFFERENT PROPERTIES. INVESTMENT D-69, TARA NAGAR 7.4 AS PER PAGE 17 OF ANNEXURE- A-2, IT IS MENTIONE D THAT THE AMOUNT OF RS. 22.40 LACS HAS BEEN GIVEN FOR SELLING HIS RIGHT IN PROPERTY NO. D-69, TARA NAGAR BY SHRI MADAN CHAND WHILE AS PER SEIZED DOCUM ENT NO. 106 TO 116, THIS PLOT HAS BEEN SOLD BY SHRI TIKAM CHAND KHANDEL WAL FOR RS. 4.40 LACS. THUS THE AMOUNT OF RS. 18.00 LACS HAS BEEN GIVEN OU R OF UNDISCLOSED STOCK FOR INVESTMENT IN ACQUISITION OF PROPERTY NAMELY D- 69, TARA NAGAR. THE ASSESSEE SUBMITTED THE CASH FLOW STATEMENT AND ACCO RDING TO THE AO, SUCH CASH FLOW STATEMENT IS UNVERIFIABLE PURCHASES AND U NRELIABLE AS NO SUPPORTING EVIDENCE IN SUPPORT OF THE CASH WITHDRAW N WAS SUBMITTED. THE ASSESSEE HAS FAILED TO FILE ANY SATISFACTORY EVIDEN CE FOR MAKING INVESTMENT IN THE ACQUISITION OF THE PROPERTY AND HENCE THE SUM OF RS. 18.00 LACS WAS ADDED TO THE INCOME OF THE ASSESSEE. INVESTMENT IN 30, KALYAN PURI KALWAR ROAD 7.5 AS PER ANNEXURE- A-1, PAGE 121 TO 128, THERE IS COPY OF SALE DATED 3- 11-2006 FOR PLOT NO 31, KALYANPURI SOLD BY SHRI KES AR SINGH TO SHRI SHANKAR KHANDELWAL FOR RS. 5.00 LACS. PAGE NO 142 TO 149 SH OWED THAT THIS PLOT IS SOLD BY SHRI GOPAL SAINI TO THE ASSESSEE FOR RS. 40 .00 LACS. ACCORDING TO THE 33 AO, THE CONSIDERATION OF THE PLOT IS AT RS. 40.00 L ACS AND THE ASSESSEE HAS PAID RS. 35.00 LACS OUT OF UNACCOUNTED SOURCES FOR ACQUISITION OF THE PROPERTY. HENCE A SUM OF RS. 35.00 LACS WAS ADDED T O THE INCOME. INVESTMENT IN PLOT NO,. 31,KALYANPURI 7.6 THERE IS SALE DEED DATED 3 RD NOV. 2006 AT PAGE NO. 121 TO 128 OF ANNEXURE- A-1 AND AS PER THIS SALE DEED, THE PLOTS HAVE BEEN SOLD BY SHRI KESAR SINGH TO THE ASSESSEE FOR RS. 5.00 LACS. PAGE NO. 153 TO 160 OF THE SEIZED DOCUMENTS CONTAIN THE SALE AGREEMENT DATED 3 1-08-07 IN RESPECT OF PLOT NO 31 OF KALYANPURI AND AS PER THIS AGREEMENT, THE PLOT WAS SOLD BY SHRI GOPAL SAINI TO THE ASSESSEE FOR RS. 40.00 LACS. THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE SOURCE OF FUNDS FOR ACQUISITION OF PROPERTY AND ACCORDINGLY A SUM OF RS. S35.00 LACS WAS ADDED TO T HE INCOME OF THE ASSESSEE. INVESTMENT IN FLAT NO. 505, HARI KRIPA 7.7 PAGE NO 41 TO 50 OF ANNEXURE- A-11 SHOWS THE PU RCHASE OF FLAT NO. 505, HARI KRIPA COMPLEX. THE FLAT WAS PURCHASED IN THE BENAMI NAME OF SHRI SUSHIL JHALANI ON 7-08-06. THE ASSESSEE HAS FA ILED TO SATISFACTORILY EXPLAIN THE SOURCE OF FUNDS FOR INVESTMENT IN THE S AID FLAT AND THEREFORE, A SUM OF RS. 14.00 LACS WAS ADDED TO THE INCOME OF TH E ASSESSEE ON ACCOUNT OF PURCHASE OF FLAT IN THE BENAMI NAME OF SHRI SUSHIL JHALANI. 34 INVESTMENT IN 92, RAGHUNATHPURI, KALWAR 7.8 THE ASSESSEE HAS SHOWN TO HAVE SIGNED THE AGREE MENT FOR PURCHASE OF 92, RAGHUNATHPURI, KALWAR ROAD FROM SHRI RAKESH GUP TA FOR AN AMOUNT OF RS. 18,28,125/-. THE ASSESSEE ADMITTED THAT THIS PR OPERTY IS IN THE BENAMI NAME OF SHRI RAKESH GUPTA. ACCORDING TO THE AO, CAS H FLOW STATEMENT FILED BY THE ASSESSEE IS NOT RELIABLE AND THEREFORE, A SU M OF RS. 18,28,125/- WAS ADDED TO THE INCOME OF THE ASSESSEE BY THE AO. INVESTMENT IN PLOT NO. 97, MANSAROVAR, KALWAR ROAD 7.9 IN THE STATEMENT RECORDED AT THE TIME OF SEARCH , THE ASSESSEE IN RESPONSE TO Q.NO. 26 STATED THAT HE HAS MADE UNDISC LOSED INVESTMENT IN THE TRANSACTION OF ACQUIRING PROPERTY AT 97, MANSAROVAR , KALWAR ROAD. IN THE STATEMENT, THE ASSESSEE STATED THAT THE PROPERTY WA S PURCHASED FOR RS. 33,48,315/- AND THE AGREEMENT FOR PURCHASE OF THIS PROPERTY IS AVAILABLE IN THE SEIZED DOCUMENT. IN THE SALE DEED, THE PURCHASE CONSIDERATION HAS BEEN SHOWN AT RS. 6.25 LACS. THE ASSESSEE THEREFORE, SUR RENDERED A SUM OF RS. 27.23 LACS AS UNDISCLOSED INCOME IN RESPECT OF INVE STMENT IN PROPERTY AT MANSARAVAR. THE PROPERTY HAS BEEN REGISTERED ON 4 TH NOV. 2006 IN THE NAME OF M/S. GUMAN FURNITURE AND SERVICES (P) LTD.. THE SALE AGREEMENT AT PAGES 1 TO 4 OF ANNEXURE- A-6 SHOWS THE AGREEMENT FOR PUR CHASE OF PROPERTY FROM SMT. TRIVENI DEVI AND SHRI SURENDERA KUMAR KHANDELW AL FOR A 35 CONSIDERATION OF RS. 31,48,315/- IN SEPT 2006. BEFO RE THE AO, THE ASSESSEE SUBMITTED THE CASH FLOW STATEMENT BUT SUCH CASH FLO W STATEMENT WAS NOT ACCEPTED BY THE AO. THE ASSESSEE IN HIS STATEMENT U /S 132(4) ADMITTED THAT UNACCOUNTED CONSTRUCTION OF RS. 15.00 LACS HAS ALSO BEEN MADE IN THREE HOUSES AT PLOT NO. 97, MANSAROVAR COLONY. THE AO AC CORDINGLY ADDED A SUM OF RS. 42.33 LACS TO THE INCOME OF THE ASSESSEE. INVESTMENT IN 27, KRISHNA NAGAR 7.10 DURING THE COURSE OF SEARCH, THE ASSESSEE WAS SHOWN ANNEXURE- A-6 IN WHICH DOCUMENT RELATING TO THE PURCHASE OF THE P ROPERTY OF 27, KRISHNA NAGAR WERE AVAILABLE. THE ASSESSEE ADMITTED THAT HE HAS PURCHASED THE PROPERTY FOR RS. 32.00 LACS WHILE CONSIDERATION OF ONLY RS. 6.70 LACS HAS BEEN SHOWN IN THE SALE DEED. THE SALE AGREEMENT AND THE SALE DEED ARE AVAILABLE IN ANNEXURE- A-6. THE ASSESSEE ACCORDINGL Y SURRENDERED A SUM OF RS. 25.30 LACS AS UNDISCLOSED INVESTMENT IN THIS PR OPERTY. 7.11 DURING THE COURSE OF SEARCH PROCEEDINGS, IT WA S STATED THAT PROPERTY HAS BEEN SHOWN TO HAVE PURCHASED FOR RS. 32.00 LACS IN THE BOOKS OF ACCOUNT. THE ASSESSEE PAID A SUM OF RS. 25.30 LACS IN CASH OUT OF WITHDRAWAL FROM THE BANK ACCOUNT. A SUM OF RS. 23.70 LACS WAS PAID OUT OF WITHDRAWAL FROM THE BANK ACCOUNT AND THE BALANCE HAS BEEN SHOW N AFTER THE CASH FLOW 36 STATEMENT. IN THE ASSESSMENT ORDER, THE AO HAS REFE RRED TO CHEQUE NO. DATE OF CHEQUE AND NAME OF THE BANK IN RESPECT OF WITHDRAWA LS OF RS. 23.70 LACS. 7.12 ACCORDING TO THE AO, THE HAS MADE AGREEMENT FO R PURCHASE OF PROPERTY AT 27 KRISHNA NAGAR FROM SMT. VINITA DEVI FOR SALE CONSIDERATINN OF RS. 32.00 LACS IN JULY, 2006. THE PROPERTY WAS R EGISTERED ON 2508-06 IN THE NAME OF SHANKAR LAL KHANDELWAL I.E. THE ASSESSE E. THE ASSESSEE HAS FAILD TO PRODUCE THE CAPITAL ACCOUNT/ DRAWING ACCOUNT TO PROVE THE SOURCE OF FUNDS. HENCE, A SUM OF RS. 2530 LACS WAS ADDED TO THE INCO ME OF THE ASSESSEE. INVESTMENT IN D-252, TARA NAGAR 7.13 DURING THE COURSE OF SEARCH, THE ASSESSEE WAS SHOWN ANNEXURE- A-5 WHICH CONTAINS THE DOCUMENTS IN RESPECT OF PURCHASE OF SIX PLOTS THE ASSESSEE IN HIS STATEMENT ADMITTED THAT FIVE PLOTS HAVE BEEN PURCHASED IN THE NAME OF FAMILY MEMBERS OF THE ASSESSEE AND THE SIXT H PLOT WAS PURCHASED IN THE NAME OF SHRI DILIP KUMAWAT AND THIS PROPERTY AL SO BELONGED TO THE ASSESSEE. HENCE, THE INVESTMENT IN RESPECT OF PLOT IN THE NAME OF SHRI DILIP KUMAWAT WAS SURRENDERED BY THE ASSESSEE AS UNDISCLO SED INCOME TO THE EXTENT OF RS. 18.50 LACS. 7.14 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSEE STATED THAT THE ASSESSEE WAS OPERATING BANK ACCOUNT IN THE NAME OF SOME INDIVIDUALS WHO WERE HIS BENAMI. THE ASSESSEE FILED THE CASH FL OW STATEMENT IN RESPECT 37 OF SUCH BENAMI NAMES AND STATED THAT THE AMOUNTS ST AND EXPLAINED. THE AO WAS NOT SATISFIED WITH THE CASH FLOW STATEMENT AND HENCE A SUM OF RS. 18.50 LACS WAS ADDED TO THE INCOME OF THE ASSESSEE. INVESTMENT IN PLOT NO. 61 AND 64 MANSAROVAR 7.15 DURING THE COURSE OF SEARCH, THE ASSESSEE WAS SHOWN ANNEXURE- A-16 WHICH CONTAINS THE DOCUMENTS IN RESPECT OF PURCHASE OF THE PLOTS IN PLOTS IN TARA NAGAR D. PLOT NO. 245 AND 246 WERE PURCHASED F OR RS. 23.34 LACS PER PLOT WHILE PLOT NO. 61 AND 64 WERE PURCHASE FOR RS. 62.00 LACS. THE DOCUMENTS CONTAINED IN ANNEXURE- A-16 RELATE TO JDA CONVERSION FILE. THE ASSESSEE SURRENDERED RS. 37.00 LACS ON ACCOUNT OF U NDISCLOSED INVESTMENT IN PLOT NO. 61 AND 64, MANSAROVAR. 7.16 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, I T WAS STATED THAT THE PLOTS WERE PURCHASED IN THE NAME OF M/S. GUMAN KHAN DELWAL AND SHRI TIKAM KHANDELWAL. BEFORE THE AO, THE ASSESSEE FILED THE CASH FLOW STATEMENT BUT SUCH CASH FLOW STATEMENT WAS NOT ACCE PTED BY THE AO. THE AO ADDED A SUM OF RS. 37.00 LACS AS UNDISCLOSED INV ESTMENT IN THE PLOTS. INVESTMENT IN PLOT N. 25 INDIRA PURI, JHOTWARA AND PLOT NO.4 SAHKAR NAGAR, JHOTWARA 7.17 THESE TWO PLOTS WERE PURCHASED IN THE NAME OF SHRI DILIP KUMAWAT AND SHRI RAKESH GUPTA RESPECTIVELY. IN THE STATEMEN T RECORDED DURING THE 38 COURSE OF SEARCH, IT WAS STATED THAT THESE PROPERTI ES BELONGED TO THE ASSESSEE BUT WERE PURCHASED IN THE BENAMI NAMES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE STATED THAT THE ASSESSEE WAS OPERATING THE BANK ACCOUNT IN THE NAME OF BENAMI PERSONS AND CASH FLOW STATEMENT OF THESE BENAMI PERSNS WERE FILED. HOWEVER, SUCH CASH FLOW S TATEMENTS WERE NOT ACCEPTED BY THE AO. THE AO ACCORDINGLY MADE THE ADD ITION OF RS. 6.00 LACS. THUS THE AO MADE THE ADDITION OF RS. 2,29,31,125/- IN RESPECT OF DIFFERENT PROPERTIES. 