SHANKAR LAL KHANDELWAL, Jaipur V. ACIT, Jaipur

ITA 392/JPR/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7191 (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: 2008-2009
• Appeal Filed On: 29-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K L MOOLCHANDAN I; R K KHUTETA
• Keywords: Gross profit estimation; Unexplained cash credit; Rejection of books of accounts; Unexplained investment; Unexplained expenditure; Gift; Business income; Depreciation; Business expenditure; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Principle of natural justice; Source of fund; Additional evidence; Question of law; Cost of acquisition; Reasonable cause; Block assessment; Commercial expediency; Retraction; Documents seized; Revenue expenditure
• Section: 40A(3); 143(3); 142(1); 153A; 194C; 68; 69; 132; 144; 139

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.392/ JP/2011 ASSESSMENT YEAR 2008-09 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.487/ JP/2011 ASSESSMENT YEAR 2008-09 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 ORDER PER N.L. KALRA, AM:- THE ASSESSEE AS WELL AS REVENUE HAVE FILED THE A PPEALS AGAINST THE ORDER OF THE LD. CIT(A), CENTRAL, JAIPUR DATED 14 -03-2011 FOR THE ASSESSMENT YEARS 2008-09. 2. FIRST OF ALL, WE TAKE UP THE APPEAL OF THE ASSES SEE. 2.1 THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS AS UNDER:- 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) HAD LEGALLY AND FACTUALLY ERRED IN CONF IRMING THE ADDITION OF RS.1,38,70,000/- (WRONGLY MENTIONED AS RS.1,38,00,000/ IN THE APPEAL ORDER) ON ACCOUNT O F ALLEGED SUPPRESSION OF SALE & PURCHASES IN RESPECT OF PROPERTY AT 208 SHYAMPURI, 52, KALYAN NAGAR, 9, CHITRAKOOT, 185, 186 VIJAY SINGH PATHIK NAGAR, 1,2, 3, 4 MITRA NAGAR ON THE BASIS OF SEIZED DOCUMENTS PAGE 25/23 OF ANNEXURE A-25 SEIZED FROM 59, MANSAROWER COLONY, KALWAR ROAD, JHOTWARA, JAIPUR. WHILE DOING SO THE LD. AUTHORITIES BELOW HAD HEAVILY RELIED UPON T HE DEAF AND DUMB DOCUMENT IN VIOLATION OF THE PRINCIPL ES OF EVIDENCE ACT. IN FACT THE PAPERS CONTAINING ROUG H 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 N OT CONTAIN ANY EVIDENTIARY VALUE. HOWEVER, THE AUTHORI TIES BELOW HAVE OVER LOOKED THIS VITAL LEGAL ASPECT OF T HE CASE 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 MAKI NG SUCH ADDITION, THE AUTHORITIES BELOW HAVE OVER-LOOK ED THE VITAL FACT AND PRINCIPLE OF WORKING OF THE ADDI TIONAL 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, ON-MONEY HAD PASSED THE HANDS ON ACCOUNT OF SUCH PURCHASES AND SALES OUT SIDE BOOKS, SO DUE CREDIT FOR SUCH SUPPRESSED PURCHASES OUGHT TO HAVE BEEN GIVEN WHILE WORKING OUT NET INCOME EARNED FOR CARRYING OUT SUCH UNRECORDED SO CALLED SALES INSTEAD OF MAKING ADDITI ON OF THE ENTIRE AMOUNT OF THE ALLEGED SUPPRESSED SALE S. THUS THE AUTHORITIES HAVE LEGALLY ERRED IN MAKING ADDITION OF THE ENTIRE SALES INSTEAD OF TAKING THE MARGIN 3 OF PROFIT ON ACCOUNT OF SUPPRESSED PURCHASES AND SALES ONLY. APPARENTLY SUCH WORKING IS DEVOID OF ME RITS AND CONTRARY TO THE PRINCIPLES OF ACCOUNTANCY AND DESERVES TO BE QUASHED IN LIMINE. THIS VIEW FINDS SUPPORT FROM NUMBER OF JUDICIAL CITATIONS AS WELL W HICH WOULD BE MENTIONED IN THE DETAILED WRITTEN SUBMISSI ON IN DUE COURSE OF PROCEEDINGS. 2.2 A SEARCH AND SEIZURE OPERATION U/S 132 (1) OF T HE ACT WAS CARRIED OUT ON 16-11-2007 AT BUSINESS PREMISES AND RESIDENTIAL PREMISES OF THE ASSESSEE. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, CERTAIN DOCUMENTS/ LOOSE PAPERS WERE FOUND AND SEIZED. THE ASSESSEE FILED TH E RETURN OF INCOME ON 17 TH MARCH, 2009 VIDE WHICH THE INCOME OF RS. 83,58,46 0/- WAS DECLARED. FROM THE RETURN OF INCOME, THE AO NOTICED THAT THE ASSESSEE HAS ADMITTED OF CARRYING THE FOLLOWING BUSINESS WHICH WERE NOT DISC LOSED IN THE PREVIOUS I.T. RETURN FILED U/S 139 OF THE ACT 1. PROPERTY BUSINESS 2. TAXI RUNNING BUSINESS 3. FURNITURE JOB WORK 4. TRADING IN ELECTRONICS 5. OTHER MISC. BUSINESS INCOMES THE ASSESSEE IN THE RETURN OF INCOME HAS ATTACHED A NOTE IN WHICH FOLLOWING DECLARATION HAS BEEN MADE THAT CERTAIN TRANSACTIONS IN THE NAME OF FOLLOWING PERSONS ARE TAKEN ON ACCOUNT OF THE ASSESSEE AND T HE 4 INCOME/INVESTMENTS/LOANS ETC. PROVIDED / ACCORDING TO /BY THEM ARE CONSIDERED IN ASSESSEE'S HAND. 1. SHRI SUSHIL JHALANI AND SMT. SONA JHALANI 2. SHRI RAKESH GUPTA AND SMT. MEENA GUPTA 3. SHRI DILIP KUMAWAT AND SMT. ANITA KUMAWAT 4. SHRI GOPAL SAINI THE AO IN HIS ASSESSMENT ORDER HAS MENTIONED THAT T HERE WAS TOTAL NON- COOPERATION FROM THE ASSESSEE IN FURNISHING THE INF ORMATION, PRODUCING THE ACCOUNT BOOKS AND SUPPORTING VOUCHERS, CONFIRMATION FROM PARTIES FOR FRESH LOANS AND ADVANCES. DUE TO SUCH NON-COOPERATION, TH E AO INTIMATED THE ASSESSEE THAT HE WILL HAVE TO MAKE EXPARTE ASSESSME NT AS NECESSARY INFORMATION IS NOT BEING PROVIDED AND COOPERATION I S NOT BEING EXTENDED. IN ABSENCE OF ANY SUPPORTING VOUCHERS, THE AO REJECTED THE BOOKS OF ACCOUNTS AND COMPLETED THE ASSESSMENT EXPARTE U/S 144 OF THE ACT. 2.3 THE ASSESSEE DURING THE COURSE OF SEARCH OPERAT ION ADMITTED THAT HE HAS MADE TRANSACTION OF PURCHASES AND SALES IN BENA MI NAMES IN ALL THE FINANCIAL YEARS FALLING IN BLOCK PERIOD: THE ASSESS EE HAS NOT COMPLIED WITH THE NOTICE FOR MAKING PERSONAL APPEARANCE DURING TH E ASSESSMENT PROCEEDINGS. THE AO THEREFORE, COMPUTED THE INCOME FROM VARIOUS SOURCES. THE AO MADE THE ADDITION OF RS. 1,38,70,000/- WHICH REPRESENTED SUPPRESSION OF SALE CONSIDERATION IN RESPECT OF TH E PROPERTIES SOLD. FROM 5 ASSESSMENT YEAR 2003-04 TO 2008-09, THE ASSESSEE HA S SOLD 24 PROPERTIES ON WHICH THE AO CONCLUDED THAT THE ASSESSEE HAS RECEIV ED EXCESS CONSIDERATION AS COMPARED TO CONSIDERATION SHOWN IN THE BOOKS OF ACCOUNTS. THE DETAILS OF ALL THE 24 PROPERTIES HAVE BEEN MENTIONED BEEN BY T HE AO AT PAGES 3 AND 4 OF THE ASSESSMENT ORDER. THE CHART CONTAINS THE NAM E OF THE PROPERTY , ASSESSMENT YEAR, DATE OF SALES, SALES SHOWN AS PER BOOKS, ACTUAL SALES AND THE DIFFERENCE. FOR ASCERTAINING THE DIFFERENCE, TH E AO HAS RELIED UPON THE SEIZED PAPER NO. 25/23 OF ANNEXURE A-25. THE ASSESS EE WAS CONFRONTED WITH SUCH SEIZED PAPER AND IT WAS STATED THAT IT IS THE ESTIMATED AND DUMB PAPER. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTABLE T O THE AO. ACCORDING TO THE AO, THE ASSESSEE IN THIS PAPER HAS WRITTEN FIGU RES WHICH IS THE SALE CONSIDERATION RECEIVED ON SALE OF PARTICULAR PROPER TY WITH THE REMARK SOLD AND FIGURE IN LACS DENOTING CONSIDERATION RECEIVED AND FURTHER DESCRIPTION OF PROPERTY MATCHES WITH THE PROPERTY SOLD BY THE FAMI LY MEMBERS DURING THE LAST YEARS. THE FIGURES CONTAINED IN THE SEIZED PAP ER ARE RELIABLE. HENCE CONSIDERATION SHOWN IN THIS PAPER IS TO BE CONSIDER ED AS ACTUAL CONSIDERATION AS COMPARED TO SALE CONSIDERATION SHOWN IN THE BOOK S OF ACCOUNTS. THE AO ACCORDINGLY MADE THE ADDITION OF RS. 1,38,70,000/-. 