7.18 BEFORE THE LD. CIT(A), THE ASSESSEE MADE THE F OLLOWING SUBMISSIONS 8.2 SUBMISSION OF ASSESSEE: IS AS FOLLOWS:- 1) ADDITION OF RS. 18,00,000/- MADE ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN PLOT NO D-69 THE ASSESSEE HAS FILED FOLLOWING DOCUMENTS IN PAPER BOOK IN SUPPORT OF HIS CONTENTION THAT NO DISCLOSED INVESTMENT IN THE PLOT WAS MADE BY HIM. REGARDING INVESTMENT IN PLOT NO D-69 TARA NAGAR A. COPY OF PLOT PURCHASE A/C (D-69 TARA NAGAR) IN T HE BOOKS OF TIKAM KHANDELWAL 135 135 B. COPY OF SEIZED PAGE 17 136 136 C. COPY OF SEIZED PAGE 65-69 OF ANNEXURE A-2 EXTINGUISHMENT DEED EXECUTED BY SMT SANTOSH DEVI & OTHERS IN FAVOUR OF MAGAN CHAND 137 141 D. COPY OF SEIZED PAGE 105-116 OF ANNEXURE A-2 REGISTERED SALE DEED EXECUTED BY LEGAL HEIRS OF LA TE SHRI MAGAN CHAND IN FAVOUR OF TIKAM KHANDELWAL 142 153 E. COPY OF UCO BANK LOAN ACCOUNT IN THE BOOKS OF 15 4 155 39 TIKAM KHANDELWAL F. COPY OF CERTIFICATE ISSUED BY UCO BANK CERTIFYIN G THAT THE PROPERTY D-69 TARA NAGAR IS UNDER ITS MORTGAGE AND COPY OF LOAN STATEMENT - FILED AS ADDITIONAL EVIDENCE U/R 46A BEFORE THE CIT(A) 156 157 THE ASSESSING OFFICER FAILED TO APPRECIATE THE FA CTS THAT THE INVESTMENT IN THIS PLOT WAS MADE BY SHRI TIKAM KHANDELWAL AND NOT BY THE ASSESSEE, THEREFORE NO ADDITIONS IS CALL ED FOR IN THE HANDS OF THE ASSESSEE. FURTHER, THE SEIZED PAPER 17 IS DEAF AND DUMP PAP ER. THE NAME OF BUYER OF THE PLOT, DATE, TERMS AND CONDITIO N OF THE SALE HAS NOT BEEN SPECIFIED ON THIS PAGE. 2) ADDITION OF RS. 35,00,000/- MADE ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN PLOT NO 30, KALYANPURI, K ALWAR ROAD, JAIPUR THE ASSESSEE HAS FILED FOLLOWING DOCUMENTS IN PAPER BOOK IN SUPPORT OF HIS CONTENTION THAT NO DIS CLOSED INVESTMENT IN THE PLOT WAS MADE BY HIM. REGARDING INVESTMENT IN PLOT NO 30 KALYANPURI A. COPY OF PLOT PURCHASE A/C (30- KALYAN PURI ) IN THE BOOKS OF ASSESSEE 158 158 B. COPY OF SEIZED PAGE 5-8 OF ANNEXURE A-1 AGREEMENT TO SALE DATED 24/09/2006 EXECUTED BY MOHAN SINGH IN FAVOUR OF SHANKER KHANDELWAL 159 162 C. COPY OF SEIZED PAGE 114-121 OF ANNEXURE A-1 REGISTERED SALE DEED DATED 04/11/2006 EXECUTED BY MOHAN SINGH IN FAVOUR OF SHANKER KHANDELWAL 163 170 D. COPY OF SEIZED PAGE 142-149 OF ANNEXURE A-1 AGREEMENT TO SALE DATED 31/10/2007 FOR THE SAME PLOT EXECUTED BY GOPAL SAINI IN FAVOUR OF SHANKER KHANDELWAL 171 178 I) THE ASSESSEE PURCHASED THIS PLOT FROM SHRI MOHA N SINGH VIDE SALE AGREEMENT DATED 24.09.2006 FOR RS. 7,29,000/- (COPY OF 40 AGREEMENT AT PAGE NO. 159 TO 162 OF PAPER BOOK) AN D THE SAME REGISTERED IN REGISTRAR OFFICE IN THE NAME OF ASSES SEE VIDE SALES DEED DATED 04.11.2006 (COPY OF REGISTRY AT PAGE 163 TO 170 OF PAPER BOOK). THE ASSESSEE INCURRED EXPENSES OF RS. 45,20 0/- ON REGISTRATION OF PLOT. THE TOTAL INVESTMENT IN THIS PLOT BY ASSESSEE WAS RS.7,29,000/-+45,200/-= 7,74,200/- AND THE DUL Y SHOWN IN BOOKS OF ACCOUNTS OF ASSESSEE (PAPER BOOK PAGE NO. 158). II) THE ADDITION OF RS. 35,00,000/- WAS MADE BY AO ON THE BASIS OF SEIZED AGREEMENT DATED 31.08.2007 (PAPER BOOK PA GE 171 TO 178) BETWEEN ASSESSEE AND SHRI GOPAL SAINI FOR SALES OF THIS PLOT TO ASSESSEE FOR RS. 40,00,000/-. THE AO FAILED TO APPRECIATE THE FACTS THAT THE ASSESSEE WAS ALREADY OWNER OF THIS PLOT AN D THE SAME WAS PURCHASED BY ASSESSEE MUCH BEFORE TO EXECUTION OF T HIS AGREEMENT. THE AO HAS HELD THAT SHRI GOPAL SAINI IS BENAMIDAR OF THE ASSESSEE, THEREFORE, HOW A PERSON CAN PURCHASE A PL OT FROM HIMSELF. AS ON THE DATE OF EXECUTION OF THIS AGREEMENT THE A SSESSEE WAS OWNER OF THIS PLOT AND HOW A PERSON CAN BUY HIS OWN PLOT. THE AO MADE THE ADDITION ON THE BASIS OF AGREEMENT WHIC H DO NOT HAVE ANY LEGAL VALIDITY BECAUSE ON THE DATE OF EXECUTION OF AGREEMENT THE ASSESSEE WAS OWNER OF PLOT NOT SHRI GOPAL SAINI. III) THIS WAS A FALSE AGREEMENT WHICH WAS MADE BY ASSESSEE TO SUBMIT IN BANK FOR OBTAINING THE BANK FINANCE AND FOR THIS PURPOSE THE VALUE OF PROPERTY WAS ARTIFICIALLY ENH ANCED. IV) IN CASE OF DOUBT REGARDING CONTENTS AND VALIDI TY OF AGREEMENT DATED 31.08.2007 THE ASSESSING OFFICER COULD MAKE THE INQUIRY FROM ACTUAL SELLER OF THIS PLOT AND FROM SHRI GOPAL SAI NI BUT INSTEAD OF THAT THE ASSESSING OFFICE MADE THE ADDITION IN HANDS OF THE ASSESSEE. 3) ADDITION OF RS. 35,00,000/- MADE ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN PLOT NO 31, KALYANPURI, K ALWAR ROAD, JAIPUR THE ASSESSEE HAS FILED FOLLOWING DOCUMENTS IN PAPER BOOK IN SUPPORT OF HIS CONTENTION THAT NO DISCLOSED INVESTMENT IN T HE PLOT WAS MADE BY HIM. 41 REGARDING INVESTMENT IN PLOT NO 31 KALYANPURI A. COPY OF PLOT PURCHASE A/C (31- KALYAN PURI ) AND ACCOUNT OF KESAR SINGH IN THE BOOKS OF ASSESSEE 179 180 B. COPY OF SEIZED PAGE 1-4 OF ANNEXURE A-1 AGREEMEN T TO SALE DATED 24/09/2006 EXECUTED BY KESAR SINGH IN FAVOUR OF SHANKER KHANDELWAL 181 184 C. COPY OF SEIZED PAGE 122-128 OF ANNEXURE A-1 REGI STERED SALE DEED DATED 03/11/2006 EXECUTED BY KESAR SINGH IN FAVOUR OF SHANKER KHANDELWAL 185 191 D. COPY OF SEIZED PAGE 153-160 OF ANNEXURE A-1 AGRE EMENT TO SALE DATED 31/08/2007 FOR THE SAME PLOT EXECUTED BY GOPAL SAINI IN FAVOUR OF SHANKER KHANDELWAL 192 199 I) THE ASSESSEE PURCHASED THIS PLOT FROM SHRI KESA R SINGH VIDE SALE AGREEMENT DATED 24.09.2006 FOR RS. 8,58,600/- (COPY OF AGREEMENT AT PAGE NO. 181 TO 184 OF PAPER BOOK) AN D THE SAME REGISTERED IN REGISTRAR OFFICE IN THE NAME OF ASSE SSEE VIDE SALES DEED DATED 03.11.2006 (COPY OF REGISTRY AT PAGE 18 5 TO 191 OF PAPER BOOK). THE ASSESSEE INCURRED EXPENSES OF RS. 45,20 0/- ON REGISTRATION OF PLOT. THE TOTAL INVESTMENT IN THIS PLOT BY ASSESSEE WAS RS.8,58,600/-+45,200/-= 9,03,800/- AND THE DUL Y SHOWN IN BOOKS OF ACCOUNTS OF ASSESSEE (PAPER BOOK PAGE NO. 179). II) THE ADDITION OF RS. 35,00,000/- WAS MADE BY AO ON THE BASIS OF SEIZED AGREEMENT DATED 31.08.2007 (PAPER BOOK PA GE 192 TO 199) BETWEEN ASSESSEE AND SHRI GOPAL SAINI FOR SALES OF THIS PLOT TO ASSESSEE FOR RS. 40,00,000/-. THE AO FAILED TO APP RECIATE THE FACTS THAT THE ASSESSEE WAS ALREADY OWNER OF THIS PLOT A ND THE SAME WAS PURCHASED BY ASSESSEE MUCH BEFORE TO EXECUTION OF THIS AGREEMENT. AS ON THE DATE OF EXECUTION OF THIS AGREEMENT THE ASSESSEE WAS OWNER OF THIS PLOT AND HOW A PERSON CAN BUY HIS O WN PLOT. THE AO MADE THE ADDITION ON THE BASIS OF AGREEMENT WHICH DO NOT HAVE ANY LEGAL VALIDITY BECAUSE ON THE DATE OF EXECUTION OF AGREEMENT THE ASSESSEE WAS OWNER OF PLOT NOT SHRI G OPAL SAINI. III) THIS WAS A FALSE AGREEMENT WHICH WAS MADE BY ASSESSEE TO SUBMIT IN BANK FOR OBTAINING THE BANK FINANCE AND FOR THIS PURPOSE THE VALUE OF PROPERTY WAS ARTIFICIALLY ENH ANCED. IV) IN CASE OF DOUBT REGARDING CONTENTS AND VALIDI TY OF AGREEMENT DATED 31.08.2007 THE ASSESSING OFFICER COULD MAKE THE INQUIRY FROM 42 ACTUAL SELLER OF THIS PLOT AND FROM SHRI GOPAL SAI NI BUT INSTEAD OF THAT THE ASSESSING OFFICE MADE THE ADDITION IN HANDS OF THE ASSESSEE. 4) ADDITION OF RS. 14,00,000/- MADE ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN FLAT NO 505, HARI KRIPA THE ASSESSEE HAS FILED FOLLOWING DOCUMENTS IN PAPER BOOK IN SUPPORT OF HIS CONTENTION THAT NO DISCLOSED INVESTM ENT IN THE PLOT WAS MADE BY HIM. REGARDING INVESTMENT IN PLOT NO 505 HARI KRIPA FLAT A. COPY OF ACCOUNT OF SUSHIL JHALANI IN THE BOOKS O F ASSESSEE 200 200 B. COPY OF ASSESSEES ACCOUNT IN THE BOOKS OF GUMAN KHANDELWAL 201 201 C. COPY OF SEIZED PAGE 41-50 OF ANNEXURE A-11 REGISTERED SALE DEED DATED 07/08/2006 EXECUTED BY RAM KHATRI & OTHERS IN FAVOUR OF SUSHIL JHALANI 202 214 I) THE ASSESSEE PURCHASED A FLAT NO. 505, HARI KRIP A ON 07.08.2006 FOR RS. 14,00,000/- IN THE NAME OF SHRI RAKESH JHALANI . (I) SOURCE OF INVESTMENT:- THE PAYMENT FROM P URCHASES OF FLAT WAS MADE BY SMT. GUMAN KHANDELWAL ON 05.08.2006 AND T HE SAME WAS DEBITED BY HER TO THE ACCOUNT OF SHANKAR KHANDELWAL (COPY OF A/C AT PAGE 201 OF PAPER BOOK). (II) ACCOUNTING OF PURCHASES:- THE ASSESSEE RECORD ED THE PURCHASES OF THIS PLOT BY CREDITING THE ACCOUNT OF SHRI RAKESH JHALA NI AND DEBITING THE PLOT. COPY OF ACCOUNT OF SHRI RAKESH JHALANI IN BOOKS OF ACCOUNTS OF ASSESSEE IS AT PAGE NO. 200 OF PAPER BOOK. THE ASSESSEE DEBITED THE ACCOUNT OF SHRI SUSHIL JHALANI AND CREDITED THE ACCOUNT OF GUMAN KH ANDELWAL FOR THE PAYMENT RECEIVED BY SHRI SUSHIL JHALANI ON BEHALF O F ASSESSEE FROM SMT GUMAN KHANDELWAL. II) THE LD. AO MADE THE ADDITION ON THE BASIS OF SEIZED REGISTERED SALES DEED (PAPER BOOK PAGE 202 TO 214) WHICH WAS EXECUTED IN THE NAME OF SHRI RAKESH JHALANI. THE A O HELD THAT THE 43 ASSESSEE FAILED TO FILE SATISFACTORY EXPLANATION R EGARDING SOURCE OF INVESTMENT IN THIS FLAT WHILE THE PAYMENT AGAIN ST PURCHASES OF PLOT WAS MADE THROUGH ACCOUNT PAYEE CHEQUE AND THE PURCHASES WAS DULY RECORDED IN THE BOOKS OF ACCOUNTS OF ASSESSEE AND VERIFIABLE FROM TRADING ACCOUNT SUBMITTED BEFORE AO (PAPER BO OK PAGE 13). III) SINCE THE PURCHASES OF THIS FLAT WAS DULY RECO RDED IN BOOKS OF ACCOUNTS OF THE ASSESSEE AND THE AO FAILED TO PROP ERLY EXAMINE THE SOURCE OF INVESTMENT IN PLOT WHICH WAS DULY RE CORDED IN BOOKS OF ACCOUNTS OF THE ASSESSEE, THEREFORE THE A DDITION MADE BY AO IS UNWARRANTED AND DESERVE TO BE DELETED. 