2.4 THE LD. CIT(A) HAS CONFIRMED THE ADDITION OF RS . 1.38 CRORES ON THE BASIS OF THE FINDINGS RECORDED FOR THE ASSESSMENT Y EAR 2005-06. 6 2.5 IN THE APPEAL FOR THE ASSESSMENT YEAR 2005-06, THE LD. AR OF THE ASSESSEE HAS MADE FOLLOWING SUBMISSIONS BEFORE THE LD. CIT(A) . 6.2 THE A.R OF THE APPELLANT HAS MADE THE SUBMISS IONS WHICH ARE AS UNDER:- 1) SUBJECT PAPER IS MUTE, AMBIGUOUS, UNSPECIFIC AND ROUGH THE PAGE NO 23 OF ANNEXURE A-25 (PB PAGE 121) IS OF SUCH A NATURE THAT NO CONCLUSION CAN BE DERIVED OUT OF IT. IT IS A DUM B PAPER. NO DATE IS MENTIONED. ONLY SOME FIGURE WORK/CALCULATION WORK I S AVAILABLE ON THIS PAPER. THE LD AO HELD THAT THE WORD SOLD MENTIONE D AGAINST THE PLOT INDICATES THE SALE OF THE PLOT. THE ASSESSEES EXPL ANATION IN RESPECT OF EACH PLOT IS AS UNDER:- A) 32 KRISHNA NAGAR ALLEGED SALE FOR RS. 15,00,000/ - AS AGAINST DECLARED SALES AT RS. 5,00,000/- THERE IS NO ENTRY FOR THE PLOT AT KRISHNA NAGAR ON THE IMPUGNED SEIZED PAPER. THE ADDITION IS MERELY ON SURMISES AND CONJECTURES. B) 164 KALYAN KUNJ ALLEGED SALE FOR RS. 4500000/- A S AGAINST DECLARED SALES AT RS. 815000/- THE SEIZED PAPER SHOWS THE ROUGH WORKING IN RESPECT OF KALYAN KUNJ AS UNDER:- KALYAN KUNJ 45 THEREFORE THERE IS NO ENTRY ON THE SEIZED PAPER IN RESPECT OF PLOT NO. 164 KALYAN KUNJ. FURTHER, THE LD AO FAILED TO APPRECIAT E THAT THE WORD SOLD IS NOT MENTIONED AGAINST THIS PLOT. THE FIGURE 45 DENO TES THE ESTIMATED VALUE OF THE COMPLETE CONSTRUCTED HIGH QUALITY FINISHED HOUS E. FURTHER THE ASSESSEE PURCHASED THIS PLOT ONLY FOR RS. 2,50,000/- ON 29/0 3/2004. THE LD AO HAS ACCEPTED THE PURCHASE COST OF THIS PLOT AND NO BODY CAN SALE THE PLOT OF RS. 250000/- FOR THE HUGE AMOUNT OF RS. 45,00,000/- WI THIN FEW DAYS. THE FINDING OF THE AO IS AGAINST HUMAN PROBABILITY AND POSSIBILITIES. THE MATTER SHOULD BE CONSIDERED BY APPLYING HUMAN PROBABILITIE S. RELIANCE IS PLACED ON SUMATI DAYAL VS CIT 214 ITR 801 (SC), THEREFORE, ADDITION ON ACCOUNT OF SUPPRESSED SALE I N RESPECT OF THE PLOT NO 164 KALYAN KUNJ WAS MADE ON SURMISES AND CONJECTURES. C) 49 AGARSEN NAGAR ALLEGED SALE FOR RS. 150000/- A S AGAINST DECLARED SALES AT RS. 210000/- THE SEIZED PAPER SHOWS THE ROUGH WORKING IN RESPECT OF AGARSEN NAGAR AS UNDER:- SOLD AGARSEN NAGAR 15 X 4 THEREFORE THERE IS NO ENTRY ON THE SEIZED PAPER IN RESPECT OF PLOT NO. 49 AGARSEN NAGAR. THE FIGURE 15 DENOTES THE ESTIMATED VALUE OF THE COMPLETE CONSTRUCTED HOUSE. THE ASSESSEE HAS NOT MADE OUT CO MPLETE CONSTRUCTION OVER THE PLOT BUT SOME MINOR CONSTRUCTION IN 325 SQ FT A REA WAS CARRIED OUT WHICH INVOLVED INVESTMENT OF RS. 86993/-ONLY. FURTHER THE ASSESSEE PURCHASED THIS PLOT ONLY FOR RS. 1,00,000/- ON 26/03/2004. THE LD AO HAS ACCEPTED THE PURCHASE COST OF THIS PLOT AND NO BODY CAN SALE THE PLOT OF RS. 100000/- FOR THE 7 HUGE AMOUNT OF RS. 15,00,000/- WITHIN FEW DAYS. TH E FINDING OF THE AO IS AGAINST HUMAN PROBABILITY AND POSSIBILITIES. THE MA TTER SHOULD BE CONSIDERED BY APPLYING HUMAN PROBABILITIES. RELIANCE IS PLACED ON SUMATI DAYAL VS CIT 214 ITR 801 (SC), THEREFORE, ADDITION ON ACCOUNT OF SUPPRESSED SALE I N RESPECT OF THE PLOT NO 49 AGARSEN NAGAR WAS MADE ON SURMISES AND CONJECTURES. D) 173 SHYAMPURI ALLEGED SALE FOR RS. 15,00,000/ AS AGAINST DECLARED SALES AT RS. 5,00,000/- NOTHING HAS BEEN MENTIONED ON THE SEIZED PAPER FOR THIS PLOT. THE SEIZED PAPER SHOWS THE ROUGH WORKING IN RESPECT OF SHYAMPU RI PLOT AS UNDER:- SOLD SHYAMPURI 170-177 -164-165 15 X 4 =60 SOLD SHYAMPURI 207 35 THEREFORE THERE IS NO ENTRY ON THE SEIZED PAPER IN RESPECT OF PLOT NO. 173 SHYAMPURI. PLOT NUMBERS OF SHYAMPURI IS CLEARLY MEN TIONED WHICH ARE 170,177,164 AND 165. FIGURE 15 DENOTES THE ESTIMATE D VALUE OF THE CONSTRUCTED HOUSE AND FIGURE 4 DENOTES TO NUMBER OF PLOTS. FURT HER THE ASSESSEE PURCHASED THIS PLOT ONLY FOR RS. 165000/- AND WHICH CANNOT B E SOLD FOR THE HUGE AMOUNT OF RS. 15.00 LACS IN SHORT SPAN OF TIME. THEREFORE, ADDITION ON ACCOUNT OF SUPPRESSED SALE IN RESPECT OF THE PLOT NO 173, SHYA MPURI WAS MADE ON SURMISES AND CONJECTURES. E) 98 CHITRAKOOT ALLEGED SALE FOR RS. 20,00,000/- A S AGAINST DECLARED SALES OF RS. 18,00,000/- THE SEIZED PAPER SHOWS THE ROUGH WORKING IN RESPECT OF CHITRAKOOT COLONY AS UNDER:- CHITRAKOOT COLONY 31 = 22X2 CHIRTAKOOT COLONY 9 45 THEREFORE THERE IS NO ENTRY ON THE SEIZED PAPER IN RESPECT OF PLOT NO. 98 CHITRAKOOT. PLOT NUMBERS OF CHITRAKOOT COLONY ARE C LEARLY MENTIONED WHICH ARE 31 AND 9. FIGURE 22 OR 45 DENOTES THE ESTIMATE D VALUE OF THE CONSTRUCTED HOUSE AND FIGURE 2 DENOTES TO NUMBER OF PLOTS. FURT HER, THE LD AO FAILED TO APPRECIATE THAT THE WORD SOLD IS NOT MENTIONED AG AINST THESE PLOTS. FURTHER, NOWHERE THE FIGURE OF 20 IS MENTIONED AGAINST THE P LOT OF CHITRAKOOT NAGAR TO VISUALIZE THE ALLEGED SALE VALUE OF THE PLOT. THERE FORE, ADDITION ON ACCOUNT OF SUPPRESSED SALE IN RESPECT OF THE PLOT NO 98 CHITRA KOOT WAS MADE ON SURMISES AND CONJECTURES. F) 34 & 35 CHITRAKOOT COLONY ALLEGED SALE FOR RS. 22,00,000/- AS AGAINST DECLARED SALES OF RS. 21,50,000/- THE SEIZED PAPER SHOWS THE ROUGH WORKING IN RESPECT OF CHITRAKOOT COLONY AS UNDER:- CHITRAKOOT COLONY 31 = 22X2 CHIRTAKOOT COLONY 9 45 THEREFORE THERE IS NO ENTRY ON THE SEIZED PAPER IN RESPECT OF PLOT NO. 34 & 35 CHITRAKOOT COLONY. PLOT NUMBERS OF CHITRAKOOT COLON Y ARE CLEARLY MENTIONED WHICH ARE 31 AND 9. FIGURE 22 OR 45 DENOTES THE ES TIMATED VALUE OF THE CONSTRUCTED HOUSE AND FIGURE 2 DENOTES TO NUMBER OF PLOTS. FURTHER, THE LD AO FAILED TO APPRECIATE THAT THE WORD SOLD IS NOT ME NTIONED AGAINST THESE PLOTS. 8 THEREFORE, ADDITION ON ACCOUNT OF SUPPRESSED SALE I N RESPECT OF THE PLOT NO 34 & 35 CHITRAKOOT COLONY WAS MADE ON SURMISES AND CON JECTURES. G) 52 RAM NAGAR ALLEGED SALE FOR RS. 21,00,000/- AS AGAINST DECLARED SALES OF RS. 6,00,000/- THE SEIZED PAPER SHOWS THE ROUGH WORKING IN RESPECT OF RAM NAGAR AS UNDER:- RAM NAGAR = 21X2 THEREFORE THERE IS NO ENTRY ON THE SEIZED PAPER IN RESPECT OF PLOT NO. 52 RAM NAGAR. FIGURE 21 DENOTES THE ESTIMATED VALUE OF THE COMPLETE CONSTRUCTED HOUSE. IN THIS CASE, THE ASSESSEE MADE CONSTRUCTION IN 600 SQ FT AREA ONLY. FURTHER, THE LD AO FAILED TO APPRECIATE THAT THE WO RD SOLD IS NOT MENTIONED AGAINST THESE PLOTS. THEREFORE, ADDITION ON ACCOUNT OF SUPPRESSED SALE IN RESPECT OF THE PLOT NO 52 RAM NAGAR WAS MADE ON SUR MISES AND CONJECTURES. 2) NO INQUIRY FROM THE BUYER OF THE PLOT:- THE LD AO MADE THE ADDITION ON PRESUMPTION ASSUMPTI ON SURMISES AND CONJECTURES WITHOUT MAKING PROPER INQUIRY FROM THE BUYER OF THE PLOT. SUCH TYPE OF ADDITION IS NOT PERMISSIBLE IN THE EYE S OF LAW. 3) STATEMENTS OF THE ASSESSEE U/S 132(4) OF INCOME TAX ACT THE LD A.O. HAS MENTIONED THAT THE ASSESSEE HAS AC CEPTED THE SUPPRESSION OF PURCHASE AND SALES IN HIS STATEMENT RECORDED U/S 132(4) OF INCOME TAX ACT, WHEREAS THE ASSESSEE HAS NO WHERE ADMITTED THE SUPPRESSED SALES ON THE BASIS OF SEIZED ANNEXURE A-25. THE RELEVANT ANS WER ON THE ANNEXURE A-25 IS IN ANSWER TO QUESTION NO. 18 ( PB PAGE 50 F ILED IN AY 2003-04) WHEREIN THE ASSESSEE STATED THAT THE DETAILS OF THE PROPERTY IS MENTIONED ON PAGE 23 TO 25 OF ANNEXURE A-25. FURTHER IN ANSWER T O QUESTION NO. 26 (PB PAGE 53 FILED IN AY 2003-04) THE ASSESSEE HAS SURRE NDERED CERTAIN INCOMES THOUGH UNDER DURESS AND COERCION TACTICS AD OPTED BY SEARCH PARTY BUT THIS SURRENDER ALSO DOESNT INCLUDE ANNEXURE A- 25. 4) THE LD A.O. HAS GENERALIZED FACT OF SUPPRESSION OF PURCHASE AND SALE CONSIDERATION IN PROPERTY TRANSACTIONS. IF IT IS SO THAN THE ENTIRE SO CALLED SUPPRESSED VALUE CANNOT BE TREATED AS INCOME OF THE ASSESSEE. ONLY GP ESTIMATION CAN BE MADE ON THE SO CALLED SUPPRESSION OF SALE CONSIDERATION. THEREFORE, NO ADDITION CAN BE MADE ONLY ON THE BAS IS OF DEAF AND DUMB DOCUMENT. RELIANCE IS PLACED ON FOLLOWING DECISIONS :- (A) JAYANTILAL PATEL VS. ACIT AND OTHERS/ DR BALBIR SINGH TOMAR VS ACIT & OTHERS (RAJASTHAN HIGH COURT) 233 ITR 588 . / 244 ITR 500 (DEPARTMENTAL APPEAL IN DB) HONBLE RAJASTHAN HIGH COURT OBSERVED THAT ADDITION ON THE BASIS OF NOTING ON A PIECE OF PAPER CANNOT BE SUSTAINED WHEN IT IS NOT IN ASSESSEES OWN HAND-WRITING. (B) HISSARIA BROS VS ACIT (ITA NO. 179/JDPR/1998) 2 2 TAXWORLD 684 ITAT JAIPUR IT WAS HELD THAT ADDITION CANNOT BE MADE ON THE BAS IS OF VAGUE FIGURES FOUND NOTED ON SEIZED LOOSE PAPER WIT HOUT PROVING THAT THE ALLEGED AMOUNT ARE RECEIPTS AND INCOME OF THE ASSES SEE. (C) ITO VS MANNALAL JHALANI (ITA NO. 250 TO 260/JP/ 1998) 22 TAXWORLD 551 ITAT JAIPUR. IT WAS HELD THAT ADDITION CANNOT BE MADE SIMPLY 9 RECOVERY OF SOME PAPERS FOUND AND SEIZED DURING THE COURSE OF SEARCH WITHOUT MAKING NECESSARY VERIFICATION AND EXAMINATION. (D) ASHWANI KUMAR BHARDWAJ VS DCIT 21 TAXWORLD 358 ITAT JAIPUR. IT WAS HELD IN PARA 29.6 THAT NO ADDITION CAN BE MA DE ON THE BASIS OF DEAF AND DUMB DOCUMENTS. (E) MOHD. ILLIAS CHOUDHARY VS DCIT 25 TAX WORLD 394 ITAT JAIPUR. IT WAS HELD THAT THE ADDITION CANNOT BE JUSTIFIABLY BE MADE AS UNDISCLOSED INCOME ON THE BASIS OF CERTAIN ENTRIES FOUND RECORDED ON A SEIZED PAPER WITHOUT MAKING ANY INQUIRY AND INVESTIGATION AND WITHOUT EXAMINING THE ASSESSEE. (F) ASWANI KUMAR VS ITO 39 ITD 183 DEL. IT WAS HELD THAT NO ADDITION CAN BE MADE ON THE BASIS OF DUMB DOCUMENTS . (G) MOONGA METALS PVT. LTD., VS. ACIT (ALL.) 67 TTJ 247 BURDEN IS ON THE REVENUE TO ESTABLISH THAT FIGURES APPEARING ON LOOSE PAPERS FOUND REPRESENT UNDISCLOSED INVESTMENT OF THE ASSES SEE. (H) JAGDAMBA RICE MILLS VS. ACIT (CHD.) 67 TTJ 838 IT WAS HELD THAT NO ADDITION CAN BE MADE ON A DUMB DOCUMENT. 2.6 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF ASSESSEE AT PARA 6.3 T 6.3.4 OF ITS FOR THE ASSESSMENT YEAR 200 5-06 HELD AS UNDER:- 6.3 I HAVE CONSIDERED THE SUBMISSION OF THE A.R AND HAVE PERUSED THE ASSESSMENT ORDER AND RELEVANT RECORD. THE ARGUMENT OF THE A.R. IS THAT THE IMPUGNED PAPER IS MUTE, AMBIGUOUS, UNSPECIFIC AND ROUGH AND ACCORDINGLY IT IS A DUMB PAPER. NO DATE IS MENT IONED. ON PERUSAL OF PAGE 25 OF ANNEXURE A-25, IT IS SEEN THAT ON THE TO P OF IT, PROPERTY ACCOUNT - GROUP SUMMARY IS MENTIONED WITH DATE AS 1.4.05 TO 31.3.06 (IN THE FORM OF HEADING ) AND BELOW THIS HEADING TYPED DETAILS OF THE VARIOUS PLOTS ALONGWITH THEIR AREA AND THE VALUE IS MENTIONED. BELOW THESE TYPED DETAILS, HAND WRITTEN DETAILS ARE THERE WHERE IN NAME OF THE VARIOUS COLONIES ARE MENTIONED AND AGAINST THAT AMOUNT (IN CODED FORM) AND THE NUMBER OF PLOTS (IN THAT COLONY) IS ALSO MENTIONED. IF THE PARTICULAR PLOT HAS BEEN SOLD, THEN SOLD IS ALSO MENTIONED. SIMIL AR IS THE POSITION OF PAGE 23 OF ANN.A-25, WHERE IN THE TYPED HEADING DIF FERENT PERIOD I.E 1.4.06 TO 31.3.07 IS MENTIONED. UNDISPUTEDLY THESE PAGES ARE NOT PART OF THE REGULA R BOOKS OF ACCOUNTS AND WILL ACCORDINGLY NOT CONTAIN THE FULL DESCRIPTION OF THE PLOTS AS WELL 10 THE OTHER DETAILS. THIS BEING A MEMORANDUM PAGE , THE NOTINGS WOULD OBVIOUSLY NOT BE IN STRUCTURED FORMAT. NORMALLY IN SUCH PAGES TRANSACTIONS OR STATEMENT O F AFFAIRS ARE WRITTEN FOR SELF CONSUMPTION OR FOR THE CONSUMPTION OF FEW LIMITED PERSONS INVOLVED IN THE BUSINESS. THUS THESE PAGES WOULD OBVIOUSLY NOT CONTAIN FULL DESCRIPTIVE DETAILS. THE NOTINGS WILL BE IN SUMMARY MANNER WHICH CAN BE UNDERSTOOD BY THE PERSON WRITING THE PAPER AND OTHE R PERSONS. THE INSTANT PAGE ALSO CONTAIN THE NOTINGS OF DETAILS OF THE PLOT OF THE APPELLANT GROUP, WHICH HAVE BEEN SOLD AT THE VARIOUS POINT OF TIME ALONGWITH THE SAL E VALUE ETC. IN SUMMARY MANNER. THE A.O. HAS ALSO CROSS CHECKED AND CORRELATED THE SALE OF PLOTS MENTIONED IN THIS DOCUMENT (IN THE SUMMARY AND CODED MANNER) WITH THE SALES SHOWN IN THE MEMORANDUM BOOKS OF ACCOUNTS. THE DATE OF SALE IS VERY WELL KNOWN FROM THE COPIES OF THE AGREEMENT TO SALE AVAILABLE IN THE SEIZED DOCUMENTS OR WITH THE APPELLANT AND SOME OF THEM WAS ALSO FURNISHED BEFORE THE A.O. THUS, IT IS NOT AT ALL A DUMB, AMBIGUOUS AND UNSPECIFIC DOCUMENT . THE DOCUMENT IS WELL SELF SPEAKING . ACCORDINGLY, THE ARGUMENT OF THE APPELLANT IN THIS REGARD IS REJECTED. THE A.O. WAS JUSTIFIED IN HOLDING THAT RATES HAVE BEEN WRITTEN I N CODED FORM. 6.3.1 VARIOUS DECISIONS CITED BY THE A.R OF THE APP ELLANT ARE ON THE ISSUE THAT NO ADDITION CAN BE MADE ON THE BASIS OF DUMB D OCUMENT. AS IN THE INSTANT CASE, THE DOCUMENT RELIED ON BY THE A.O. HAS BEEN HELD TO BE NOT A DUMB DOCUMENT AND RATHER HELD TO BE LOUD SPEAKING DOCUMENT, THE RATIO OF THE CASES CITED BY THE A.R. IS NOT APPLICABLE IN THE INSTANT CASE. 6.3.2 IT IS CLEAR THAT IN THE AGREEMENT TO SALE, TH E DIFFERENT SALE AMOUNT FOR SAME AREA OF PLOT (WITH CONSTRUCTION) IS SHOWN TO ACCOMMODATE THE PURCHASER AS PER THE AVAILABILITY OF ACCOUNTED FUND WITH HIM AND THAT IS WHY IN THE SALE AGREEMENT CONSTRUCTION DETAILS ARE NOT SHOWN SO THA T DIFFERENT RATES OF SALE SHOWN IN THE AGREEMENT MAY NOT BE QUESTIONED ON THE GROUND O F PARITY BY ANY GOVT. AUTHORITY. 6.3.3 WHEN THE LOOSE PAPER IS SPEAKING AND SAME WAS FOUND FROM THE PREMISES OF THE APPELLANT GROUP, AND THEN THERE IS NO REQUIREMENT OF THE A.O. TO 11 MAKE ENQUIRES FROM THE PRESENT PLOT HOLDER, AS CONT ENDED BY THE A.R. HENCE THIS CONTENTION OF THE A.R IS REJECTED. 