5) ADDITION OF RS. 18,28,125/- MADE ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN PLOT NO 92, RAGHUNATHPURI , KALWAR. THE ASSESSEE HAS FILED FOLLOWING DOCUMENTS IN PAPER BOOK IN SUPPORT OF HIS CONTENTION THAT NO DISCLOSED INVESTMENT IN THE PLOT WAS MADE BY HIM. REGARDING INVESTMENT IN PLOT NO 92 RAGUNATHPURI A. COPY OF PLOT PURCHASE A/C (92- RAGUNATH PURI ) A ND ACCOUNT OF RAKESH GUPTA S/O SHRI MADAN LAL BUMB IN THE BOOKS OF ASSESSEE AND COPY OF ACCOUNT OF RAKESH GUPTA IN THE BOOKS OF M/S GUMAN FURNITURE & SERVICE S PVT LTD 215 217 B. COPY OF SEIZED DOCUMENT PAGE 31-33 OF ANNEXURE A ---- AGREEMENT TO SALE EXECUTED BY RAKESH GUPTA IN FAVOU R OF SHANKER KHANDELWAL SHOWING THAT HE PURCHASED THE PLOT ON 9.10.86 WAS SOLD TO THE ASSESSEE FOR RS. 18,28,125/- 218 220 I) THE ASSESSEE PURCHASED A PLOT NO. 92, RAGHUNATHP URI, KALWAR ON 26.07.2006 FOR RS. 18,28,125/- IN THE NAME OF S HRI RAKESH GUPTA AND THE SAME IS DULY RECORDED IN BOOKS OF AC COUNTS OF ASSESSEE (PAGE 215 AND 216 OF PAPER BOOK). II) THE LD. AO MADE THE ADDITION ON THE GROUND THA T THE ASSESSEE PURCHASED THIS PROPERTY IN BENAMI NAME SHRI RAKESH GUPTA WHERE UNACCOUNTED CASH/CHEQUE HAS GIVEN TO REAL PERSON F ROM WHOM THIS PROPERTY PURCHASED IS BASED ON IMAGINATION AND WIT HOUT GOING INTO THE 44 REAL FACTS AND BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AND HIS FAMILY MEMBERS. THE SEIZED DOCUMENT (PB PAGE 219) SHOWS THE FOLLOW ING PAYMENTS:- (I) CASH RS. 5,00,000/- ON 26/07/2006 AT THE TIME OF AGREEMENT SOURCE:- OUT OF CASH BALANCE AVAILABLE WITH SHANKER KHANDELWAL, THE CASH BOOK HAS BEEN PRODUCED BEFOR E THE AO. (II) CHEQUE NO. 025255 DATED 13.09.2006 OF UBI R S. 6,00,000/- SOURCE:- THIS CHEQUE WAS GIVEN BY GUMAN FURNITURE & SERVICE LIMITED AND DULY RECORDED IN THE BOOKS OF ACCOUNT. (III) CHEQUE NO. 025256 DATED 16.09.2006 OF UBI RS. 1,00,000/- SOURCE:- THIS CHEQUE WAS GIVEN BY GUMAN FURNITURE & SERVICE LIMITED AND DULY RECORDED IN TH E BOOKS OF ACCOUNT. (III) CASH RS. 6,28,125/- ON 26/07/2006 AT THE TIME OF AGREEMENT (IV) SOURCE:- OUT OF CASH BALANCE AVAILABLE WITH SHANKER KHANDELWAL, THE CASH BOOK HAS BEEN PRODUCED BEFOR E THE AO. III) WITHOUT PREJUDICE TO ABOVE IF STILL IT IS PR ESUMED THAT THE CONTENTION OF THE AO ACCEPTABLE THAN FROM THE AGRE EMENT TO SALES EXECUTED BETWEEN ASSESSEE AND SHRI RAKESH GUPTA (PAPER BOOK PAGE 218 TO 220) IT IS CLEARLY MENTION ED IN THE SALES DEED THAT THIS PLOT WAS PURCHASED BY SHRI RAK ESH GUPTA ON 09.10.1986 AND THE SAME IS OUT OF PURVIEW OF PER IOD COVERED FOR ASSESSMENT U/S SECTION 153A. IV) IN VIEW OF ABOVE THE PRESUMPTION OF THE AO TH AT SHRI RAKESH GUPTA IS NOT REAL OWNER OF THIS PLOT IS WIT HOUT AND BASIS. THIS RAKESH GUPTA IS SOME OTHER PERSON. HE IS SON OF SHRI MADAN LAL BUMB AND RESIDING AT 1-KA-21 JAWAHA R NAGAR, JAIPUR WHEREAS THE BENAMI RAKESH GUPTA IS SON OF S HRI RAM 45 GOPAL GUPTA AND RESIDING AT 753 RADHA BALLABH MARG , NEW TRIPOLIYA GATE, SANGANER. THEREFORE, THE FINDINGS O F THE AO IS WRONG AND WITHOUT GOING INTO THE FACTS OF THE CASE. 6) AS REGARD THE ADDITION MADE BY THE AO IN RESPECT OF PROPERTIES MENTIONED AT S.NO. 5 TO 9 MERELY ON THE BASIS OF STATEMENT DURING THE COURSE OF SEARCH, WE SUBMIT TH AT THE ASSESSEE HAS FILED DETAILED SUBMISSION IN THIS REGA RD BEFORE THE AO AS UNDER A) ADDITION BASED MERELY ON THE BASIS OF STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF SEARCH:- DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, T HE ASSESSEE HAS SUBMITTED BEFORE THE LD AO THAT THE ST ATEMENTS BEFORE THE SEARCH WERE MADE UNDER HEAVY MENTAL PRES SURE AND THE SAME WERE RETRACTED IMMEDIATELY. THE SUBMISSION OF THE ASSESSEE BEFORE THE LD AO WAS AS UNDER:- THE QUERIES RAISED ARE REGARDING ADDITION TO BE M ADE ON THE BASIS OF THE STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF SEARCH. IN THIS CONNECTION BEFORE SUBMITT ING THE HEAD/ITEM WISE REPLY REGARDING ALLEGED UNDISCLOSED INCOME, THE ASSESSEE SUBMITS THE FOLLOWING FACTS FOR CONSIDERAT ION:- 1. . THAT THE ASSESSEE IS A CANCER PATIENT. 2. THERE WAS A FAMILY FUNCTION I.E. A BIRTH FUNCTION O F HIS NEPHEW ON 15.11. 2007, WHICH LASTED UP TO LATE NIGHT. 3. THE SEARCH WAS STARTED IN THE EARLY MORNING OF 16.1 1.2007 AND WENT TO CONTINUE CONTINUOUSLY TILL17.11.2007. IN VIEW OF THE ABOVE FACTS IT IS APPARENT THAT TH E ASSESSEE NEITHER PHYSICALLY NOR MENTALLY FIT TO UND ERSTAND AND REPLY THE VARIOUS QUESTIONS ASKED BY THE SEARCH PARTY UND ER DURESS, MENTAL PRESSURE AND TENSE ATMOSPHERE. THUS IT WOULD BE WRO NG AND BAD IN LAW TO RELY UPON THE SAID STATEMENT OF THE ASSESSEE RECORDED U/S 132(4) OF THE I.T. ACT, DURING THE COURSE OF SEARCH. IN TH IS CONNECTION THE ASSESSEE ALSO SUBMITS THAT BECAME TO KNOW ABOUT TOT AL UNDISCLOSED 46 INCOME FROM THE DAILY NEWSPAPERS AND AFTER GOING TH ROUGH THE NEWS IMMEDIATELY CONTACTED TO THE CONCERNED OFFICERS OF THE INVESTIGATION WING TO SUBMIT AND CLARIFY THAT NO SUCH HUGE AMOUNT OF DISCLOSURE WAS MADE BY ME. BUT NO FRUITFUL RESULTS WERE CAME O UT AND ACCORDINGLY THE ASSESSEE SENT A WRITTEN REQUEST THA T THE ABOVE SAID ALLEGED HUGE AMOUNT OF UNDISCLOSED INCOME NOT SURRE NDERED BY HIM. THEREAFTER REMINDER ON 20.11.2007 AND 21.11.2007 WA S ALSO SENT. PHOTOCOPY OF THE UPC ACKNOWLEDGMENT AND COPY OF LET TER IS ENCLOSED HEREWITH. FURTHER INCOME HAS BEEN GOT SURRENDERED W ITHOUT CONSIDERING THE BORROWINGS FROM VARIOUS BANKS AMOUN TING TO RS.1,586.91 LACS BY THE ASSESSEE, HIS BUSINESS CONC ERNS AND HIS FAMILY MEMBERS. THE CASH FLOW CHART HAS BEEN PREPARED AFTE R TAKING INTO ACCOUNT SAID PROCEEDINGS. THE SUBMISSIONS ARE VERIF IABLE FROM THE CASH FLOW CHART AND DOCUMENTARY EVIDENCE FILED. IN VIEW OF THE ABOVE FACTS AND SUBMISSION MADE THE ASSESSEE AGAIN SUBMIT S THAT THE ALLEGED DISCLOSURE MADE IN THE STATEMENT RECORDED U/S 132(4 ) OF I.T. ACT IS NOT A RELIABLE ONE IN THE EYES OF LAW AND NO ADVERSE IN FERENCE DESERVES TO BE DRAWN ON THE BASIS OF SAID STATEMENT. NOW THE ASSESSEE SUBMITS THE ITEM WISE/HEAD WISE FA CTS AND QUANTUM OF UNDISCLOSED INCOME AS FOLLOWS:- (I) ALLEGED SURRENDER OF RS. 42.23 LACS ON ACCOUN T OF ALLEGED UNDISCLOSED INVESTMENT IN PLOT NO. 97 AT MA NSAROVER THE SAID PLOT WAS PURCHASED FOR RS. 33.48 LACS . PA YMENT OF 6.25 LACS WAS MADE VIDE CHEQUE NO. 028153 & 028154 EACH FOR RS. 312500/- DRAWN ON UNION BANK OF INDIA CC ACCOUNT NO . 542505040000125 ON 3-11-2006 BY GUMAN FURNITURES & SERVICES PVT. LTD. REMAINING AMOUNT OF RS. 27.23 LACS WAS PA ID IN CASH OUT OF WITHDRAWAL FROM BANK ACCOUNT OF RS. 9.00 LACS AS PE R DETAIL GIVEN HEREUNDER AND BALANCE OUT OF CASH FLOW STATEMENT FI LED AS PER PARA NO. 1 OF THIS LETTER. DATE NAME OF BANK CHEQUE NO. AMOUNT 3-11-2006 CENTURION BANK OF PUNJAB LTD. 332408 50000/- 3-11-2006 SBBJ 343867 400000/- 3-11-2006 SBBJ 343868 100000/- 47 3-11-2006 ICICI BANK LTD. 388667 350000/- THE SUBMISSIONS ARE VERIFIABLE FROM THE CASH FLOW S TATEMENT, BANK STATEMENT FILED. CONSTRUCTION ON THE SAID PLOT WAS DONE DURING THE PERIOD NOV. 2006 TO MARCH 2007 AND TOTAL CONSTR UCTION COST WAS RS. 2099140/- (AND NOT RS. 15.00 LACS). A COPY OF C ONSTRUCTION ACCOUNT APPEARING IN THE AUDITED STATEMENTS OF ACCO UNT OF ABOVE SAID COMPANY FOR VERIFICATION OF SUBMISSION IS ENCLOSED HEREWITH. THUS THE SOURCE OF TOTAL INVESTMENT OF RS. 48.22 LA CS IN THE SAID PLOT IS COMPLETELY EXPLAINED/ VERIFIABLE FROM THE A UTHENTIC RECORD AND AS SUCH THERE WAS NO ALLEGED UNEXPLAINED INVESTMENT OF RS. 42.23 LACS IN THE SAID PLOT OF LAND AND CONSTRUCTION THEREON. (II) ALLEGED SURRENDER OF RS. 25.30 LACS ON ACCOUN T OF ALLEGED UNDISCLOSED INVESTMENT IN PLOT NO. 27 KRISHNA NAGAR THE SAID PLOT NO. 27 WAS PURCHASED FOR RS. 32 LACS AND PAYMENT OF 6.70 LACS WAS MADE VIDE CHEQUE NO. 025221 FOR RS . 4.00 LACS & CHEQUE NO. 025222 FOR 2.70 LACS ON 24-08-2006 WHICH WERE DRAWN ON UNION BANK OF INDIA CC A/C NO. 542505040000125 ON B EHALF OF ASSESSEE BY M/S GUMAN FURNITURES & SERVICES PVT. LT D. REMAINING AMOUNT OF RS. 25.30 LACS WAS PAID IN CASH OUT OF WI THDRAWALS OF RS. 24.70 LACS FROM BANK A/C AS PER DETAIL GIVEN HEREUN DER AND BALANCE OUT OF CASH FLOW STATEMENT PRODUCED BEFORE THE AO. DATE NAME OF BANK CHEQUE NO. AMOUNT 19-08-2006 ALLAHABAD BANK 180268 1000000/- 21-08-2006 ALLAHABAD BANK 180269 1300000/- 25-08-2006 CENTURION BANK OF PUNJAB LTD. 332402 700 00/- 25-08-2006 ALLAHABAD BANK 180270 100000/- THE SUBMISSIONS ARE VERIFIABLE FROM THE CASH FLOW S TATEMENT, BANK STATEMENT FILED BEFORE THE LD AO. THUS THE SOU RCE OF TOTAL INVESTMENT OF RS. 32.00 LACS IN THE SAID PLOT IS CO MPLETELY EXPLAINED /VERIFIABLE FROM THE VERIFIABLE FROM THE AUTHENTIC RECORD AND AS SUCH THERE WAS NO ALLEGED UNEXPLAINED INVESTMENT OF RS. 25.30 LACS IN THE SAID PLOT OF LAND. 48 (III) ALLEGED SURRENDER OF RS. 18.50 LACS ON A/C OF ALLEGED UNDISCLOSED INVESTMENT IN PLOT NO. D-252, TARA NAGA R PLOT NO. D-252, TARA NAGAR WAS PURCHASED ON 30-03-2 007 FOR RS. 18.50 LACS IN NAME OF SHRI DILIP KUMAWAT, AND T HE ENTIRE AMOUNT WAS PAID IN CASH OUT OF WITHDRAWALS FROM BANK A/C O F RS.18.50 LACS AS PER DETAIL GIVEN HEREUNDER:- DATE NAME OF BANK CHEQUE NO. AMOUNT 14-03-07 JAMMU & KASHMIR BANK LTD. 376291 250000/- 20-03-07 SBBJ 168667 500000/- 22-03-07 SBBJ 168668 400000/- 24-03-07 JAMMU & KASHMIR BANK LTD. 376294 500000/- 28-03-07 JAMMU & KASHMIR BANK LTD. 376296 100000/- 29-03-07 BANK OF BARODA 597464 100000/- THE SUBMISSIONS ARE VERIFIABLE FROM THE CASH FLOW S TATEMENT, BANK STATEMENT FILED BEFORE THE LD AO. THUS THE SOU RCE OF TOTAL INVESTMENT OF RS. 18.50 LACS IN THE SAID PLOT IS CO MPLETELY EXPLAINED/VERIFIABLE