6.3.4 AFTER AFFIRMING THE A.OS ACTION IN GENERAL O N THIS ISSUE IN VIEW OF THE DISCUSSION MADE IN THE AFORESAID PARAS, IT WILL BE APPROPRIATE TO MENTION ABOUT THE INDIVIDUAL PLOT/ENTRY. I) FROM PERUSAL OF PAGE 23 AND 25 OF ANN. A-25, IT IS SEEN THAT KRISHNA NAGAR PLOT IS MENTIONED ON PAGE 23 OF A-25 AND ACCORDINGLY A.RS CONTENTION IN THIS REGARD IS INCORRECT THAT THERE IS NO ENTRY OF KRISHNA NAGAR P LOT. AGAINST THE NAME KRISHNA NAGAR WORD SOLD HAS ALSO BEEN MENTIONED AND THERE BEING FOR SUB-PLO TS/ PLOTS, RATE 15X4 IS ALSO MENTIONED. HENCE A.O. IS JUSTIFIED IN TAK ING SALE VALUE OF KRISHNA NAGAR PLOT AT RS. 15 LAKHS. II) ON PERUSAL OF PAGE 25 OF ANN. A-25, IT IS SEEN THAT IT INTER-ALIA INCLUD E FOLLOWING NARRATION AT 4THE LINE FROM THE BELOW. KALYAN KUNJ - 45 AS THE APPELLANT HAS SOLD ONLY THIS PLOT IN THE KAN YANKUNJ COLONY, THE PLOT NO. HAS NOT BEEN MENTIONED ON THIS LOOSE PAGE. HENCE ARGUMENT O F THE APPELLANT OF NO PLOT NO MENTIONED ON THE LOOSE PAGE IS DEVOID OF ANY MERIT. MOREOVER, OTHER ARGUMENT REGARDING WORD SOLD NOT MENTIONED IN THE LOOSE PA PER IS ALSO NOT RELEVANT IN VIEW OF THE FACT THAT APPELLANT ADMITTEDLY DID SOLD THE KAN LYANKUNJ PLOT DURING THE YEAR UNDER CONSIDERATION. ONLY QUESTION TO BE SEEN AS TO WHAT IS THE SALE CONSIDERATION. IN THE INSTANT CASE THE SALE CONSIDERATION IS DEFINITELY R S. 45 LAKHS. THE ARGUMENT OF THE APPELLANT THAT THE PLOT WAS PURCHASED FOR RS. 2.5 L AKHS AND SALE OF RS. 45 LAKHS IS AGAINST HUMAN PROBABILITY DESERVES TO BE REJECTED I N VIEW OF THE FACT THAT FIRSTLY, THE APPELLANT HAS CONSTRUCTED THE HOUSE OVER THIS PLOT AND SOLD THE CONSTRUCTED HOUSE AND SECONDLY IT IS WELL KNOWN FACT THAT DURING THE RELE VANT PERIOD THE PRICES OF THE PLOTS/LANDS WERE SKY ROCKETING AND ACCORDINGLY SUCH A HIGH PROFIT IS QUITE POSSIBLE, PARTICULARLY WHEN THE SALE PRICE IS MENTIONED ON TH ESE LOOSE PAPERS. III) REGARDING AGARSEN NAGAR PLOT, PAGE 25 OF ANN.A-5 INTER ALIA INCLUDE FOLLOWING NARRATION ON THE FIRST HANDWRITTEN LINE SOLD AGRASEN NAGAR 15X4 12 IT IS EVIDENT THAT IN THE APPELLANT GROUP THERE ARE 4 PLOTS IN THE AGRASEN NAGAR WHICH HAVE BEEN SOLD AT RS. 15 LAKHS EACH. NON-MENTION OF THE PLOT NUMBER IN THE LOOSE PAPER IS NOT RELEVANT, IN VIEW OF THE FACT THAT THE APPELLANT DID SOLD PLOT IN AGRASEN NAGAR COLONY. ONE PLOT IN AGRASEN NAGAR BELONGING T O SH. TIKAM KHANDELWAL SOLD DURING A.Y 2005-06 HAS BEEN CONSIDERED IN HIS HAND AND SALE VALUE OF RS. 15 LAKHS HAS BEEN UPHELD BY THE UNDERSIGNED. CONSIDERING THE AFORESAID FACT AND LEGAL POSITION THE A.O. IS JUSTIFIED IN TAKING SALE VALUE OF AGRAS EN NAGAR PLOT AT RS. 15 LAKHS. THE ARGUMENT OF VALUE BEING AGAINST HUMAN PROBABILITY H AS ALREADY BEEN DISCUSSED AND REJECTED IN THE EARLIER PARAGRAPH. IV) REGARDING SHYAMAPURI COLONY PLOT ARGUMENTS OF THE A.R THAT THE PLOT NO. 173 IS NOT MENTIONED IS NOT MENTIONED IS NOT RELEVANT I N VIEW OF THE FACT THAT SALE VALUE OF PLOT NO. 170,177 HAS BEEN VERY SPECIFICALLY MENTION ED ON PAGE 25 OF ANN.A-25 IN THE THIRD HAND WRITTEN LINE AT RS. 15 LAKHS EACH. THERE FORE THE A.O WAS JUSTIFIED IN TAKING THE SALE VALUE OF PLOT NO. 173 AT RS. 15 LAKHS BEIN G OF THE SAME SIZE AND BEING ADJACENT TO THE ABOVE MENTIONED PLOTS NAMELY 164- 165, 170-1 77. THE ARGUMENT REGARDING DOUBLE ADDITION BY THE A.O. IN THE CASE OF SHNKAR K HANDEWAL THE APPELLANT AS WELL AS SH. TIKAM KHANDELWAL, HIS BROTHER HAS BEEN CONSIDER ED IN THE APPEAL ORDER NO.584/09-10 IN THE CASE OF SH. TIKAM KHA NDELWAL IN A.Y 2005-06 AND FOR THE REASONS DISCUSSED THEREIN, THE SAME HAS BEEN REJEC TED. ACCORDINGLY, A.O. WAS JUSTIFIED IN TAKING SALE VALUE OF PORTION OF 173, S HYAMPURI PLOT SOLD BY APPELLANT AT RS. 15 LAKHS INSTEAD OF RS. 5 LAKHS SHOWN BY THE APPELL ANT. V) AS REGARDS SALE VALUE OF PLOT AT CHITRAKOOT COLONY , TAKEN BY THE A.O. AT RS. 20 LAKHS IS CONCERNED, IT IS SEEN THAT PAGE NO. 23 OF ANN. A-25 AT 5 TH WRITTEN LINE HAS FOLLOWING NARRATION SOLD CHITRAKOOT- 20X3 MOREOVER, THERE IS ONE MORE DIFFERENT ENTRY ON PAGE 25 OF ANN. A-25 WHICH IS AS BELOW:- CHITRAKOOT COLONY - 31 = 22X2 - 09 = 45 13 CONSIDERING THESE NARRATIONS, THE A.O. WAS JUSTIFIE D IN TAKING SALE VALUE OF PLOT NO. 34 AND 35 AT RS. 22 LAKH AND FOR PLOT NO. 98 AT RS. 20 LAKHS. VI) ENTRY REGARDING RAM NAGAR COLONY PLOT IS CONCERNED; THE ENTRY IS AVAILABLE ON PAGE 25 OF ANN. A-25 WHICH IS AS BELOW:- RAM NAGAR = 21X2 THE ARGUMENT OF THE A.R. THAT PLOT NO IS NOT MENTIO NED AND WORD SOLD IS ALSO NOT MENTIONED IS OF NO SIGNIFICANCE AND IS REJECTED IN VIEW OF THE FACT THAT THE APPELLANT DID SOLD THE RAM NAGAR PLOT DURING THE YEAR UNDER C ONSIDERATION AND ONLY ONE PLOT 52, RAM NAGAR, HAS BEEN SOLD. IN THE LOOSE PAPER, N EED OF WRITING PLOT NO. DID NOT ARISE BECAUSE THE APPELLANT AND HIS GROUP ARE NOT H AVING PLOTS AT RAM NAGAR COLONY HAVING DIFFERENT AREA. HENCE ARGUMENT OF THE A.R IS REJECTED AND A.O. IS JUSTIFIED IN TAKING SALE VALUE AT RS. 21 LAKHS. 2.7 ON THE BASIS OF THE FINDINGS OF THE RECORDED FO R THE ASSESSMENT YEAR 2005-06, THE LD. CIT(A) HAS UPHELD THE ADDITION OF RS. 1.38 CRORES. THE LD. CIT(A) HAS NOT SPECIFICALLY REFERRED TO PROPERTIES WHICH HAVE BEEN SOLD DURING THE YEAR. THE PROPERTIES SOLD IN ASSESSMENT YEAR 2005-06 WERE DIFFERENT AS COMPARED TO THE PROPERTIES SOLD IN THE ASSESSMENT YEAR 2008-09. 2.8 DURING THE COURSE OF PROCEEDING BEFORE US, THE LD. AR HAS FILED WRITTEN SUBMISSION ALONGWITH PAPER BOOK. SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT IN THE GROUP CASES OF SHANKAR LAL KHAND ELWAL OF JAIPUR. THE GROUP CONSISTS OF SIX INDIVIDUALS AND THREE COMPANI ES. DURING THE COURSE OF SEARCH OPERATIONS, NO REGULAR BOOKS OF ACCOUNT WERE FOUND AND SEIZED. IN ABSENCE OF REGULAR BOOKS OF ACCOUNT, SHRI SHANKAL L AL KHANDELWAL THE MAIN 14 PERSON OF THE GROUP, ADMITTED ADDITIONAL INCOME ON ACCOUNT OF UNRECORDED INVESTMENT IN DIFFERENT PROPERTIES INCLUDING THE CA SH FOUND AT THE TIME OF SEARCH. SUCH UNRECORDED INVESTMENTS ADMITTED WERE T O THE EXTENT OF RS. 375.28 LACS. HOWEVER, IMMEDIATELY AFTER THE SEARCH OPERATIONS, THE ASSESSEE INFORMED THE DEPARTMENT VIDE LETTER DATED 20 TH NOV. 2007 AND 21 NOV. 2007 THAT HE WAS A CANCER PATENT AND AT THE GIVEN POINT OF TIME, HE WAS NOT IN PROPER FRAME IN MIND DUE TO HIS ILLNESS, ANXIETY AN D RECENT FAMILY FUNCTIONS WHICH WAS PERFORMED ONLY ON THE PREVIOUS NIGHT OF T HE SEARCH OPERATIONS. THE ASSESSEE NEVER INTENDED TO MAKE HUGE DISCLOSURE OF THE ADDITIONAL INCOME AS PUBLISHED IN THE LOCAL DAILIES. THE ASSES SEE DISCLOSED THE ADDITIONAL INCOME WHILE FILING THE RETURNS IN COMPL IANCE TO NOTICE ISSUED U/S 153A OF THE ACT. THE DISCLOSED ADDITIONAL INCOME IN RESPECT OF DIFFERENT INDIVIDUALS IS AS UNDER:- 1. SHRI SHANKAL LAL KHANDELWAL RS. 160.34 LACS 2. SHRI GUMAN KHANDELWAL RS. 19.12 LACS 3. SHRI TIKAM KHANDELWAL RS. 35,93 LACS 4. SHRI MOHAN LAL KHANDELWAL RS. 7.94 LACS TOTAL RS. 223.33 LACS 2.9 DURING THE COURSE