FROM THE AUTHENTIC RECORD AND AS SUCH THERE WAS NO ALLEGED UNEXPLAINED INVESTMENT OF RS. 18.50 LACS IN THE SAID PLOT OF LAND. (IV) ALLEGED SURRENDER OF RS. 37.00 LACS ON ACCOUN T OF ALLEGED UNDISCLOSED INVESTMENT IN PLOT NO. 61 & 64 MANSAROV AR COLONY . THE SAID PLOTS WERE PURCHASED FOR RS. 66,40,200/- ( AND NOT FOR RS. 62.00 LACS). THE SOURCE OF PAYMENT FOR PURCHASE S OF SAID PLOTS ARE AS UNDER:- PLOT NO. NAME OF OWNER PURCHASED FROM AMOUNT. SOURCE OF PAYMENT 61 GUMAN KHANDELWAL SMT. DARIYA KANWAR 22,45,200/- RS. 2,45,200/- 21.9.2006 CASH RS.10,00,000/- 22.9.2006 CHEQUE NO. 693983 UCO BANK SK RS. 10,00,000/- CH.NO.693987 UCO BANK-SK 64 TIKAM MOHAN SINGH RS.15,45,00 RS.10,00,000 29.9.2006 CH. 49 KHANDELWAL 0/- NO. 693984 UCO BANK-SK 4,00,000/- 26.10.2006 CH. NO.693986- UCO BANK-SK RS. 1,45,000/- CASH - REGISTRY- TK 28,50,000/- 1.11.2007-CASH-SK TOTAL 66,40,200 THE SUBMISSIONS ARE VERIFIABLE FROM THE CASH FLOW S TATEMENT AND BANK STATEMENTS FILED BEFORE THE AO. THUS THE SOURCES OF INVESTMENT OF RS. 66.40 LACS IN THE SAID PLOTS ARE COMPLETELY EXPLAINED/VERIFIABLE FROM AUTH ENTIC RECORD AND AS SUCH THERE WAS NO ALLEGED UNEXPLAINED INVESTMENT OF RS. 37.00 LACS IN THE SAID PLOTS OF LAND. (V) ALLEGED SURRENDER OF 6.00 LAC ON ACCOUNT OF AL LEGED INVESTMENT IN PLOT NO 25 INDRAPURI AND PLOT NO. 4 SAHKAR MARG REGARDING THE UNEXPLAINED INVESTMENT FOR PLOT NO 25 , INDRAPURI JHOTWARA PURCHASED IN NAME OF SHRE DILIP KUMAWAT AN D OF RS 2.00 LACS FOR PLOT PURCHASED IN NAME SHRI RAKESH GUPTA B ASED ON STATEMENT OF ASSESSEE RECORDED U/S 132(4) OF THE I.T. ACT 196 1, ASSESSEE SUBMITS THAT PAYMENT OF 2.00 LACS WAS MADE BY ASSESSEE FORM AVAILABLE BALANCE OF CASH AS PER CASH BOOK AND DULY APPEARING IN THE ACCOUNT OF THE ASSESSEE. THE SUBMISSIONS ARE VERIFIABLE FORM C ASH FLOW CHART. FURTHER PLOT NO.4 SAHKAR MARG WAS PURCHASED IN NAME OF SHRI RAKESH GUPTA FOR RS.651 LACS AND FOR WHICH PAYMENT WAS ALSO MADE BY ASSESSEE 7.19 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS REDUCED THE ADDITION TO RS. 1,67,61,125/- AFTER OBSERVING AS UNDER. 50 8. 3 I HAVE CONSIDERED THE SUBMISSION OF LD. A .R AND HAVE PERUSED THE MATERIAL ON RECORD. INDIVIDUAL ADD ITIONS ARE DISCUSSED HEREUNDER:- I) D-69, TARA NAGAR RS. 18 LAKHS:- THE COMMENTS OF THE A.O. ON SUBMISSION OF THE A.R ARE AS FOLLOWS:- I DO NOT AGREE WITH THE CONTENTION OF THE ASSESSEE. IT IS SUBMIT THAT ANNEXURE A-2 IS A FILE HAVING PAGES 1 TO 116 WHICH RELATES TO D-69 TARA NAGAR AND ALL DOC UMENTS RELATE TO PURCHASE OF D-69, TARA NAGAR ARE IN THIS FILE. ALL DOCUMENTS RELATING TO THIS PROPERTY AND THIS PAGE N O. 17 IS PART OF THE FILE AND SHRI MAGAN CHAND HAS SOLD HIS RIGHT IN D-69 TARA NAGAR FOR RS.22.40 LACS. IN THIS FILE, THUS IS TWO AGREEMENTS ONE INCOMPLETE WHICH HAS SHRI MAGAN CHAN D SELLING HIS RIGHTS IN D-69, TARA NAGAR FOR RS.22.40 LACS AND ANOTHER COMPLETE AGREEMENT (SALE DEED) WHICH HAS BE EN REGISTERED IS AMOUNT OF RS. 4,75,100/- REGARDED IN BOOKS OF ACCOUNTS. THIS REGISTERED DOCUMENT HAS ALSO SIGNATU RE OF SHRI MAGAN CHAND AND HIS LEGAL HEIRS. THE SIGNATURE OF M AGAN CHAND IS APPEARING IN BOTH THE DOCUMENTS FOUND FROM THE POSSESSION OF ASSESSEE. THUS SHRI MAGAM CHAND SELLI NG HIS RIGHTS IN D-69 TRANAGAR IS ACTUAL TRANSACTION AND A CTUAL CONSIDERATION IS RS.22.40 LACS WHILE REGISTERED DOC UMENTS BY SHRI MAGAN CHAND AT RS. 4,75,000/- IS AS PER BOOKS AND IS AT SUPPRESSED AMOUNT AND BALANCE OF RS.22.40-4.40=18 L AKHS HAS GIVEN IN CASH, WHICH IS UNDISCLOSED INVESTMENT. DET AIL OF PURCHASER IN THIS DOCUMENT DOES NOT INVALIDED THE I MPORTANCE OF THIS PAPER AS THE MODUS OPERANDI IN PURCHASE OF PRO PERTY IS THAT UNOFFICIAL AGREEMENT IS DONE WHICH SHOWS THE ACTUAL VALUE OF THE TRANSACTION AND OTHER WHICH AS ANOTHER SALE DEE D WHICH HAS A LOWER TRANSACTION VALUE WHICH IS TO BE REGISTERED . AS THE PAPER NO.17 HAS BEEN FOUND FROM THE POSSESSION OF THE ASS ESSEE, THE ONUS AND THUS THE CIRCUMSTANTIAL EVIDENCE AND SURRO UNDING POSSIBILITIES SHOWS THAT RS. 22.40 LACS IS THE ACTU AL TRANSACTION OF THE PROPERTY AND RS. 18 LACS HAS BEEN RIGHTLY AD DED. . ON GOING THROUGH THE ASSESSMENT ORDER AND ALSO FUR THER COMMENTS OF THE A.O. IN THE REMAND REPORT, I DECLIN E TO ACCEPT 51 THE ARGUMENT OF THE A.R THAT PAGE 17 OF ANN. A-2 IS DEAF AND DUMB PAPER. THE IMPUGNED PAGE NO. 17 SPEAKS ABOUT S ELLING RIGHT IN PLOT NO. D-69 TARA NAGAR FOR RS. 22.40 LAK HS AND THIS PAGE HAS BEEN SIGNED BY SH. MAGAN CHAND. MOREOVER, THIS PARTICULAR PAGE NO. 17 IS PART OF COMPLETE FILE MAR KED AS ANN. A-2 HAVING 1 TO 116 PAGES AND ALL THESE DOCUMENTS I N THE FILE RELATE TO PLOT NO. D-69, TARA NAGAR. ON ANOTHER PAG E, THE REGISTERED SALE DEED SHOWING APPARENT SALE VALUE OF RS. 4.40 LAKHS AT WHICH SH. MAGAN CHAND HAS SOLD HIS RIGHT, IS APPEARING. THUS, IT IS EVIDENT THAT THIS PLOT HAS B EEN PURCHASED BY THE APPELLANT ACTUALLY FOR RS. 22.40 LAKHS AND S HOWN IN THE BOOKS OF ACCOUNT AT RS. 4.40 LAKHS AND RS. 18 LAKHS HAS BEEN INVESTED OUT OF BOOKS. ACCORDINGLY THE A.O. WAS JUS TIFIED IN MAKING ADDITION OF RS. 18 LAKHS. II) 30 & 31, KALYANPURI RS. 35 LAKHS + RS. 35 LAKHS :- THE COMMENTS OF A.O. IS AS FOLLOWS:- I DO NOT AGREE WITH THE CONTENTION OF THE ASSESS EE AS MODUS OPERANDI ADOPTED BY THE ASSESSEE IS THAT T HE REAL VALUE OF TRANSACTION OF PROPERTY IS NOT SHOWN AND IS SUPP RESSED WHICH IS TO BE REGISTERED. ACTUALLY IT IS PURCHASED IN HI GHER AND MAJOR AMOUNT OF WHICH IS PAID IN CASH WHICH IS NOT REFLEC TED AND FURTHER IT IS SOLD TO BENAMI NAME AT ACTUAL TRANSAC TION AND THE CASH COMPONENT IS ALSO REFLECTED IN THIS AGREEMENT. THE BANK CANNOT GIVE LOAN WITHOUT VERIFYING THE ACTUAL MARKE T PRICE PREVAILING IN THE LOCALITY. DURING THE COURSE OF SE ARCH OPERATION, AS BOTH THE SALE DEED HAS BEEN FOUND IN THE POSSESS ION OF THE ASSESSEE WHICH CANNOT BE DENIED. DURING THE COURSE OF SEARCH OPERATION AS PER ANNEXURE A-1 PAGES 122 TO 128 AND 153 TO 160, TWO SETS OF AGREEMENT WERE FOUND AND SEIZED FR OM THE POSSESSION OF THE ASSESSEE, COPY OF SALE OF AGREEME NT REGISTERED BY SHRI KESAR SINGH WITH SHANKAR LAL KHANDELWAL FOR RS.5 LAKHS AND ANOTHER AGREEMENT BETWEEN GOPAL SAINI POW ER OF ATTORNEY ORDER OF KEAR SINGH HAVING MADE SALE AGREE MENT FOR RS.40 LAKHS, OUT OF WHICH 5 LAKHS HAS BEEN PAID IN CASH AND 35 LAKHS HAVE TO PAID. THUS RS.35 LAKHS HAS BEEN PAID IN EXCESS ORDER AND ABOVE AS ON MONEY FOR PURCHASE OF PROPERT Y FROM KESAR SINGH. THE RS.40 LAKHS IS THE MARKET PRICE / REAL 52 CONSIDERATION WHICH HAS BEEN PAID AND RS. 5 LAKHS I S THE REGISTERED AMOUNT WITH SUB- REGISTRAR. ON CONSIDERATION OF ALL THE MATERIAL AVAILABLE ON RECORD, IT IS EVIDENT FROM SEIZED PAGES 171 TO 17 8 AND 192 TO 199 OF ANN. A-1 THAT THESE ARE AGREEMENT TO PURCHAS E OF THESE TWO PLOTS BY THE APPELLANT FROM SH. GOPAL SAINI. TH E ARGUMENT OF THE A.R IS NOT HAVING FORCE IN VIEW OF THE SPECI FIC AGREEMENT FOR PURCHASE OF THESE TWO PLOTS FOUND AND SEIZED DU RING THE SEARCH SHOWING VALUE OF PURCHASE OF EACH PLOT AT RS . 40 LAKHS. IF THESE AGREEMENTS ARE CONSIDERED TO BE NOT RELIAB LE AS CONTENDED BY THE APPELLANT, IT WILL BE MAKING A MOC KERY OF ENTIRE LEGAL SYSTEM AND THE INDIAN EVIDENCE ACT. IN VIEW OF THE OVERALL FACTS AND CIRCUMSTANCES, THE ADDITION OF RS . 35 LAKH EACH IN RESPECT OF TWO PLOTS SO MADE BY THE A.O. IS CONF IRMED. III) FLAT NO. 505, HARI KRIPA:- RS. 14 LAKHS :- THE A.O. HAS FOUND THE INVESTMENT TO BE VERIFIABLE AFTE R GOING THROUGH THE SUBMISSIONS MADE BY THE A.R. AND THE SU PPORTING DOCUMENT. THE COMMENT OF THE A.O IS AS FOLLOWS:- I HAVE GONE THOROUGH THE SUBMISSION MADE BY THE A/R. OF THE ASSESSEE DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN DETAIL OF CHEQUE ISSUED FOR PURCHASE OF PROPERTY IN THE NAME OF THE SUSHIL JHAL ANI AND FURTHER PAYMENT HAS BEEN MADE FROM THE ACCOUNT OF SMT. GUMAN KHANDELWAL WHO IS THE WIFE OF THE ASSESS EE. ASSESSEE HAS GIVEN SUBMISSION REGARDING EVIDENCE/REGARDING HOME LOAN TAKEN BY HIS WIFE SMT. GUMAN KHANDELWAL FROM HDFC BANK OF BARODA WHICH HAS GIVEN BY A/C. PAYEE CHEQUE. DURING ASSESSMENT PROCEEDING ASSESSEE HAD FAILED TO GIVE ANY EVIDENCE REGARDING SOURCE OF INVESTMENT . IN VIEW OF THE SUBMISSION OF THE APPELLANT AND COM MENTS OF A.O. NOT OBJECTING ON THE MERITS OF THE SUBMISSI ON, THE ADDITION OF RS. 14 LAKHS IS HEREBY DELETED. IV) 92, RAGHUNATHPURI RS. 18,28,125/-: 53 ON VERIFICATION, A.O. FOUND THAT RS. 7,00,000/- A RE EXPLAINED AS THESE WERE PAID THROUGH CHEQUE AND BAL ANCE ADDITION OF RS. 11,28,125/- LAKH MAY BE UPHELD, AS THESE PAYMENTS WERE MADE IN CASH. THE UNDERSIGNED HAS ALS O VERIFIED. ACCORDINGLY, ADDITION OF RS 7 LAKH IS DEL ETED AND RS. 11,28,125/- IS CONFIRMED AS THE EXPLANATION GIVEN BY THE A.R IS FOUND TO BE HAVING NO FORCE. V) 97, MANSAROVAR RS.42,23,000/-:- COMMENTS OF THE A.O. ARE AS BELOW:- I DO NOT AGREE WITH CONTENTION OF THE ASSESSEE. DURING THE SEARCH OPERATION AS PER ANNEXURE A-4 PAG E 1 TO 8, IKRARNAMA (AGREEMENT) IS FOR RS.33,48,315/- WHILE P AYMENT OF RS.6,25,000/- WAS BY CHEQUE . THE CASH COMPONENT WA S RS.27.23 LAKHS. ASSESSEE IN HIS STATEMENT U/S. 132( 4) HAD SURRENDERED AN AMOUNT OF RS.27.23 LAKHS AND FURTHER UNDISCLOSED INVESTMENT IN CONSTRUCTION OF 3 HOUSES AS 97A, 97B, 97C ON THE PLOTS AND SURRENDERED 15 LAKHS ON I T. THUS AMOUNT OF RS.42.23 LAKHS WAS SURRENDERED. DURING TH E APPELLATE STAGE, ASSESSEE HAS GIVEN EVIDENCE AS PER PB DT.21. 01.10 OF CASH WITHDRAWAL OF CASH OF RS.9,00,000/- ON 03.11.06 FRO M (CENTRAL BANK RS.50,000/-, SBBJ- CHEQUES RS.3,43,867/-, RS.4,00,000/- AND RS.1,00,000/- AND ICICI- RS. 3,8 8,607 AND 3,59,000/-). THUS BALANCE OF RS.27,23,000/--9,00,00 0/-)= RS.18,23,000/- REMAINED UNEXPLAINED AND FURTHER CAS H FLOW SUBMITTED DURING ASSESSMENT PROCEEDINGS REMAINED UNVERIFIABLE. FURTHER ASSESSEE HAS MADE CONSTRUCTIO N EXPENSES OF RS.20,99,190/- OF 3 HOUSES AS 97A, 97B, 97C ON A CCOUNT OF GUMAN FURNITURE & SERVICES PVT. LTD. THE ASSESSEE H AS FAILED TO GIVEN EVIDENCE. THUS ADDITION MADE MAY BE SUSTAI NED ON ABOVE FACTS AND CIRCUMSTANCES. THE ARGUMENT OF THE A.R. HAS BEEN CONSIDERED BY ME WITH REFERENCE TO MATERIAL AVAILABLE ON RECORD A ND THE ASSESSMENT ORDER AND THE REMAND REPORT OF THE A.O. IT IS EVIDENT THAT DURING THE COURSE OF SEARCH, APPELLANT HIMSELF HAS ADMITTED THAT PLOT NO. 97, MANSAROVAR WAS PURCHASED FOR RS. 33,48,315/- THE AGREEMENT OF WHICH IS AVAILABLE ON PAGE 1 TO 8 OF ANN. A-4. 54 OUT OF WHICH RS. 27.23 LAKHS WAS GIVEN IN CASH OVER AND ABOVE THE CHEQUE PAYMENT OF RS. 6.25 LAKHS. APPELLANT FUR THER ADMITTED TO HAVE INVESTED RS. 15 LAKHS IN THE CONST RUCTION OF THREE DWELLING UNITS OVER THE PLOT. IN VIEW OF THE SPECIFIC STATEMENT, IT CANNOT BE SAID THAT SAME WAS GIVEN UN DER DURESS. THE CLAIM OF THE APPELLANT THAT THE ENTIRE AMOUNT I S RECORDED IN THE BOOKS IS NOT SUPPORTED BY PROPER EVIDENCE. MORE OVER, THE A.O. HAS ALREADY RIGHTLY REJECTED THE CASH FLOW STA TEMENT. HOWEVER, IN VIEW OF THE DIRECT EVIDENCE OF WITHDRAW AL OF CASH OF RS. 9 LAKHS FROM BANK ACCOUNTS, IT WILL BE APPRO PRIATE AND JUST TO GIVE RELIEF OF RS. 9 LAKHS OUT OF TOTAL ADD ITION OF RS. 42,23,000/-, AS ALSO MENTIONED BY THE A.O. IN THE REMAND REPORT AND BALANCE RS. 33,23,000/- IS HEREBY CONFIR MED. VI) 27, KRISHNA NAGAR- RS 25,30,000/- THE A.OS COMMENTS ARE AS BELOW: I DO NOT AGREE WITH CONTENTION OF THE ASSESSE A/R. SUBMISSION AS IT HAS BEEN ADMITTED DUR ING SEARCH OPERATION IN STATEMENT U/S. 132(4) WHICH WAS GIVEN VOLUNTARILY WITHOUT ANY COERCION, ASSESSEE HA S GIVEN ANY OTHER FACT TO PROVE HIS POINT. THE CASH COMPONENT OF THE TRANSACTION IN THE PROPERTY HAS BE EN ADMITTED. CASH OF RS. 25,30,000/- HAS BEEN PAID AS PER ANNEXURE A-6 PAGE 1 TO 7 ASSESSEE MADE IKRARNAMA FO R PURCHASE OF THIS PROPERTY FOR RS.32,00,000/- IN JUL Y, 2006. WHILE THIS PROPERTY HAS BEEN REGISTERED ON 25.08.2006 AT SALE PRICE OF RS. 6,70,000/- IN THE N AME OF SH. SHANKAR KHANDELWAL. DURING THE APPELLATE STAGE ASSESSEE HAS GIVEN EVIDENCE OF WITHDRAWAL OF RS. 24 LAKHS FROM ALLAHABAD BANK WHILE AS PER SKETCHY UNRELIABLE CASH EXTRACT SUBMITTED DURING ASSESSMENT PROCEEDING NO SUCH UTILIZATION OF CASH FUND HAS REP ORTED. IT IS ONLY AFTER THOUGHT. HAD IT BEEN ACCOUNTED MON EY ASSESSEE WOULD HAVE REGISTERED AT HIGHER PRICE RATH ER THAN REGISTERING AT RS.6.70 LAKHS WITH THE SUB-REGISTRAR . FURTHER THE ASSESSEE HAS GIVEN STATEMENT U/S. 132(4 ) STATING THAT UNACCOUNTED CASH OF RS. 25.30 LACS HAS BEEN 55 MADE AND TO BRING ON RECORD EVIDENCE/DOCUMENTS TO PROVE CASH PAYMENT FOR THE PURCHASE OF PROPERTY. I HAVE CONSIDERED THE SUBMISSIONS OF THE A.R, ASSESSMENT ORDER AND REMAND REPORT OF THE A.O. THE APPELLANT HAS SUBMITTED THAT THOUGH THE CASH WAS PAID OVER AN D ABOVE THE CHEQUE PAYMENT BUT THE CASH PAYMENT IS RECORDED IN THE BOOKS OF ACCOUNT. EVEN THOUGH THE ARGUMENT OF THE A.O. IS CONSIDERED CORRECT THAT THE CASH FLOW GIVEN BY THE A.R IS NOT RELIABLE, HOWEVER IN THE INSTANT CASE, IT IS SEEN THAT THE RE GISTRY OF THE DOCUMENT HAS BEEN DONE ON 25.8.06 AND APPELLANT HAS PAID CASH RS. 25.30 LAKHS ON 25.8.06 AND THERE ARE DIRECT CAS H WITHDRAWAL FROM THE BANK ACCOUNT OF THE APPELLANT FROM 19.8.06 TO 28.8.06 TOTALING TO RS. 24.70 LAKHS, THE EVIDENCIARY VALUE OF WHICH CANNOT BE BRUSHED ASIDE. ARGUMENT OF A.O IN THIS RE GARD IS NOT ACCEPTED. ACCORDINGLY, THE AMOUNT OF DIRECT CASH WI THDRAWAL OF RS. 24.70 LAKH IS ACCEPTED AND CONSIDERED AS EXPLAI NED WHEREAS BALANCE AMOUNT OF RS. 60,000/- IS HELD TO BE UNEXPL AINED CASH INVESTED IN PURCHASE OF PLOT NO. 27 KRISHNA NAGAR. VII) PLOT NO. D-252 TARA NAGAR - THE COMMENTS OF A.O. ARE AS UNDER:- I DO NOT AGREE WITH CONTENTION OF THE ASSESSEE A/R. SUBMISSION AS IT HAS BEEN ADMITTED DU RING SEARCH OPERATION IN STATEMENT U/S. 132(4) WHICH WAS GIVEN VOLUNTARILY WITHOUT ANY COERCION, ASSESSEE HA S GIVEN ANY OTHER FACT TO PROVE HIS POINT. THE CASH COMPONENT OF THE TRANSACTION IN THE PROPERTY HAS BE EN ADMITTED. CASH OF RS. 18,50,000/- HAS BEEN PAID AS PER ANNEXURE A-5. AS ALREADY STATED ASSESSEE SUBMITTED CASH FLOW STATEMENT WHICH IS UNVERIFIABLE/UNRELIABLE AS NO SUPPORTING EVIDENCE IN SUPPORT OF CASH ACCOUNT WAS SUBMITTED AND ASSESSEE HAD FAILED TO PRODUCED CAPIT AL ACCOUNT/DRAWING ACCOUNT TO PROVE THE SOURCES OF FUN DS. FURTHER THE ASSESSEE HAS GIVEN STATEMENT U/S. 132(4 ) STATING THAT UNACCOUNTED CASH OF RS. 18.50 LACS HAS BEEN TO BRING ON RECORD EVIDENCE/DOCUMENTS TO PROVE CASH PAYMENT FOR THE PURCHASE OF PROPERTY. DURING THE APPELLATE PROCEEDING ASSESSEE HAS GIVEN DETAIL OF 56 WITHDRAWAL CASH AS PER PAPER BOOK DT. 21.01.2011 RS . 9 LAKHS HAS BEEN WITHDRAWN FROM SBBJ, RS.3.50 LAKHS H AS BEEN WITHDRAWN FROM JAMMU AND KASHMIR BANK AND FURTHER RS.1LAKH FROM BANK OF BARODA FROM DATE 14.03.2007 TO 29.03.2007 TOTALING RS.18.50 LAKHS WH ILE AS PER SKETCHY UNRELIABLE CASH EXTRACT SUBMITTED DU RING ASSESSMENT PROCEEDING NO SUCH UTILIZATION OF CASH F UND HAS REPORTED. IT IS ONLY AFTER THOUGHT. ON CAREFUL CONSIDERATION ON THE AVAILABLE MATERIA L ON RECORD, IT IS SEEN THAT, THE DIRECT WITHDRAWAL F ROM THE BANK SUPPORTING THE CASH PAYMENT FOR PURCHASE OF D-252 T ARA NAGAR PROPERTY HAS BEEN OBJECTED BY THE A.O. IN THE REMAN D REPORT ON THE GROUND THAT THESE ARE AFTER THOUGHT. A.O. HAS A LSO NOTED THAT APPELLANT FURNISHED SKETCHY, UNRELIABLE CASH EXTRAC T DURING THE ASSESSMENT PROCEEDINGS. FROM THE PERUSAL OF CASH EX TRACT BY THE UNDERSIGNED, IT IS SEEN BY THE UNDERSIGNED THAT PAY MENT OF RS. 18.50 LAKHS IN CASH HAS BEEN SHOWN/REFLECTED ON 30. 3.07 AND CONSIDERING THE IMMEDIATE WITHDRAWALS FROM THE VARI OUS BANK ACCOUNT OF THE APPELLANT FROM 14.3.07 TO 29.3.07 TO TALING RS. 18.5 LAKHS, WHICH HAS BEEN CLAIMED TO BE UTILIZED F OR PURCHASE OF AFORESAID PLOT, CANNOT BE BRUSHED ASIDE, EVEN IF THE CASH FLOW STATEMENT IS NOT ACCEPTED BY THE A.O.. IN VIEW OF T HE DIRECT EVIDENCE OF THE WITHDRAWAL OF THE CASH FROM BANK AC COUNT, IT WILL NOT BE JUSTIFIED TO SUSTAIN THE ADDITION OF RS . 18.50 LAKHS MADE BY THE A.O. AS UNEXPLAINED INVESTMENT IN D-252 TARA NAGAR PLOT. ACCORDINGLY ADDITION OF RS. 18.50 LAKH IS HEREBY DELETED. VIII) 61,64, MANSASROVAR COLONY- RS 37 LAKHS . THE COMMENTS OF A.O. ARE AS UNDER:- I DO NOT AGREE WITH CONTENTION OF THE ASSESSEE A/R . SUBMISSION AS IT HAS BEEN ADMITTED DURING SEARCH OP ERATION IN STATEMENT U/S. 132(4) WHICH WAS GIVEN VOLUNTARILY W ITHOUT ANY COERCION, ASSESSEE HAS GIVEN ANY OTHER FACT TO PROV E HIS POINT. THE CASH COMPONENT OF THE TRANSACTION IN THE PROPER TY HAS BEEN ADMITTED. DURING ASSESSMENT PROCEEDING THE ASSE SSEE HAS SUBMITTED THAT SAID PLOT 61 AND 64 WAS PURCHASED FO R RS. 66.40,200/- AND PAYMENT IS AS UNDER:- 57 1. SOURCE OF PAYMENT (61MANSAROVER)- CASH RS. 2,45,200 /- ON 21.09.2006, CHEQUE RS. 10,00,000/- ON 22.09.2006 AND 10,00,000/ - (UCO BANK) 2. SOURCE OF PAYMENT (64MANSAROVER)- CHEQUE RS. 10,00, 000/- ON 29.09.2006 AND 4,00,000/- ON 26.10.2006 (UCO BANK) AND CASH RS.28,50,000/- SHANKARLAL KHANDELWAL. DURING THE APPELLATE PROCEEDINGS ASSESSEE HAS GIV EN NO EVIDENCE REGARDING CASH PAYMENT OF RS.28.50 LAKHS O N 01.01.2007 WHICH HAS BEEN WITHDRAWN FROM SHANKAR KHANDELWAL, T HUS HAS FAILED TO GIVE ANY EVIDENCE REGARDING SOURCES OF FUND OF R S. 28.50 LAKHS AS UNDISCLOSED PAYMENT FOR PURCHASE OF PROPERTY ABOVE. THUS THE ADDITION MADE BY THE AO MAY BE SUSTAINED. AS PER AN NEXURE A-16 ASSESSEE HAS MADE IKRARNAMA OF PURCHASE OF PROPERTY FOR 61 AND 64, MANSAROVAR FROM SH. MOHAN SINGH SON OF BANE SINGH A T THE PURCHASE PRICE OF RS. 62 LAKHS WHILE AS PER REGISTERED DOCUM ENT IT WAS ONLY RS.25 LAKHS AND DURING SEARCH OPERATION THE ASSESSE E HAD SURRENDERED DIFFERENCE AMOUNT OF RS.37 LAKHS. THE ASSESSEE A/R. SUBMISSION BY PB DATED 21.01.2011 HAS ADMITTED THE FOLLOWING CASH PAYMENTS 01.01.2007 CASH RS.28,50,000/-, 05.02.2007 CASH RS. 1,45,000/- , 21.09.2006 CASH RS. 2,45,200/-. ASSESSEE HAS NOT BE EN ABLE TO EXPLAINED CASH PAYMENT OF RS. 28.50 LAKHS ON 01.01. 