OF PROCEEDINGS BEFORE US, THE LD. AR DREW OUR ATTENTION TO THE FACTS WHICH ARE RELEVANT TO UNDERS TAND STATE OF MIND OF THE PERSON WHEN HE MADE A HUGE DISCLOSURE IMMEDIATELY A FTER THE COMMENCEMENT OF SEARCH OPERATION. THE NEPHEW OF THE ASSESSEE FELL SICK 15 AND THE AUTHORIZED OFFICER HAD TO RUSH SANTOKHBA DU RLABJI HOSPIAL ALONGWI THE ASSESSEE TO GET THE NEPHEW ADMITTED IN THE HOSP ITAL. THE NEPHEW REMAINED ADMITTED IN THE HOSPITAL FOR TWO DAYS. AFT ER RETURNING FROM THE HOSPITAL, THE RECORDING OF THE STATEMENT OF THE ASS ESSEE STARTED AT ABOUT 3.00 PM ON 16-11-2007. THE STATEMENT CONTINUED TO BE REC ORDED TILL THE NEXT DATE I.E. 17-11-07. IN BETWEEN THE ASSESSEE WAS REQUIRED TO WITNESS THE SEARCH PROCEEDINGS AT SECOND POINT AT MANSAROVAR COLONY SH OWROOM. AT THAT PLACE ALSO, THE STATEMENT OF THE ASSESSEE WAS RECODED BY THE AUTHORIZED OFFICER. ALL THE SEQUENCE OF THE EVENT IS EVIDENT FROM PANCHNAMA PREPARED FOR THE SEARCH PROCEEDINGS. HENCE AT THE TIME OF RECORDING OF THE STATEMENT, THE ASSESSEE WAS NOT IN A STABLE STATE OF MIND AND THER EFORE, HIS DECLARATION CANNOT BE CONSIDERED AS A PERSON WHO WAS IN STABLE STATE OF MIND OF UNDERSTANDING THE REAL STATE OF AFFAIRS. THE SEARCH PROCEEDINGS STARTED AT 7.30 AM AND ON 16-11-07 AND CONTINUED UPTO 02 PM ON 17-1 1-07. 2.10 IN RESPECT OF GROUND OF APPEAL NO. 1, THE LD. AR OF THE ASSESSEE HAS FILED THE FOLLOWING SUBMISSIONS:_ THIS ADDITION HAS BEEN DISCUSSED BY THE LD AO AT PAGES NO. 3 & 4 OF HIS ASSESSMENT ORDER FOR FOLLOWING PROPERTIES:- S.NO. NAME OF PROPERTIES SALES SHOWN AS PER BOOKS ACTUAL SALES DIFFERENCE 1 208, SHYAMPURI 9,30,000 15,00,000 5,70,000 2 52, KALYAN NAGAR 22,00,000 30,00,000 8,00,000 16 3 9, CHITRAKOOT 10,00,000 20,00,000 10,00,000 4 185,186VIJAY SINGH PATHIK NAGAR 14,00,000 33,00,000 19,00,000 5 1,2,3,24, MITRA NAGAR 54,00,000 1,50,00,000 96,00,000 WHILE MAKING SUCH ADDITION, THE AO HAD OBSERVED TH AT THE EXPLANATION AS FURNISHED BY THE APPELLANT THAT THE SAID PAPERS WER E DEAF & DUMB PAPERS AND CARRIED ROUGH WORKING ONLY AND WAS NOT ACCEPTABLE AND UNTENABLE. THE AO ACCORDINGLY OPINED THAT THESE PAPERS CARRIED ACTUAL FIGURES OF THE SALE CONSIDERATION OF THE PROPERTIES SOLD BY THE FAMILY MEMBERS OF THIS GROUP DURING THE LAST YEARS AND THE DIFFERENCE OF SALES CONSIDERATION WAS ACTUALLY RECEIVED AS PER SE IZED PAPER AND SALES CONSIDERATION SHOWN AS PER BOOKS IS TAKEN AS INCOME RECEIVED WHICH HAS NOT BEEN REC ORDED. DURING THIS YEAR, THE APPELLANT HAD SUPPRESSED THE SALES I N RESPECT OF THE SALE OF THE ABOVE REFERRED PROPERTIES. THIS DIFFERENCE AMOUNT AS SHOWN AT S.N0. 20 TO 24 OF THE LIST MENTIONED IN THE ORDER AT PAGE NO. 4 AMOUNTING RS. 1,38,70,000/- WAS ADDED TO THE INCOME OF THE ASSESSEE AS UNDISCLOSED INCOME. IN APPEAL ALSO, THE LEARNED CIT (A) DID NOT DWELL U PON THE POINT AT LENGTH AND CONFIRMED THE SAID ADDITION SUMMARILY HOLDING THERE IN THAT THE LD. AO WAS CORRECT IN HOLDING THE REMARK SOLD AS THE PROPERTY ACTUALLY SOLD AND THE SIMPLE DIGIT S DENOTED THE SALE CONSIDERATION IN LAC. ACCORDINGLY AT PAGE NO. 2 OF THE APPEAL ORDER THE HONORABLE CIT (A) CONCLUDED THAT T HEREFORE THE ASSESSEE HAS SUPPRESSED THE SALE CON SIDERATION OF RS.1,38,00,000/- (AGAINST CORRECT FIGURES OF 1,3 8,70,000/-) WHICH HE CONFIRMED AS INCOME OF THE ASSESSEE. OBVIOUSLY THE FINDINGS OF THE AUTHORITIES BELOW ON THE POINT ARE FACTUALLY INCORRECT AND ARE DEVOID OF MERITS FOR THE FOLLOWIN G REASONS: (A) ON CAREFUL STUDY OF THE PAPER UNDER CONSIDERATI ON (PAGE 23 & 25 OF EX. A- 25 WHICH IS PLACED IN THE PAPER BOOK AT PAGE NO. 86 -87 FOR READY REFERENCE) YOUR HONORS WOULD APPRECIATE THAT THE AFORESAID PAPER IS ACTUAL LY A DEAF AND DUMB PAPER FOR THE FOLLOWING REASONS: (I) ON PERUSAL OF THE SAID PAPERS, YOUR HONORS WOUL D NOTE THAT THESE ARE COPIES OF A PRINT OUT OF PROPERTY A/C GROUP SUMMARY FOR TWO FINANCIAL YEARS I.E. 1 ST APRIL, 2006 TO 31 ST .MARCH, 2007 (PAGE NO.23) & 1 ST APRIL, 2005 TO 31 ST MARCH, 2006 (PAGE NO.25). ON THE BLANK SPACE OF TH ESE SHEETS, THERE IS ROUGH JOTTINGS AND WORKING IN HAND. ON CAREFUL STUD Y OF THESE JOTTINGS YOUR HONORS WOULD NOTE THAT THERE IS NO MENTION OF ANY DATE, MONTH OR YEA R, MEASUREMENT OR ANY SIZE OF THE PLOT OR PROPERTY IN HAND WRITTEN JOTTINGS, THERE IS NO MENTION OF THE NATURE OF PROPERTY I.E. WHETHER IT IS A PLOT OR A FLAT, THERE IS NO SPECIFICATION OF THE DIGITS DENOTING THE EXACT AMOUNT OF THE SALE CONSIDERATION AS PER THE LIST OF THE PROPE RTIES SOLD DURING THE YEAR UNDER CONSIDERATION. IT IS NOT UNDER-STOOD FROM WHE RE THE AUTHORITIES 17 BELOW COULD DEDUCED THE SHOWN FIGURES IN LACS , WHEN THERE IS NO SPECIFIC MENTION OF LAC ANY WHERE IN THE HAND-WRITTEN JOTTINGS. IN THE CIRCUMSTANCES, THE APPELLANT HAD BEEN CORRECTLY PLE ADING THAT THESE ARE DEAF AND DUMB PAPERS ONLY CARRYING NO EVIDENTIARY V ALUE AS OPINED BY NUMBER OF JUDICIAL AUTHORITIES IN NUMBER OF CASES A S REFERRED TO IN THE WRITTEN SUBMISSION MADE FROM TIME TO TIME.(KINDLY R EFER TO PAGE NO. 4-5 OF PB). IN VIEW OF THESE FACTS, IT IS ESTABLISHED B EYOND DOUBT THAT THESE PAPERS ARE DEAF AND DUMB PAPERS AS BEING PLEADED BE FORE THE AUTHORITIES BELOW. (II) NOW COMING TO THE CORRECTNESS OF THE CHART AS DRAWN BY THE LD. AO AT PAGE NO. 4 OF THE ASSESSMENT ORDER. YOUR HONORS WOULD N OTE THAT THE PROPERTIES FOR WHICH ADDITION OF RS. 1,38,70,000/- WAS MADE ARE SHOWN AT S. NO 20 TO 24 WHICH ARE DISCUSSED ONE BY ONE AS UNDER: (1) 208, SHYAMPURI RS. 5,70,000/- ON CAREFUL STUDY OF THE JOTTINGS ON THESE PAPERS, YOUR HONORS WOULD NOTE THAT THERE IS NO MENTION OF ANY SUCH PROPERTY IN SUCH JOTTINGS. THIS FACT IS EV IDENT FROM THE COPY OF THE SAID PAPER AS LYING IN THE PAPER BOOK A T 86-87. IN ABSENCE OF ANY SPECIFIC/AND CATEGORICAL MENTION OF ANY PROPERTY IN THE JOTTINGS, YOUR HONORS WOULD AGREE THAT NO VALID ADDITION CAN BE MADE. MORE-OVER IT WOULD BE WORTH MENTIONING THAT T HE SAID PLOT I.E. PLOT NO. 208 HAD BEEN SOLD IN TWO PARTS; ONE P ART FOR RS.9,30,000/- ON 2.05.2007 & SECOND PART FOR RS.10 ,21,000/- ON 25.3.2008 (AS PER COPIES OF THE REGISTERED SALE DEEDS SUBMITTED IN THE PAPER BOOK AT PAGE NO. 90 TO 109 ) TOTALING RS. 19,51,000/- AS AGAINST RS. 15 LAC TAKEN BY THE LD. AO BY TAKING INTO ACCOUNT THE SALE OF ONE PART ONLY AND IGNORING THE SALE OF SECOND PART AS EVIDENT FROM THE DEEDS SUBMITTED IN THE PAPER BOOK. THIS IS A VERY STRONG DOCUMENTARY INSTANCE DEMOLISHING THE ENTIRE WORKING OF THE ALLEGED SUPPRESSED SALE AS ENVISAGED BY THE LD. AO & CIT (A). THUS THE AMOUNT OF SUPPRESSED SALE AS TAKEN BY AO I S FACTUALLY INCORRECT ON THE FACE OF SUCH DOCUMENTARY EVIDENCES . ACTUALLY THERE WERE NO SUPPRESSED SALES AT ALL AS THE PLOT W AS SOLD MORE THAN THE PRICE AS TAKEN BY THE AO. AS SUCH NO ADDITION I S