2007 AS NO EVIDENCE GIVEN DURING APPELLATE PROCEEDING. AS ALRE ADY STATED ASSESSEE SUBMITTED CASH FLOW STATEMENT WHICH IS UNV ERIFIABLE /UNRELIABLE AS NO SUPPORTING EVIDENCE IN SUPPORT OF CASH ACCOUNT WAS SUBMITTED, ASSESSEE HAS PREPARED BOOKS OF ACCOUNT A FTER THE SEARCH AND NO SUPPORTING VOUCHERS WERE PRODUCED FOR VERIFICATI ON DURING ASSESSMENT PROCEEDINGS AND ASSESSEE HAD FAILED TO P RODUCE CAPITAL ACCOUNT/DRAWING ACCOUNT TO PROVE THE SOURCES OF FUN DS. THUS EXPLANATION OF THE ASSESSEES A/R. IS NOT ACCEPTABL E AND ADDITION OF RS.28.50 LAKHS MAY BE UPHELD. IN VIEW OF THE MATERIAL AVAILABLE ON RECORD, AND THE COMMENT OF A.O, THE ADDITION OF RS. 28.50 LAKHS IS HEREBY CONFIRMED WHICH HAS BEEN PAID BY THE APPELLANT IN C ASH FOR WHICH NO PROPER EXPLANATION FOR THE SOURCE OF THE S AME HAS BEEN FILED AND BALANCE ADDITION OF RS 8.50 LAKHS IS DELETED. IX) 5 INDRAPURI & 4, SHANKAR NAGAR, RS. 6 LAKHS :- THE COMMENT OF THE A.O. ARE AS UNDER:- 58 I DO NOT AGREE WITH CONTENTION OF THE ASSESSE A/ R. SUBMISSION AS IT HAS BEEN ADMITTED DURING SEARCH OPERATION IN STATEMENT U/S. 132(4) WHICH WAS GIVEN VOLUNTARILY WITHOUT ANY COERCION, ASSESSEE HAS GIVE N ANY OTHER FACT TO PROVE HIS POINT. THE CASH COMPONENT O F THE TRANSACTION IN THE PROPERTY HAS BEEN ADMITTED. THE MODUS OPERANDI OF THE ASSESSEE WAS CLEARLY BROUGHT IN CAS E OF PROPERTY PLOT NO. 4, SHAKAR MARG IN WHICH THE PROPE RTY SELLER SMT. LAXMI DEVI HAS ADMITTED THAT UNACCOUNTE D CASH OF RS.4 LACS HAS BEEN MADE OVER AND ABOVE PAY MENT OF RS.6.50 LACS WHICH WAS PURCHASED IN NAME OF BENA MI NAME I.E SH. RAKESH GUPTA, THIS TALLIED WITH THE ST ATEMENT MADE BY SH. SHANKAR KHANDELWAL DURING STATEMENT TAK EN U/S. 132(4) DURING SEARCH PROCEEDING THUS ASSESSEE GROUND THAT STATEMENT WAS TAKEN UNDER DURESS AND ME NTAL TENSION IS TOTALLY WRONG AND FALSE IN VIEW OF THE FACTS MENTIONED IN THE ASSESSMENT ORDER AND FURTHER MENTIONED BY THE A.O. IN THE REMAND REP ORT, I DO NOT AGREE WITH THE CONTENTION OF THE A.R AND ADDITION OF RS. 6 LAKHS IS HEREBY CONFIRMED. 8.4 IN BRIEF, ADDITION OF RS. 1,67,61,125/- IS C ONFIRMED AND BALANCE RS. 81.70 LAKHS IS DELETED. 7.20 BEFORE US, THE LD. AR HAS FILED THE FOLLOWING SUBMISSIONS THE AO HAD DISCUSSED THIS ADDITION AT PAGES 12 TO 19 OF THE ASSESSMENT ORDER. THE AO HAD MADE THIS ADDITION ON ACCOUNT OF THE ALLEGED UN-DISCLOSED INVESTMENT IN R ESPECT OF THE FOLLOWING 10 PROPERTIES: S.NO. PARTICULARS OF PROPERTY UNDISCLOSED FATE I N INVESTMENT APPEAL TAKEN BY THE AO ----- ------------------------------- ----------- -------- ----------------------- 59 1. D-69, TARANAGAR RS.18,00,000/- SUSTAINED 2. 30, KALYANPURI RS.35,00,000/- -DO- 3. 31, KALYANPURI RS.35,00,000/- -DO- 4. 505, HARI KRIPA RS.14,00,000/- DELETED. 5. 92, RAGHUNATHPURI RS.18,28,125/- DELETED RS.7 LAC. 6. 97, MANSAROVAR COLONY. RS.42,23,000/- DELETED R S. 9 LAC. 7. 27, KRISHNA NAGAR. RS.25,30,000/- DELETED 24.7 LAC 8. D-252, TARA NAGAR RS.18,50,000/- DELETED. 9. 61 & 64, MANSAROVAR COLONY. RS. 37,00,000/- DE LETED 8.5 LAC 10. 25, INDRAPURI & 4 SAHKAR NR. RS. 6,00,000/- S USTAINED. ON READING OF THE RELEVANT PORTION OF THE ASSESSME NT ORDER, YOUR HONORS WOULD NOTE THAT WHILE MAKING SUCH ADDITIONS, THE AO DID NOT GIVE ANY OPPORTUNITY TO THE APPELLANT TO EXPLAIN THE ALL EGED INCRIMINATING PAPERS ON THE BASIS OF WHICH SUCH ADDITIONS WERE MADE. THU S FOR MAKING SUCH ADDITION, THE PRINCIPLES OF NATURAL JUSTICE AND EQU ITY WERE NOT FOLLOWED BY THE LD. AO RENDERING THE ENTIRE ADDITION SO MADE W ITHOUT ALLOWING OPPORTUNITY TO THE APPELLANT IS BAD IN LAW AND DESE RVES TO BE DELETED SUMMARILY. ON MERITS ALSO, SUCH ADDITIONS WERE TOT ALLY UNCALLED FOR AS DISCUSSED BELOW PROPERTY-WISE: (1) D-69, TARANAGAR: RS. 18 LAC: AT THE OUT-SET IT MAY BE POINTED OUT THAT THE PROPERTY UNDER CONSIDERATION WAS NOT PURCHASED BY THE APPELLANT . IN THE CIRCUMSTANCES, THERE IS NO QUESTION OF MAK ING ANY ADDITION IN THE CASE OF THE APPELLANT ON ACCOUN T OF SUCH ALLEGED UN-DISCLOSED INVESTMENT IN THE SAID PROPERTY. AS PE R COPY OF THE PURCHASE DEED LYING IN THE PB AT PAGE NO. 50 TO 61 THE SAID PROPERTY HAD BEEN PURCHASED BY SHRI TIKAM KHANDELWA L AND NOT BY THE APPELLANT. THUS THE ADDITION SO MADE DESERVE S TO BE DELETED ON THIS SOLE GROUND. FURTHER, WHILE CONFIRMING SUCH ADDITION, THE AUTHOR ITIES BELOW HAD OVER-LOOKED THIS VITAL FACT, AND MADE THIS ADDITION WITHOUT ANY VALID REASON. WHILE MAKING AND CONFIRMING THE ADDIT ION OF RS. 18 LAC ON ACCOUNT OF THE ALLEGED UN-EXPLAINED INVESTME NT IN THIS PROPERTY, THE LD. AO AND CIT (A) HAD HEAVILY RELIED UPON THE SO- CALLED INCRIMINATING PAPER LYING SEIZED AT S.NO.17 IN EX-A-2. (COPY LYING AT PAGE NO. 62 OF PB). DURING THE COURS E OF ASSESSMENT & APPEAL PROCEEDINGS, IT WAS MADE CLEAR TO THESE AU THORITIES THAT THE SAID PAPER WAS A DEAF & DUMB PAPER AND CONVEYED NO SENSE 60 AT ALL, AND THEREFORE IT SHOULD NOT BE RELIED UPON. HOWEVER, THEY WERE NOT WILLING TO ACCEPT SUCH CONTENTION AND PROC EEDED TO MAKE AND CONFIRM THE SAID ADDITION SOLELY ON THE BASIS OF SUCH PAPER ONLY. ON CLOSE SCRUTINY OF THE SAID PAPER, YOUR HON ORS WOULD NOTE THAT IT IS SIMPLY A ROUGH PAPER CONTAINING NO REQUIRED DETAILS TO MAKE ANY SENSE OR LEAD TO ANY DEFINITE OR SPECIFIC FINDINGS. EVEN THE NAME OF THE PARTY OR PERSON TO WHOM THE SAID PA PER RELATED IS NOT INDICATED THEREIN. M OST IMPORTANTLY, THE NAME OF THE APPELLANT IS NOT MENTIONED ANY-WHERE ON THE SAID PA PER. IN THE CIRCUMSTANCE, HOW THE AUTHORITIES BELOW COULD CONCL UDE THAT THIS PAPER RELATED TO THE APPELLANT ONLY . APPARENTLY SUCH FINDINGS ARE ILLOGICAL AND WITHOUT ANY BASIS. ON READING OF THE SAID PAPER, IT WOULD BE FURTHER NOTED THAT IT IS A FULLY TYPED PAPER EXCEPT THE RATE AND SALE CONSIDERATION IN FIGURES AS WELL AS IN WORDS I.E. RS.22,40,000/- @ 6400/- IN HAND MENTIONING SUCH VITAL FIGURES IN HAND IS VERY SUGGESTIVE AND PUTS HEAVY DENT ON THE AUTHENTICITY OF THE CONTENTS OF THE SAID PAPER. ALL THESE FACTS AND CIRCUMSTANCES GO TO PROVE THAT THE PAPER CONSID ERATION IS A DEAF AND DUMB PAPER AND LOGICAL CONCLUSION CAN BE D RAWN ON SUCH ROUGH PAPER AND NO VALID ADDITION CAN BE MADE ON TH E BASIS OF SUCH PAPER. BESIDES, AS PER SALE DEED LYING SEIZED IN THE SAID FILE COVER, THE PROPERTY UNDER CONSIDERATION HAD BEEN PURCHASED BY SHRI TIKAM KHANDELWAL FOR RS. 4,40,000/- (AS PER DLC RATES) AN D ADDITION IF ANY COULD BE MADE ONLY IN THE CASE OF TIKAM KHANDEL WAL ONLY. THIS FACT IS A DOCUMENTED FACT AND CAN NOT BE OVER-LOOKED. ON THE FACE OF SUCH DOCUMENTED FACT, NO VALID ADDITION IS CALLED FOR IN THE CASE OF THE APPELLANT . IN VIEW OF ABOVE FACTS, THE ADDITION SO MADE AND CO NFIRMED IS PATENTLY INCORRECT AND DESERVES TO BE DELETED SUMMA RILY. (2&3) 30 & 31, KALYANPURI: RS.35 LAC IN EACH CASE TOTAL ADDITION OF RS.70 LAC: WHILE MAKING AND CONFIRMING THE ABOVE ADDITION, THE AUTHORITIES BELOW HAD OVER-LOOKED VITAL AND DOCUMEN TED FACTS. IT IS A MATTER OF RECORD THAT THE PROPERTIES UNDER CONSIDERATION WERE PURCHASED BY THE APPELLANT FROM SVS. MOHAN SIN GH AND 61 KESAR SINGH FOR RS. 5 LAC EACH ON 4.11.2006 & 3.11.2006 RESPECTIVELY AS EVIDENT BY THE REGISTERED SALE DEEDS LYING SEIZED AND REFERRED TO BY THE AUTHORITIES BELOW. THEY HAD HOWEVER IGNORED SUCH DOCUMENTARY EVIDENCES & PROCEE DED TO MAKE ADDITION OF THE BASIS OF SO-CALLED SALE AGREEM ENT PURPORTED TO HAD BEEN ENTERED INTO BY ONE SHRI GOP AL SAINI WITH THE APPELLANT ON 31.8.2007 I.E. AFTER 10 MONTHS FROM THE DATE OF THE ACTUAL PURCHASE OF THESE PROPERTIES BY THE AP PELLANT THROUGH REGISTERED INSTRUMENT WITHOUT EXAMINING THE FACT THAT THE SAID PROPERTY STOOD ALREADY OWNED BY THE APPELLANT ONLY THERE WAS NO REASON FOR THE APPELLANT TO PURCHASE THE SAME PROPERTY THAT TOO FROM HIS OWN BE NAMI. ALL THESE FACTS AND CIRCUMSTANCES ABUNDANTLY REVEALED T HAT THE AGREEMENT TO SALE AS ENTERED ON 31.08.2007 BY SHRI GOPAL SAINI WAS MERELY A PAPER WORK TO OBSERVE THE FORMALITY FOR OBTAINING BANK LOAN ETC. HOWEVER, THE AUTHORITIES BELOW DID NOT APPRECIATE THESE FACTS IN RIGHT SPIRIT AND PROC EEDED TO MAKE SUCH ADDITIONS ON THE BASIS OF SUCH INVALID DOCUMEN TS AND OVER- LOOKING THE OTHER DOCUMENTARY EVIDENCE AS EXISTED A ND LYING SEIZED WITH THE DEPARTMENT. ACCORDINGLY, THE ADDITI ON MADE ON THE BASIS OF SUCH INVALID DOCUMENTS IS BAD IN LAW A ND DESERVES TO BE DELETED. (4) 92, RAGHUNATHPURI : ADDITION CONFIRMED FOR RS.11,28,125/- BY THE CIT(A) OUT OF TOTAL ADDITION OF RS.18,28,125/- MADE BY THE AO: HARI KRIPA- THIS ADDITION HAD BEEN CONFIRMED BY THE LD. CIT (A) WITH THE FOLLOWING REMARKS: ON VERIFICATION, AO FOUND THAT RS.7,00,000/- ARE EX PLAINED AS THESE WERE PAID THROUGH CHEQUE AND BALANCE ADDIT ION OF RS.11,28,125/- LAKH MAY BE UPHELD, AS THESE PAYMENT S WERE MADE IN CASH. THE UNDERSIGNED HAS ALSO VERIFIED. ACCORDINGLY, ADDITION OF RS. 7 LAKH IS DELETED AND RS.11,28,125/- IS CONFIRMED AS THE EXPLANATION GIVE N BY THE A.R. IS FOUND TO BE HAVING NO FORCE. FROM THE READING OF ABOVE FINDINGS, YOUR HONORS WOU LD APPRECIATE THAT THE LD. CIT (A) HAD NO VALID REASON TO REJECT THE CLAIM OF THE APPELLANT, PARTICULARLY WHEN THE RELEV ANT BOOKS (WHICH WERE GOT PREPARED AT THE INSTANCE OF THE DEP ARTMENT WITH THE HELP OF BANK STATEMENTS, SALE AND PURCHASE INST RUMENTS, AND 62 OTHER DOCUMENTARY DETAILS ETC AND WERE GOT AUDITED BY THE APPROVED CA) WERE PRODUCED BEFORE THEM SHOWING THER EIN SUCH CASH PAYMENT FOR THE PURCHASE OF SAID PROPERTY. HO WEVER, THEY WERE NOT WILLING TO ACCEPT SUCH EXPLANATION ON THE PLEA THAT THESE BOOKS WERE NOT RELIABLE VERIFIABLE. APPARENTL Y SUCH BOOKS COULD NOT BE REJECTED WITHOUT POINTING OUT ANY SPEC IFIC DEFICIENCY OR DEFECT AND ANY INSTANCE OF UN-VERIFIA BLE ENTRY ETC. THUS THE FINDINGS AS ARRIVED AT BY THE AUTHORITIES BELOW ON THE POINT ARE PATENTLY INCORRECT AND DESERVE TO BE QUAS HED AND ADDITION MADE ON THE BASIS OF SUCH ILLOGICAL FINDIN GS DESERVES TO BE DELETED. (5) 97, MANSAROVAR, KALWAR ROAD, RS.33,23,000/- CONFIRMED BY THE CIT (A) OUT OF TOTAL ADDITION OF RS.42,23,000/- MADE BY THE AO: THE AO HAD MADE THIS ADDITION ON THE BASIS OF THE CONFESSIONAL STATEMENT ONLY AS RECORDED DURING THE COURSE OF SEARCH OPERATION, IGNORING THE OTHER RELEVANT FAC TS AS EXPLAINED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PR OCEEDINGS THAT SUCH CONFESSIONAL STATEMENT CARRIED NO EVIDENT IARY VALUE AS THE SAME WAS DISPUTED IMMEDIATELY AFTER SEARCH OP ERATIONS FOR VARIOUS REASONS AS DISCUSSED IN THE FOREGONE PARAS. MORE-OVER THE ENTIRE INVESTMENT IN THE SAID PROPERTY WAS DULY ACCOUNTED FOR IN THE REGULAR BOOKS OF M/S GUMAN FURNITURE & S ERVICES PVT. LTD. JAIPUR WHICH WERE DULY AUDITED AND THE RETURN BASED ON SUCH AUDITED BOOKS STOOD ALREADY FILED PRI OR TO THE SEARCH OPERATIONS. IN SUPPORT OF SUCH CLAIM, THE RELEVANT EXTRACTS FROM THE BOOKS WERE ALSO SUBMITTED, BUT TH E SAME WERE BRUSHED ASIDE SUMMARILY WITHOUT ASSIGNING ANY REASO N. IN APPEAL ALSO, THE LEARNED CIT (A) HAD BEEN GUIDED BY THE REMAND REPORT AS SUBMITTED BY THE AO ON THE SUBJECT. HE HA D HOWEVER ALLOWED CREDIT OF RS. 9 LAC ON ACCOUNT OF THE PAYME NT MADE BY CHEQUE. THE EXPLANATION REGARDING THE BALANCE INVES TMENT OF RS. 33,23,000/- AS SHOWN IN THE BOOKS OF THE CO. AN D IN THE BOOKS OF THE APPELLANT WAS TURNED DOWN BY REJECTI NG THE BOOKS SO PRODUCED (AS PER DETAILS GIVEN IN THE WRITTEN SU BMISSION LYING IN PB 26-27) ON THE PLEA THAT THE AVAILABILI TY OF SUCH CASH FUNDS IN THE BOOKS OF THE CO. AND THE APPELLANT WAS NOT VERIFIABLE. HOWEVER THE AO HAD NOT REJECTED THE BOOKS IN THE 63 ASSESSMENT PROCEEDINGS OF THE COMPANY AND MADE ASSE SSMENT U/S 143(3) OF THE I.T. ACT. IN THE CASE OF APPELLAN T THE AUTHORITIES BELOW WERE NOT ACCEPTING THE ARGUMENT O F THE APPELLANT THAT THE SAID INVESTMENT HAS BEEN MADE BY THE COMPANY, BOOKS OF WHICH HAD BEEN DULY ACCEPTED. OBV IOUSLY THE FINDINGS SO ARRIVED AT WITHOUT POINTING OUT ANY SPECIFIC DEFECT OR DEFICIENCY, IS BAD IN LAW, THE ADDITION M ADE ON SUCH ILLOGICAL FINDINGS DESERVES TO BE DELETED. 6) 27, KRISHNA NAGAR: ADDITION OF RS.60,000/- CONFIRMED BY THE CIT (A) OUT OF TOTAL ADDITION OF RS.25,30,000/- MADE BY THE AO ON THIS ACCOUNT: THE AO HAD MADE THIS ADDITION ON THE BASIS OF CONFESSIONAL STA TEMENT WITHOUT BRINGING ANY CORROBORATIVE EVIDENCE ON RE CORD. IN THE REMAND REPORT ALSO, THE AO HAD MAINTAINED SAME PLEA IGNORING THE CASH BOOK AS PRODUCED DURING THE COURSE OF ASSE SSMENT PROCEEDINGS. . HOWEVER, THE CIT (A) ALLOWED RELIEF OF RS. 24,70,000/- ON THE BASIS OF THE SAID CASH BOOK HO LDING THEREIN (AT PAGE NO. 41 OF THE APPEAL ORDER) THAT THE AVAI LABILITY OF THE FUNDS TO THE EXTENT OF RS.24,70,000/- WAS PROVED A ND EVIDENT FROM THE BANK A/C. DURING THE RELEVANT PERIOD I.E 1 9.08.2006 TO 28.8.2006, THERE WERE WITHDRAWALS FROM THE BANK A/C FOR RS.24,70,000/- THUS THE INVESTMENT TO THE EXTENT OF 24,70,000/- WAS TAKEN AS SATISFACTORILY EXPLAINED, AND BALANCE AMOUNT OF RS. 60,000/- WAS CONFIRMED. FROM THE ABOVE DETAILS, YOUR HONORS WOULD APPRECIATE THAT THE LEARNED CIT (A) HA D IGNORED THE BASIC FACT THAT THE BALANCE AMOUNT OF RS.60,000 /- WAS ALSO AVAILABLE ON THE FATEFUL DATE IN THE SAID BOOKS ONL Y. SUCH BALANCE COULD NOT BE IGNORED ON THE PLEA THAT THE C ONTENTS OF THE SAID BOOKS WERE VERIFIABLE ONLY IN RESPECT OF BANK WITHDRAWALS ONLY AND REMAINING TRANSACTIONS AS RECORDED THEREIN WERE NOT VERIFIABLE. APPARENTLY SUCH FINDINGS WERE DEVOID OF MERITS, PARTICULARLY WHEN SUCH FUNDS RESULTED ON ACCOUNT OF THE SALE PROCEEDS OF THE PROPERTIES ONLY WHICH COULD NOT DIS PUTED. IN THE CIRCUMSTANCES, THE FINDINGS AS ARRIVED AT THE LD CI T (A) IN THIS REGARD IS FACTUALLY INCORRECT AND IS NOT MAINTAINAB LE. THUS THE ADDITION SO CONFIRMED IS BAD IN LAW AND DESERVES TO BE DELETED. 64 (7) 61, 64 MANSAROVAR COLONY: RS.28.50 CONFIRMED BY THE CIT (A)OUT OF TOTAL ADDITION OF RS.37,00,000/- MADE BY THE AO: THE AO HAD MADE THE ADDITION OF RS.37,00,000/- ON T HE BASIS OF CONFESSIONAL STATEMENT. IN THE APPEAL PROCEEDINGS A LSO HE HAD MAINTAINED THE SAME STAND. HOWEVER, THE LD. CIT (A) PROCEEDED TO VERIFY THE INVESTMENT WITH REFERENCE TO THE CASH BOOK AS PRODUCED BY THE APPELLANT DURING THE COURSE OF ASSE SSMENT PROCEEDINGS AND ALLOWED RELIEF OF RS.8.50 LAC AS CO NCLUDED BY HIM AT PAGE NO.43 OF THE APPEAL ORDER. THE LEARNED CIT (A) WAS OF THE VIEW THAT THE CASH PAYMENT OF RS.28.50 LAC SHOWN ON 01.01.2007 WAS NOT VERIFIABLE. ACCORDINGLY CONFIRMED THE ADDITION TO THIS EXTENT. IN THIS REGARD, IT MAY BE CLARIFIED THAT THE LD. CI T (A) HAD INCORRECTLY MENTIONED THE DATE OF PAYMENT OF RS.28.50 LAC ON 01.01.2007 WHEREAS THE SAID PAYMENT WAS SHOWN AND MADE ON 01.11.2007 AS MENTIONED IN THE WRITTEN SUBMISSIONS AT PAGE NO . 29-30. THUS THE LD. CIT (A) HAD CONFIRMED THIS ADD ITION UNDER SUCH WRONG IMPRESSION WHICH IS FACTUALLY INCORRECT AND DESERVES TO BE DELETED SUMMARILY. THE RELEVANT EXTR ACT SHOWING THEREIN SUCH PAYMENT ON 01.11.2007 IS SUBMITTED IN THE PB 63 FOR YOUR KIND PERUSAL AND RECORD. ( 8) 25, INDRAPURI & 4 SHANKAR NAGAR: ADDITION OF RS.6 LAC MADE AND CONFIRMED: THE AUTHORITIES BELOW HAD MADE AND CONFIRMED ADDITION ON ACCOUNT OF THE ALLEGED U N-RECORDED INVESTMENT IN THE AFORE-MENTIONED PROPERTIES ON THE BASIS OF THE CONFESSIONAL STATEMENT ONLY. THE AFORESAID PROPERT IES WERE PURCHASED IN THE NAME OF BENAMIDARS SVS. DILIP KUMA WAT AND RAKESH KUMAR GUPTA AND WERE DULY SHOWN IN THEIR BOO KS OF ACCOUNT. HOWEVER, THE AUTHORITIES BELOW DID NOT REL Y UPON SUCH CASH BOOKS AND TURNED DOWN THE EXPLANATION OF THE APPELLANT ON THE BASIS OF CONFESSIONAL STATEMENT ON LY. AS DISCUSSED IN THE FORE-GONE PARAS, THE CONFESSIONAL STATEMENT OF SHRI SHANKARLAL KHANDELWAL WAS NOT LEGALLY MAINTAIN ABLE AND CARRIED NO EVIDENTIARY VALUE IN ABSENCE OF ANY CORR OBORATIVE DOCUMENTARY EVIDENCES FOR THE DETAILED REASONS AS E NUMERATED HERE-IN-ABOVE. IN THE CIRCUMSTANCES, THE ADDITION S O MADE ON 65 THE BASIS OF SUCH INVALID CONFESSIONAL STATEMENT IS BAD IN LAW AND DESERVES TO BE DELETED. 7.21 ON THE OTHER HAND, THE LD. DR SUPPORTED THE OR DER OF THE LD. CIT(A) IN RESPECT OF THE ADDITIONS CONFIRMED BY HIM. THE LD. CIT(A) HAS DELETED THE PART ADDITION IN RESPECT OF CERTAIN PROPERTIES. THE LD. DR SUBMITTED THAT THE ASSESSEE HAS FAILED TO PRODUCE THE SUPPORTING VOUCH ERS OR DETAILS SO AS TO MAKE AVAILABLE VERIFICATION OF THE CASH FLOW STATEM ENT. HENCE THE ADDITIONS MADE BY THE AO ARE REQUIRED TO BE CONFIRMED. 7.22 WE HAVE HEARD BOTH THE PARTIES. WE WILL DISCUS S THE ISSUE OF ADDITION IN RESPECT OF EACH PROPERTY SEPARATELY. PLOT NO.D-69, TARA NAGAR 7.23 THE COPY OF PAGE NO. 17 OF ANNEXURE A-2 IS AVA ILABLE AT PAGE 62 OF THE PAPER BOOK. IT APPEARS IT IS ONLY ONE PAGE OF ANY SALE AGREEMENT. IT IS MENTIONED IN THIS PAGE THAT PLOT D-69, TARA NAGAR I S BEING PROPOSED TO BE SOLD AT RS. 6500/- PER SQ. YARD AND THE TOTAL CONSI DERATION IS RS. 22.40 LACS. ON THIS PAPER, THERE ARE SIGNATURE OF ONE SHRI BALB IR AS WITNESS. HOWEVER, THERE IS NO NAME OF SIGNATURE OF THE PERSON TO WHOM SUCH PROPERTY WAS PROPOSED TO BE SOLD AS PER THE AGREEMENT. IT IS MEN TIONED IN THIS PAPER THAT ADVANCE OF RS. 51,000/- HAS BEEN RECEIVED WHILE THE BALANCE WAS TO BE PAID WITHIN 21 DAYS FROM 29 TH AUG. 2006. IT APPEARS THAT SUCH AGREEMENT MIGHT HAVE BEEN MADE ON 29-08-06. IN THIS PAPER, IT IS ME NTIONED THAT PLOT WAS IN 66 THE NAME OF SMT. SURAJ DEVI WIFE OF SHRI MADAN CHAN D AND SMT. SURAJ DEVI HAS EXPIRED AND THEREFORE, THE OWNERSHIP VESTS IN S HRI MADAN CHAND. SHRI MADAN CHAND HAS EXPIRED ON 6-10-06. THE SALE DEED I N RESPECT OF D-69, TARA NAGAR IS AVAILABLE AT PAGEES 52 TO 62 OF THE P APER BOOK. THE SELLERS ARE (1) SHRI UMESH KUMAR IN HIS OWN CAPACITY AS WELL AS IN THE CAPACITY OF POWER OF ATTORNEY HOLDER OF KAVITA, D/O LATE SHRI M ADAN CHAND (2) SHRI SURENDER KUMAR, RAJESH KUMAR, CHANDERSHEKHAR, S/O L ATE SHRI MADAN CHAND (3) SMT. SANTOSH DEVI AND SMT.CHANDRAKANT D/O LATE SHRI MADAN CHAND AND THE PURCHASER IS SHRI TIKAM CHAND KHANDEL WAL. IN THIS SALE DEED, THE CONSIDERATION AS SHOWN IS AT RS. 4.40 LACS. IT IS TRUE THAT THE PAPERS FOUND DURING THE COURSE OF SEARCH INDICATED THE CONSIDERA TION AT WHICH PLOT NO. D- 6, TARA NAGAR COULD HAVE BEEN SOLD. HOWEVER, THIS P APER ITSELF IS NOT SUFFICIENT TO HOLD THAT THERE HAS BEEN AN UNDISCLOS ED INVESTMENT BY THE ASSESSEE. THE AO HAS NOT MADE ANY ENQUIRY FROM THE SELLERS. THE DOCUMENTARY EVIDENCE IS TO BE ACCEPTED UNLESS THERE IS SOME CORROBORATIVE EVIDENCE TO REBUT SUCH DOCUMENTARY EVIDENCE. THE SO CALLED SALE AGREEMENT DOES NOT CONTAIN THE SIGNATURE OR THE MENTION OF TH E NAME OF THE PURCHASER. WE THEREFORE, FEEL THAT THE LD. CIT(A) WAS NOT JUST IFIED IN CONFIRMING THE