CALLED FOR ON ACCOUNT OF SUCH ALLEGED SALE. (2) 52, KALYAN NAGAR RS. 8,00,000 /- AGAIN ON CAREFUL READING OF THE JOTTINGS, IT WOULD BE NOTED THAT THERE IS NO MENTIO N OF SUCH PROPERTY 52, KALYAN NAGAR SPECIFICALLY IN THESE JOTTINGS. THERE IS HOWEVER A GENERAL REFERENCE TO THE PROPERTIES OF KALYAN NAGAR , BUT IT DID NOT REFER TO THIS PROPERTY PARTICULARLY . IN ABSENCE OF ANY SPECIFIC NARRATION OF ANY PROPERTY, NO VALID ADDITION CAN BE MADE. MORE- OVER, IT IS A MATTER OF COMMON PRUDENCE THAT THE VA LUE OF PLOTS MAY FLUCTUATE VASTLY ON ACCOUNT OF SIZE, LOCATION, AND OTHER FACTORS LIKE CONSTRUCTION WORKS IF ANY CARRIED OUT ON SUCH PLOTS AND 18 QUANTUM/ QUALITY/ FULLY FINISHED/ SEMI FINISHED OF CONSTRUCTION ETC.. IN THE JOTTINGS ALL THESE VITAL DETAILS ARE MISSING WHICH MAY NOT LEAD TO ANY DEFINITE AND LOGICAL CONCLUSION AS DRAWN BY THE LD. AO FOR MAKING SUCH ADDITION. IN FACT THE SAID PLOT WAS PURCHASED IN AUGUST, 2006 FOR RS. 12,75,000/- AND WAS SOLD IN JULY, 2007 FOR RS. 22,0 0,000/- (IN TWO PARTS EACH FOR RS. 11,00,000/-) AFTER CARRYING OUT CONSTRUCTION WORKS WORTH RS. 5,73,849/- (AS PER COPIES OF THE REGISTERED SALE DEEDS SUBMITTED IN THE PAPER BOOK AT PAGE NO. 110 TO 135 ) . THUS THE PROFIT EARNED ON THIS PLOT WAS RS. 3,51,151/- D ULY SHOWN IN BOOKS OF ACCOUNT. THE SUPPRESSED SALE AMOUNT AS TAK EN BY THE AO WITHOUT ANY CORROBORATIVE EVIDENCE IS NOT MAINTAI NABLE. (3) 9, CHITRAKOOT RS. 10,00,000/- AGAIN IN THE JOTTINGS, THERE IS NO SPECIFIC MENTION OF PROPERTIES SHOWN AS 9, CHITRAKOOT. THE PLOT UNDER CONSIDERATION WAS PURCHASED FOR RS . 7,50,000/- IN SEPTEMBER, 2006 AND WAS SOLD AFTER ONE YEAR IN OCTO BER, 2007 FOR RS. 10,00,000/- AFTER CONSTRUCTION OF BOUNDARY WALL (AS PER COPY OF THE REGISTERED SALE DEED SUBMITTED IN THE PAPER BOOK AT PAGE NO. 136 TO 143 ). NOW IT IS FOR KIND CONSIDERATION AS TO WHETHER, A PLOT PURCHASED FOR RS. 7,50,000/- ONE YEAR BACK COULD FE TCH THE PRICE OF RS. 20 LAC AS TAKEN BY THE AO. AS PER PRICE INDEXAT ION, SUCH INFLATION IN THE COST IS PRACTICALLY IMPOSSIBLE. OBVIOUSLY, THE FIGURES AS TAKEN BY THE AO ARE INCORRECT AND WITHOU T ANY BASIS ON THE FACE OF SUCH DOCUMENTED EVIDENCES. (4) 185, 186, VIJAYSINGH PATHIK NAGAR RS. 19,00,000/- AGAIN IN THE JOTTINGS, THERE IS NO SPECIFIC MENTION OF PROPERTIE S SHOWN AS 185, 186, VIJAYSINGH PATHIK NAGAR. IT IS NOT UNDERSTOOD AS TO HOW AND FROM WHERE THE LD. AO COULD DEDUCE THE AMOUNT OF THE SUPPRESSED SALE FROM THE SAID JOTTINGS. IN ABSENCE OF SPECIFIC MENTION OF THE PLOT NO. OF A PARTICULAR SCHEME, NO DEFINITE AND LOGICAL INFERENCE COULD BE DRAWN ON THE BASIS OF SU CH ROUGH JOTTINGS MENTIONING THE NAME OF THE SCHEME ONLY, IG NORING THE VITAL FACT THAT BOTH THE PLOTS WERE SOLD BY REGISTERED SALE D EEDS (COPIES LYING AT PAGE NO. 144 TO 163 OF PB). IN THE CIRCUMSTANCES, THE ROUGH JOTTING MENTIONING MERELY THE NAME OF VIJ AYSINGH PATHIK NAGAR IS IMMATERIAL AND IRRELEVANT CONVEYING NO MEANING AT ALL. (5) 1, 2, 3, & 24, MITRA NAGAR RS. 96,00,000/- AGAIN IN THE JOTTINGS, THERE IS NO SPECIFIC MENTION OF THE PROPERTIES SHOW N AS 1, 2, 3, & 24, MITRA NAGAR. IT IS NOT UNDERSTOOD AS TO HOW AND FROM WHERE THE LD. AO COULD DEDUCE AND WORK OUT THE AMOUNT O F THE SUPPRESSED SALES. IN ABSENCE OF SPECIFIC MENTION OF THE PLOT NO. OF A PARTICULAR SCHEME, NO DEFINITE AND LOGICAL INFERE NCE COULD BE 19 DRAWN ON THE BASIS OF SUCH ROUGH JOTTINGS MENTIONIN G THE NAME OF THE SCHEME ONLY. IN THE CIRCUMSTANCES, THE ROUGH JO TTING MENTIONING MERELY THE NAME OF MITRA NAGAR IS IMMATERIAL AND IRRELEVANT CONVEYING NO MEANING AT ALL. THE BRIEF FACTS OF THE PLOTS UNDER CONSIDERATION ARE GIVEN AS UNDER TO AP PRECIATE OUR VIEW:- PLOT NO. 1, MITRA NAGAR WAS SOLD FOR RS. 14,25,000/ - THROUGH REGISTERED SALE DEED (COPY LYING AT PAGE NO. 164 TO 173 OF PB). PLOT NO. 2, MITRA NAGAR WAS SOLD FOR RS. 18,00,000/ - THROUGH REGISTERED SALE DEED (COPY LYING AT PAGE NO. 174 TO 184 OF PB). PLOT NO. 3, MITRA NAGAR WAS SOLD FOR RS. 12,50,000/ - THROUGH REGISTERED SALE DEED (COPY LYING AT PAGE NO. 185 TO 194 OF PB). PLOT NO. 24, MITRA NAGAR WAS SOLD FOR RS. 9,25,000/ - THROUGH REGISTERED SALE DEED (COPY LYING AT PAGE NO. 195 TO 205 OF PB). THUS ALL THE FOUR PLOTS WERE SOLD FOR RS. 54,00,00 0/- AS PER COPIES OF SALE DEEDS AND WERE DULY SHOWN IN THE BOOKS OF ACCOUNT. (III) HERE IT WOULD ALSO BE WORTHWHILE TO MENTION THAT TH E AUTHORITIES BELOW HAVE HEAVILY RELIED UPON SUCH DEAF AND DUMB JOTTING S WITHOUT CAUSING ANY ENQUIRY TO FIND OUT THE CORRECTNESS OF SUCH JOTTINGS. IN A BSENCE OF SUCH AN EXERCISE , SUCH JOTTINGS CAN NOT BE RELIED UPON BLINDLY AS H ELD BY HONORABLE DELHI HIGH COURT IN THE CASE OF CIT VS. LUBTEC INDIA LTD. THE RELEVANT EXTRACT FROM THE JUDGMENT IS RE-PRODUCED H EREUNDER FOR READY REFERENCE: SEARCH AND SEIZURE- BLOCK ASSESSMENT- COMPUTATION OF UNDISCLOSED INCOME-ADDITION UNDER S. 69-C- SOME FIGURES WERE FO UND NOTED AGAINST CERTAIN ITEMS JOTTED DOWN IN PENCIL ON TWO SHEETS OF PAPER WHICH WERE RECOVERED DURING THE COURSE OF SEARCH AN D SEIZURE OPERATIONS IN THE PREMISES OF THE ASSESSEE- AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE THAT IT DID NOT INCUR T HE SAID EXPENDITURE AND TREATED THE AMOUNT AS UNEXPLAINED EXPENDITURE- NOT JUSTIFIED- ..AO HAS NOT MADE ANY ENQUIRY WHATSOEVER TO FIND OUT WHETHER SUCH EXPENDITURE WAS ACTUALLY INCURRED BY THE ASSES SEE- TRIBUNAL JUSTIFIED IN UPHOLDING THE ORDER OF THE CIT(A) DELE TING THE IMPUGNED ADDITION. FOR FURTHER JUDICIAL CITATIONS ON THE SUBJECT, KIND LY REFER TO THE WRITTEN SUBMISSIONS AS MADE BEFORE LD. CIT (A) PB NO. 4-5. IN THE PRESENT CASE, THE LD. AO DID NOT CARRY OUT ANY ENQUIRY TO VERIFY THE CORRECTNESS OF THE EXPLANATION OF THE APPELLANT AS FURNISHED IN RESPECT OF SUCH JOTTINGS OF 20 THE DEAF AND DUMB PAPERS/SHEETS. THUS IN ABSENCE OF ANY ENQUIRY WHATSOEVER, NO ADVERSE VIEW CAN BE TAKEN. IN VIEW OF ABOVE DISCUSSIONS, IT IS PROVED BEYOND D OUBT THAT THE JOTTINGS AS CONTAINED IN THE AFORESAID EXHIBITS ARE DEAF AND DU MB JOTTINGS AND CARRY NO EVIDENTIARY VALUE. HERE IT WOULD NOT BE OUT OF PLAC E TO MENTION THAT AT THE TIME OF SEARCH OPERATIONS ALSO, THE APPELLANT WAS C ONFRONTED WITH THESE PAPERS AND WAS SPECIFICALLY REQUIRED TO EXPLAIN THE NATURE OF THESE JOTTINGS. AT THAT TIME ALSO, THE APPELLANT HAD INFORMED THAT THESE PAGES CONTAINED DETAILS OF THE PROPERTIES ONLY AS PER RELEVANT EXTR ACTS RE-PRODUCED HEREUNDER FOR READY REFERENCE, AND THE CONCERNED AU THORIZED OFFICER ALSO FELT SATISFIED WITH SUCH AN EXPLANATION AND DID NOT ATTACH MUCH IMPORTANCE TO SUCH DEAF AND DUMB PAPER AND ACCORDIN GLY DID NOT INSIST FOR ANY DISCLOSURE OF ADDITIONAL INCOME ON T HE BASIS OF THESE EXHIBITS. (AS PER PAGE NO. 82 OF PB) IZU 18 ESA VKIDKS ANNEX. A-17, A-25 O A-28 FN[KK JGK GWA A D`I;K CRK;S FD BLESA FDL RJG DS FOOJ.K NTZ GS A MRRJ % BUESA LS VF/KDRJ PROPERTY DH [KJHN FCDZH LS LACAF/KR DKXTKR GS A ANNEX A-17, IJ IST LA[;K 23 LS 47 ESA FOFHKUU O;FDR;KSA LS IZKIR DH XB Z JKFK;KSA RFKK FOFHKUU O;FDR;KSA DKS FD;S X;S HKQ XRKUKSA DH DETAILS GS A ANNEX. A-25 DS IST LA[;K 23 LS 25 ESA FOFHKUU DS IST LA[;K 23 LS 25 ESA FOFHKUU DS IST LA[;K 23 LS 25 ESA FOFHKUU DS IST LA[;K 23 LS 25 ESA FOFHKUU PROPERTIES DH DH DH DH DETAILS 'KKFEY GS A 'KKFEY GS A 'KKFEY GS A 'KKFEY GS A RFKK BL RFKK BL RFKK BL RFKK BL ANNEX. DS IST LA[;K 1 LS 4 ESA GEKJS }KJK [KJHNS O CSPH X BZ DS IST LA[;K 1 LS 4 ESA GEKJS }KJK [KJHNS O CSPH X BZ DS IST LA[;K 1 LS 4 ESA GEKJS }KJK [KJHNS O CSPH X BZ DS IST LA[;K 1 LS 4 ESA GEKJS }KJK [KJHNS O CSPH X BZ PROPERTIES DH DH DH DH DETAILS FY[KH XBZ FY[KH XBZ FY[KH XBZ FY[KH XBZ GS A GS A GS A GS A A-28 ESA FOFHKUU FINANCIAL TRANSACTIONS FY[KS GQ, GS A ANNEX. A-24 ESA HKH BLH IZDKJ DH PROPERTIES DH DETAILS FY[KH GQBZ GS A FURTHER THE ABSURDITY OF THIS ADDITION CAN VERY WE LL BE UNDER-STOOD FROM THE FACTS AS DISCUSSED IN COMING PARAS DISPUTING THEREIN THE ADDITIONS OF RS. 1,50,00,000 AS MADE BY THE AO. & REDUCED TO RS.49,74,730/- BY THE LD. CIT (A) UNDER THE HEAD OF CONSTRUCTION EXPENSES. WHILE MAKING AND CONFIRMING SUCH ADDITION ON ACCOUN T OF CONSTRUCTION EXPENSES, THE AUTHORITIES BELOW HAD OU T-RIGHTLY IGNORED THE ADDITION AS MADE AND CONFIRMED BY THEM ON THE BASIS OF SUCH DEAF AND DUMB PAPER ON ACCOUNT OF THE ALLEGED SUPPRESSED SALES AS BEING APPREHENDED BY T HEM. WHILE MAKING AND CONFIRMING THE ADDITION ON ACCOUNT OF THE CONSTRUCTION EXPENSE S, NEITHER DID THEY HAD TAKEN CARE OF SUCH ALLEGED SUPPRESSED SALES NOR DID THEY T AKE CARE OF THE CONSEQUENT N.P RESULTS ON ACCOUNT OF SUCH ALLEGED SUPPRESSED SALE S. IF ALL THE ADDITIONS AS CONFIRMED BY THE CIT (A) UNDER BOTH THE HEADS ARE TAKEN TOGETHER THEN THE PERCENTAGE OF THE N.P. WOULD GO TO UN-IMAGINED HEIG HTS OF RS. 2,66,31,443/- GIVING N.P.RATE 110.16% WHICH IS RATHER IMPOSSIBLE IN THI S LINE OF BUSINESS. NORMALLY N.P. IN THIS LINE OF BUSINESS RANGES IN THE VICINITY OF 8 TO 10%. AS PER RULES OF ACCOUNTANCY, SUPPRESSED SALES IS PART OF THE TRADI NG RESULTS ONLY. ONCE TRADING RESULTS ARE ESTIMATED AFTER REJECTING THE BOOKS U/ S 145(3) OF THE ACT, THEN NO FURTHER ADDITION IS WARRANTED ON ACCOUNT OF ANY OTHER DEFEC T OR DEFICIENCY. BEFORE PARTING WITH THE POINT AT ISSUE, IT WOULD BE IN THE FITNESS OF THINGS TO BRING IT ON RECORD THAT THE JOTTINGS UNDER CONSIDERATION ARE APPEARING ON T HE COMPUTER PRINT-OUTS OF THE PROPERTY A/C PERTAINING TO THE F INANCIAL YEARS 2006-07 AND 21 PRECEDING YEAR, MEANING THEREBY THESE PRINT-OUTS C OULD BE OBTAINED ONLY AFTER THE FINANCIAL YEAR ENDING ON 31.03.2007. HOWEVER, THE LD. AO HAD HUNCHED TO CONNECT THESE JOTTINGS AS APPEARING ON SUCH SHEETS TO TH E PROPERTIES WHICH WERE MOSTLY SOLD LONG BACK SAY ABOUT THREE FOUR YEARS BACK AND THERE WAS NO APPARENT REASON FOR THE APPELLANT TO MAKE SUCH JOTTINGS IN RESPECT OF SUCH PROPERTIES AFTER THE LAPSE OF THREE FOUR YEARS AS THE SAID PROPERTIES STOOD ALREADY S OLD LONG BACK AND MAKING OF SUCH JOTTINGS WAS TOTALLY USELESS AND IMMATERIAL FOR THE APPELLANT. FROM THIS FACT, IT IS ESTABLISHED PATENTLY THAT THESE JOTTINGS WERE ONLY ROUGH NOTING AND WERE OF NO USE. HAVING CONSIDERED THE ABOVE FACTS, YOUR HONOR WOULD APPRECIATE THAT THE AUTHORITIES BELOW HAVE MADE AND CONFIRMED THE ADDIT ION OF RS.1,38,70,000/- WITHOUT ANY VALID GROUND. WITHOUT PREJUDICE TO THE ABOVE CONTEN TIONS, THIS ADDITION IS FURTHER ASSAILED ON THE FOLLOWING LEGAL AND TECHNICAL GROUNDS: (I) WHILE MAKING SUCH ADDITION, THE LEARNED AO DID NOT MENTION ANY SECTION OF LAW UNDER WHICH HE WAS MAKING THIS ADDIT ION. AS PER JUDICIAL DISCIPLINE , THE LD. AO WAS LEGALLY REQUIRED TO MENTION THE RELEVANT SECTION OF LAW FOR WHICH HE WAS MAKING THE ADDITION. FOR SUCH LAPSE, THE ADDITION SO MADE IS BAD IN LAW AND DESERVES TO THE DELETED IN LIMINE. (II) AGAIN THE AUTHORITIES BELOW SEEM TO BE CONFUSED ABO UT THE EXACT NATURE OF THE ADDITION SOUGHT TO BE MADE/CONFIRMED BY THEM. THEY HAD OPINED THAT THESE ARE SUPPRESSED SALES. IN THAT CASE, ONLY N.P. EARNED ON SUCH SUPPRESSED SALES IS TO BE TAKEN INTO ACCOUNT, WHEREAS THE AUTHORITIES BELOW HAD ADDED THE ENTIRE AMOUNT OF THE SUPPRESSED SALES . THUS THE ADDITION SO MADE IS CONTRARY TO THE PRINCIPLES OF ACCOUNTANCY. IN SUCH CASE THE LOGICA L ADDITION, IF AT ALL IS MADE FOR ANY COGENT REASON, THEN IT WOULD BE TO THE EXTENT OF N.P. EARNED ON SUCH SUPPRESSED SALES ONLY AND NO T THE ENTIRE SALE CONSIDERATION AS DONE BY THE AUTHORITIES. 2.11 THE LD. AR PLACED RELIANCE ON THE FOLLOWING CA SE LAWS 1. S.P. GOYAL VS. DCIT (2002) 77 TTJ (MUMBAI) 1 2. DCIT VS. ROYAL MARWAR TOBACCO PRODUCT (P) LTD. 120 TTJ 387 (AHD.) 2. AMARJIT SINGH BAKSHI (HUF) VS. ACIT 81 TTJ 169 (DEL . 3. CIT VS. LUBTEC INDIA LTD. 311 ITR 175 (DEL.) 22 4. NEERAJ SHARMA VS. DCIT 137 TTJ 566 (ITAT DEL.) 2.12 ON THE OTHER HAND, THE LD. DR DREW OUR ATTENTION TO PAGE 23 AND 25 OF ANNEXURE A-25. THESE ARE AVAILABLE AT PAGES 86 AND 87 OF THE PAPER BOOK FILED BY THE LD. AR OF THE ASSESSEE. THE WORD SOLD IS BEING MENTIONED ON THESE TWO PAGES AGAINST CERTAIN PROPERTIES. A FIGUR E IS ALSO BEING MENTIONED AGAINST THE PROPERTY. HENCE WHERE THE WORD SOLD I S MENTIONED THEN IT MEANS THAT PROPERTY HAS BEEN SOLD. THE FIGURE MENTI ONED CAN BE CONSIDERED AS A FIGURE MENTIONED IN LACS. FOR EXAMPLE FOR THE PROPERTY SHYAMPURI, IT IS MENTIONED AS WORD SOLD AND FIGURE MENTIONED IS 15 X4 = 60. IT MEANS 04 PLOTS HAVE BEEN SOLD FOR RS. 15.00 LACS EACH. ON QU ERY FROM THE BENCH, IT WAS STATED THAT PROPERTY SOLD DURING THE YEAR IS OF KALYAN NAGAR THOUGH THERE IS MENTIONING OF THE PROPERTY AT KALYANPURI AND KAL YANKUNJ BUT THERE IS NO MENTION OF PROPERTY AT KALYAN NAGAR. IN THE SEIZED PAPER, THERE IS DESCRIPTION OF FIGURE OF 10,000/- AND SAME HAS BEE N MULTIPLIED BY 7500 AND THE FIGURE HAS BEEN DENOTED AS RS. 7.5 CRORES. FROM THESE DESCRIPTIONS, THE LD. DR SUBMITTED THAT THERE HAS BEEN TREMENDOUS SUP PRESSION OF SALE CONSIDERATION AND THE AO WAS THEREFORE, JUSTIFIED I N MAKING THE ADDITION . SIMILARLY IN RESPECT OF VIJAY SINGH PATHIK NAGAR, THERE HAS BEEN A FIGURE OF 10,000 X 1,000 AND FIGURE OF RS. 1.00 CRORE IS WRIT TEN THOUGH THE WORD SOLD 23 IS NOT MENTIONED BUT THAT INDICATE THE PRICE AT WHI CH THE PLOTS WERE TO BE SOLD. 2.13 WE HAVE HEARD BOTH THE PARTIES. PLOT NO. 208, SHYAMPURI, HAS BEEN SOLD THROUGH TWO REGISTERED SALE DEED AVAILABLE AT PAGES 92 TO 109 OF THE PAPER BOOK FILED BY THE LD. AR. ONE PART WAS SOLD F OR RS. 9.30 LACS AND SECOND PART WAS SOLD FOR RS. 10.21 LACS. FIRST PART SOLD CONTAINED 122 SQ. YARD ON WHICH CONSTRUCTED AREA WAS 1700 SQ.FT. THE SECOND PART SOLD IS OF 118 SQ. YARD ON WHICH CONSTRUCTED AREA IS 1700 SQ.F T. THE FIRST HAS BEEN SOLD ON 2 ND MAY, 2007 WHILE THE SECOND PART HAS BEEN SOLD ON 2 5-03-2008. THE AO HAS CONSIDERED THE SALE CONSIDERATION AT RS. 15. 