ADDITION OF RS. 18.00 LACS IN RESPECT OF PLOT NO. D-69, TARA NAGAR. THUS THE ADDITION ALSO COULD NOT HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE BECAUSE 67 THE PURCHASER IS NOT THE ASSESSEE BUT SHRI TIKAM CH AND KHANDELWAL. SHRI TIKAM CHAND KHANDELWAL HAS NOT BEEN HELD AS BENAMI OF THE ASSESSEE. PLOT NO. 30-31, KALYANPURI, KALWAR ROAD, JAIPUR 7.24 THESE PROPERTIES WERE PURCHASED FROM SHRI MOHA N SINGH AND SHRI KESAR SINGH FOR RS. 5.00 LACS EACH ON 24 TH NOV. 2006 AND 3-11-2006 BY REGISTERED SALE DEED AND COPIES OF SUCH SALE DEEDS WERE FOUND DURING THE COURSE OF SEARCH. THE ASSESSEE IN ORDER TO RAISE TH E FUNDS ENTERED INTO AN AGREEMENT WITH SHRI GOPAL SAINI. THE EXPLANATION OF FERED BY THE ASSESSEE IS THAT THIS WAS ONLY A PAPER WORK TO OBSERVE THE FORM ALITIES FOR OBTAINING BANK LOAN BUT THE PROPERTY STANDS REGISTERED IN THE NAME OF THE ASSESSEE IN NOV. 06. THUS THERE WAS NO CASE OF ANY AGREEMENT AS ON 3 1-08-07 WITH SHRI GOPAL SAINI. THE AO IN HIS ORDER HAS MENTIONED THAT THESE PROPERTIES HAVE BEEN SOLD BY SHRI GOPAL SAINI TO THE ASSESSEE FOR RS. 40 .00 LACS EACH. ONCE THE ASSESSEE WAS OWNER THROUGH REGISTERED SALE DEED THE N THERE WAS NO OCCASION OF PURCHASING OF SUCH PROPERTIES AGAIN FROM SHRI GO PAL SAINI. THUS THE EXPLANATION OFFERED BY THE ASSESSEE IS REASONABLE. WE THEREFORE, FEEL THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDI TION OF RS. 70.00 LACS IN RESPECT OF THE PROPERTIES AT 30-31, KALYANPURI, KA LWAR ROAD, JAIPUR . FLAT NO.505, HARI KRIPA 68 7.25 THE LD. CIT(A) HAS DELETED THE ADDITION OF RS. 14.00 LACS MADE ON ACCOUNT OF INVESTMENT IN FLAT NO. 505, HARIKRIPA. BEFORE THE LD. CIT(A), THE ASSESSEE FILED THE DETAILS TO SHOW THAT THE PROPERT Y IS RECORDED IN THE BOOKS OF ACCOUNTS. WE THEREFORE, FEEL NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE AD DITION OF RS. 14.00 LACS. PLOT NO. 92, RAGHUNATHPURI, KALWAR 7.26 AT THE TIME OF ASSESSMENT, THE AO HAS MADE THE ADDITION OF RS. 18,28,125/-. A SUM OF RS. 7.00 LACS HAS BEEN PAID T HROUGH CHEQUE AND THE SAME STANDS ACCEPTED BY THE AO. THE LD. CIT(A) THER EFORE, DELETED THE ADDITION OF RS. 7.00 LACS AND CONFIRMED THE ADDITIO N TO THE EXTENT OF RS. 11,28,125/-. THE ASSESSEE IN HIS BOOKS OF ACCOUNTS PREPARED AFTER THE SEARCH HAS SHOWN THAT CASH PAYMENT FOR PURCHASE OF THE PRO PERTY IS REFLECTED IN THE CASH FLOW STATEMENT. THE ADDITION IS BEING CONFIRME D BECAUSE THE BOOKS OF ACCOUNTS SO PREPARED AFTER THE SEARCH HAVE NOT BEEN ACCEPTED. THE REVENUE AUTHORITIES HAVE NOT POINTED OUT ANY SPECIFIC DEFIC IENCY OR DEFECT. WHEN THE PAYMENT HAS BEEN ENTERED IN THE CASH FLOW STATEMENT THEN ADDITION CANNOT BE MADE BY HOLDING THAT PAYMENT IS OUT OF UNDISCLOSED SOURCES. THUS THE ADDITION OF RS. 11,28,125/- CONFIRMED BY THE LD. CI T(A) IS DELETED. PLOT NO.97, MANSAROVAR 69 7.27 THE AO MADE THE ADDITION OF RS. 42.23 LACS. TH E ENTIRE INVESTMENT STANDS DULY ACCOUNTED IN THE REGULAR BOOKS OF ACCOU NT OF M/S. GUMAN FURNITURE & SERVICES LTD.. THESE PAYMENTS WERE DULY DISCLOSED IN THE RETURN FILED PRIOR TO SEARCH OPERATION AND ARE VERIFIABLE FROM THE AUDITED BOOKS OF ACCOUNTS AND THE AUDIT REPORT. 7.28 THE LD. CIT(A) HAS DELETED THE ADDITION ORS 33 .23 LACS AND CONFIRMED THE ADDITION OF RS. 9.00 LACS. THE PROPERTY HAS BEE N PURCHASED IN THE NAME OF M/S. GUMAN FURNITURE & SERVICES LTD..AND THE PAY MENT STANDS DISCLOSED IN THE RETURN. THEREFORE, THE LD. CIT(A) WAS NOT JU STIFIED IN CONFIRMING THE ADDITION OF RS. 9.00 LACS. THUS THE ADDITION CONFIR MED BY THE LD. CIT(A) IS DELETED. PLOT NO. 27, KRISHNA NAGAR 7.29 THE AO MADE THE ADDITION OF RS. 25.30 LACS. TH E LD. CIT(A) HAS DELETED THE ADDITION OF RS. 24.70. THE LD. CIT(A) H AS ACCEPTED THE AVAILABITY OF THE FUNDS TO THE EXTENT OF RS. 24.70 LACS ON THE BASIS OF THE WITHDRAWALS FROM THE BANK ACCOUNT. THE BALANCE OF RS. 60,000/- HAS NOT BEEN ACCEPTED ON THE BASIS OF THE CASH FLOW STATEMENT. THE ASSESSEE HAS PREPARED THE CASH FLOW STATEMENT. THUS THE PAYMENT STANDS EXPLAINED BY THE ASSESSEE AND HENCE THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDI TION OF RS. 60,000/- AND THE SAME IS DELETED. 70 PLOT NO.D-252, TARA NAGAR 7.30 BEFORE THE LD. CIT(A) , THE ASSESSEE HAS FILED THE DETAILS OF THE AMOUNT WITHDRAWN FROM THE BANK FOR MAKING PAYMENT. THUS TH E PAYMENT TO THE EXTENT OF RS. 18.50 LACS STANDS VERIFIED FROM THE B ANK ACCOUNT AND THEREFORE, THE LD. CIT(A) HAS DELETED THE ADDITION OF RS. 18.5 0 LACS. THUS THE ASSESSEE HAS BEEN ABLE TO ESTABLISH THE SOURCE OF FUNDS AND THEREFORE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 18.50 LACS. PLOT NO. 61-64, MANSAROVAR 7.31 THE AO HAS MADE THE ADDITION OF RS. 37.00 LACS . IT WAS POINTED OUT THAT THE LD. CIT(A) HAS INCORRECTLY MENTIONED THE D ATE OF PAYMENT OF RS. 28.50 LACS ON 01-01-2007 WHEREAS THE SAID PAYMENT W AS SHOWN AND MADE ON 1-11-07. PAGE NO. 63 OF THE PAPER BOOK CONTAINS THE COPY OF THE CASH BOOK FROM 18-10-07 TO 5-11-07. THE PAYMENT AGAINST PLOT NO. 61, 64 MANSAROVAR IS BEING MENTIONED ON 1-11-07. THE AO WILL VERIFY F ROM THE CASH BOOK AND IN CASE THE PAYMENT HAS BEEN SHOWN AS ON 1-11-07 AN D NOT ON 1-01-07 THEN THE ADDITION WILL BE DELETED. HENCE FOR LIMITED PUR POSES, THIS ISSUE IS BEING RESTORED BACK ON THE FILE OF THE AO FOR VERIFYING T HE PAYMENT MADE AS ON 1- 01-2007 TO 01-11-2007 PLOT NO. 25 INDRAPURI & 4 SHANKAR NAGAR 71 7.32 THESE TWO PROPERTIES WERE PURCHASED IN THE NAM E OF BENAMIDAR NAMELY SHRI DILIP KUMAWAT AND SHRI RAKESH KUMAR G UPTA. THESE HAVE BEEN SHOWN IN THE BOOKS OF ACCOUNTS OF SHRI DILIP K UMAWAT AND SHRI RAKESH KUMAR GUPTA. THE CASH FLOW STATEMENTS OF BOT H THE BENAMI PERSONS WERE FILED. THUS THE SOURCES OF THE FUND STAND EXPL AINED FROM THE CASH FLOW STATEMENTS AND THEREFORE, THERE WAS NO NEED OF MAKI NG ADDITION OF RS. 6.00 LACS. THUS THE GROUND NO. 6 OF THE ASSESSEE IS ALLO WED AND GROUND NO. 5 OF THE REVENUE IS DISMISSED. 8.1 THE 7 TH GROUND OF THE ASSESSEE IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. AO. HAD LEGALLY AND FACTUALLY ERRED I N MAKING MULTIPLE &OVER-LAPPING ADDITIONS ON ACCOUNT OF SUPPRESSION OF PURCHASES, SALES, DISALLOWANCES OF THE EXPENSES BEING UN-VOUCHED OR UNVERIFIABLE OR EXPENDED IN VIOLATION OF CERTAIN PROVISIONS OF THE ACT ETC., UN-EXPLAINED INVESTMENT U/S 69, UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT AND INVESTMENT AND DEPOSITS ETC. SHOWN IN THE NAMES OF THE SO-CALLED BENAMI PERSONS ETC. WITHOUT TAKING CARE OF TELESCOPING THEORY, OR FOLLOWING A UNIFORM METHOD OF WORKING OF THE INCOME OF THE APPELLANT. IN APPEA L PROCEEDINGS, THE LEARNED CIT (A) HAD DEALT WITH THI S GROUND OF APPEAL HALF-HEARTEDLY VIDE PARA NO.11.2 WITHOUT GIVING ANY SPECIFIC FINDING ON THE POINT. I N THE CIRCUMSTANCES, THE LD AO COULD NOT GIVE ANY APPEAL EFFECT ON THIS GROUND. AS THE FINDINGS OF TH E LEARNED CIT (A) ON THE POINT ARE NOT WELL REASONED AND SELF CONTAINED, SO TO THIS EXTENT THE ORDER OF THE LEARNED CIT (A) IS BAD IN LAW AS PER VARIOUS JUDICI AL CITATIONS. IN THE INTEREST OF EQUITY AND NATURAL JU STICE, WE PRAY THE HONORABLE MEMBERS TO COMPUTE OUR 72 INCOME ON ACQUSITION OF ASSETS AND EXPENDITURE THEORY IN ORDER TO AVOID OVER-LAPPING AND MULTIPLE ADDITIONS IN THE INTEREST OF EQUITY AND NATURAL JUSTICE. 8.2 IN THE WRITTEN SUBMISSION, IT HAS BEEN STATED T HE LD. CIT(A) HAS NOT GIVEN DIRECTION FOR TELESCOPING THE MULTIPLE ADDITI ONS. HOWEVER, BEFORE US, NO SPECIFIC ISSUE HAS BEEN RAISED FOR GETTING ADDIT ION, IF ANY, CONFIRMED TO BE TELESCOPIC AGAINST ANY OTHER ADDITION. HENCE THIS G ROUND NO. 7 OF THE ASSESSEE IS ONLY ACADEMIC. 9.1 THE GROUND NO. 6 AND 7 OF THE REVENUE ARE AGAIN ST DELETION OF ADDITION OF RS. 3,22,64,594/- MADE BY THE AO ON ACC OUNT OF UNVERIFIABLE CASH CREDITS BY ACCEPTING THE ADDITIONAL EVIDENCES. 9.2 THIS ISSUE HAS BEEN CONSIDERED BY US WHILE DIS POSING OFF THE APPEAL FOR THE ASSESSMENT YEAR 2008-09. FOLLOWING OUR FIND ING FOR THE ASSESSMENT YEAR 2008-09, WE HOLD THAT THE LD. CIT(A) WAS JUSTI FIED IN ACCEPTING THE ADDITIONAL EVIDENCE AND THE ON THE BASIS OF THE ADD ITIONAL EVIDENCE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. 10.1 THE LAST GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO GIVE THE SET OFF FOR THE UNACCO UNTED / SUPPRESSED SALE CONSIDERATION TO THE ASSESSEE BY ASCERTAINING THE A VAILABILITY OF UNACCOUNTED MONEY OUT OF SUPPRESSED SALE CONSIDERATION. 73 10.2 WE HAVE HEARD BOTH THE PARTIES. SINCE THE ADDI TION MADE ON ACCOUNT OF SUPPRESSED SALE CONSIDERATION HAS BEEN DELETED, THE REFORE, THE ISSUE OF SETTING OFF FOR UNACCOUNTED/ SUPPRESSED SALE CONSIDERATION AGAINST AVAILABILITY OF UNACCOUNTED MONEY BECOMES ACADEMIC. 11 IN THE RESULT, THE APPEALS OF THE ASSESSEE AS WE LL AS THE REVENUE ARE PARTLY ALLOWED... THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 12-08 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 12 /08/2011 *MISHRA COPY FORWARDED TO :- 1. SHRI SHANKAR KHANDELWAL, JAIPUR 2. THE ACIT, CENTRAL CIRCLE-1, JAIPUR/DCIT, CENTRAL CI RCLE- 1, JAIPUR 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE (ITA NO.391/JP /11) A.R, ITAT, JAIPUR 74