00 LACS IN RESPECT OF THAT PART OF PLOT WHICH HAS BEEN SOLD FOR RS. 9.30 LACS. IN RESPECT OF OTHER PART OF PLOT SOLD FOR RS. 10.23 LACS, THE AO HAS NOT MADE A NY ADDITION. IF THE CONSIDERATION FOR THE SECOND PART OF THE PLOT SOLD IS CONSIDERED AS ACCEPTABLE THEN THERE WAS NO CASE OF MAKING ADDITION IN RESPEC T OF THE PLOT SOLD ON 2 ND MAY, 2007. THE FIGURE OF 15 AS MENTIONED IN SEIZED EXHIBIT IS IN RESPECT OF PLOT OF SHYAMPURI MENTIONED AS 170, 177, 164 AND 1 65 WHILE THE PLOT SOLD IS 208, SHYAMPURI . PAGES 23 AND 25 OF ANNEXURE A-2 5 ARE COMPUTER SHEET BELOW WHICH CERTAIN ENTRIES HAVE BEEN MENTIONED IN HANDWRITING. BEFORE THE US, THE LD. AR HAS EXPLAINED THAT THE ASSESSEE WAS A BROKER AND MIGHT HAVE ENTERED CERTAIN DETAILS IN RESPECT OF CERTAIN PLOT S SOLD. WHEN THE AO IS 24 MAKING SPECIFIC ADDITION THEN THE ONUS WAS ON THE A O TO HAVE ESTABLISHED THAT THE ASSESSEE HAS RECEIVED EXCESS CONSIDERATION OVER AND ABOVE THE SALE CONSIDERATION SHOWN IN THE REGISTERED DOCUMENTS. HE NCE THERE IS NO CASE OF MAKING ADDITIN OF RS. 5.70 LACS IN RESPECT OF PLOT NO. 208, SHYAMPURI. 2.14 THE SECOND PROPERTY IS AT 52, KALYAN NAGAR. WE HAVE GONE THROUGH THE SEIZED PAPER 23 AND 25 OF ANNEXURE A-25. THERE IS NO MENTION OF KALYAN NAGAR PROPERTY. THE WORD KALYANPURI AND KALY AN KUNJ ARE BEING MENTIONED. THE ASSESSEE HAS EXPLAINED THAT PLOT WAS PURCHASED IN AUGUST 2006 AND WAS SOLD IN JULY 2007 FOR RS. 22.00 LACS A FTER CARRYING OUT CONSTRUCTION WORK WORTH RS. 5,73,849 /-. THUS THE INVESTMENT IS OF RS. 12.75 LACS ON PLOTS AND INVESTMENT IN CONSTRUCTION ARE TO THE EXTENT OF RS. 5.73 LACS. THE ASSESSEE HAS SHOWN THE PROFIT TO THE EXTE NT OF RS. 3.50 LACS. HENCE THE ASSESSEE HAS SHOWN THE REASONABLE MARGIN OF RS. 20% ON INVESTMENT. THE AO HAS NOT MADE ANY ENQUIRY OF INVESTIGATION FR OM THE PERSONS TO WHOM SUCH PLOTS ALONGWITH SOME CONSTRUCTION HAVE B EEN SOLD. THUS THERE IS NO CASE OF MAKING ADDITION OF RS. 8.00 LACS. 2.15 THE NEXT PROPERTY IS AT 9, CHITRAKOOT . THE PLOT WAS PURCHASED FOR RS. 7.50 LACS IN SEPT. 2006 AND WAS SOLD FOR RS. 10.00 LACS IN OCT. 2007. THE SALE DEED IS AVAILABLE AT PAGES 136 TO 143 OF THE P APER BOOK FILED BY THE LD. AR. THE PLOT CONSISTED OF 179.43 SQ. YARD AND COVE RED AREA OF 1700 SQ.FT 25 AND CONSISTED OF GROUND FLOOR AND FIRST FLOOR. THE STAMP AUTHORITY HAD TAKEN THE CONSIDERATION AT RS. 10.00 LACS WHICH HAS BEEN DECLARED BY THE ASSESSEE. THE AO HAS ADDED A SUM OF RS. 19.00 LCS ON ACCOUNT OF SUPPRESSED SALE CONSIDERATION IN RESPECT OF PLOT NO. 185 AND 186 A T VIJAY SINGH PATHIK NAGAR. THE PLOT MEASURING 500 SQ. YARD HAS BEEN SOL D FOR RS. 6.75 LACS AS PER REGISTERED SALE DEED AVAILABLE AT PAGES 145 TO 152 OF THE PAPER BOOK. THE ADJACENT PLOT NO. 187 IS ALSO OF 500 SQ. YARD AND H AS ALSO BEEN SOLD IN MARCH 2008 FOR RS. 7.25 LACS. THE COPY OF REGISTERE D SALE DEED IS AVAILABLE AT PAGES 155 TO 162 OF THE PAPER BOOK. IN THE PLOT NO. 186, THERE IS SOME CONSTRUCTED AREA TO THE EXTENT OF 260 SQ.FT WHILE T HERE WAS NO CONSTRUCTION IN PLOT NO. 185. IT IS TRUE THAT PAGES 23 AND 25 OF AN NEXURE A-25 CONTAINS THE DESCRIPTION OF 1,000 X 10,000 = 1.00 CRORE AGAINST VIJAY SINGH PATHIK NAGAR. WHETHER THE ADDITION CAN BE MADE SIMPLY ON THE BASI S OF SUCH NOTINGS ON A PAPER. THERE IS NO MENTION THAT THE PLOTS OF VIJAY SINGH PATHIK NAGAR HAVE BEEN SOLD ON THE PAPER FOUND DURING THE COURSE OF S EARCH. NO EFFORT HAS BEEN MADE TO ASCERTAIN THE NATURE OF ENTRIES WRITTEN IN THE PAPER. WE ARE NOT AWARE AS TO WHOSE HANDWRITING THE PAPER AT PAGES 23 AND 2 5 HAVE BEEN WRITTEN. IN ABSENCE OF ANY CORROBORATIVE EVIDENCE, ONE CANNOT M AKE ADDITION OF RS. 19.00 LACS. THE ADDITION OF RS. 19.00 LACS IS NOT S UPPORTED BY THE ENTRIES CONTAINED IN PAPER 23 AND 25 BECAUSE THE TOTAL SALE CONSIDERATION HAS NOT 26 BEEN TAKEN AT RS. 1.00 CRORE. WE THEREFORE, FEEL TH AT IT WAS NOT A CASE OF MAKING ADDITION OF RS. 19.00 LACS. 2.16 THE AO HAS ADDED A SUM OF RS. 96.00 LACS IN RE SPECT OF SALE OF 04 PLOTS IN MITRA NAGAR. THE SALE DEED IN RESPECT OF ALL THE PLOTS ARE AVAILABLE AT PAGES 164 TO 205 OF THE PAPER BOOK. PLOT NO. 1 AT M ITRA NAGAR HAS BEEN SOLD BY THE ASSESSEE AS POWER OF ATTORNEY HOLDER OF SHRI AJAY PAL SINGH AND THE PROPERTY HAS BEEN PURCHASED BY M/S. HARISH FINANCE & INVESTMENT (P) LTD. THE PLOT NO. 2 HAS BEEN AGAIN SOLD BY THE ASSESSEE AS POWER OF ATTORNEY HOLDER OF JAYA CHOUDHARY AND THE PURCHASER IS M/S. HARISH SHARMA FINANCE (P) LTD. . PLOT NO. 2 HAS ALSO BEEN SOLD BY SHANKAR KHANDELWAL AS POWER OF ATTORNEY OF MANISHA BENIWAL . THE PURCHASER IS AGAIN M/S. HARISH SHARMA FINANCE (P) LTD. PLOT NO, 24 OF MITRA NAGAR HAS ALSO BEEN SOLD BY TH E ASSESSEE AS POWER OF ATTORNEY HOLDER OF HEMANT KUMA R BENIWAL AND THE PURCHASER IS AGAIN M/S. HARISH SHARMA FINANCE (P) L TD . ALL THE FOUR PLOTS ARE ADJACENT TO EACH OTHER. THE SEIZED PAPERS CONTAIN T HE NOTINGS AS MITRA NAGAR = 1,500 X 10,000. THE TOTAL AREA OF FOUR PLOTS WILL BE 2660 SQ. YARD WHILE FIGURE MENTIONED IN PAPER 25 OF ANNEXURE A-25 IS 1, 500 X 10,000. THE AO HAS NOT MENTIONED AS TO HOW HE IS TAKING THE SUPPRE SSED SALE CONSIDERATION AT RS. 96.00 LACS. THUS THERE IS NO CASE OF MAKING ADDITION OF RS. 96.00 LACS. THE TRIBUNAL IN THE CASE OF DCIT VS. VS. REGISTHAN (P) LTD. (ITA 27 NO.3195/JP/2005 DATED 31-05-2011) HAD AN OCCASION T O CONSIDER AS TO WHETHER THE ADDITION CAN BE MADE IN THE HANDS OF TH E PURCHASER ON THE GROUND THAT THE VALUE ADOPTED BY STAMP AUTHORITIES CAN BE TAKEN AS INVESTMENT FOR HOLDING AN INVESTMENT OUTSIDE THE BO OKS OF ACCOUNTS. IT WILL BE USEFUL TO REPRODUCE PARA 3.5 FROM THAT ORDER 31- 05-2011 AS UNDER:- 3.5 WE HAVE HEARD BOTH THE PARTIES. THE ISSUE BEFOR E US STANDS COVERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. RAJEEV MISHRA, CONTRACTOR VS. THE ADDL. CIT AND ACI T VS. M/S. RAJEEV MISHRA, CONTRACTOR (ITA NO. 654/JP/20 10 DATED 23-12-2010). THE TRIBUNAL VIDE ORDER DATED 23TH DEC . 2010 HAS HELD AS UNDER:- 6.4 WE HAVE HEARD BOTH THE PARTIES. THE SUB-REGIS TRAR, KOTA WHILE CHARGING THE STAMP DUTY HAS TAKEN THE COST OF THE PLOT AT RS. 4,58,070/-. THE SUB-REGISTRAR IS SUPPOSED TO ADOPT THE DLC RATES FOR THE PURPOSE OF STAMP DUTY. MOREOVER, THE LD. CIT(A) HAS RIGHTLY POINTED THAT PLOT CONSIDERED FOR ASCERTAINING THE RATE OF LAND W AS PLOT OF 327 SQ. METER AND WAS SITUATED ON THE ROAD OF 18 METER. THE AO HA S RECORDED THE STATEMENT OF SELLER AND THE SELLER HAS ADMITTED TO HAVE RECEIVED THE SALE CONSIDERATION OF RS. 7.11 LACS FOR THE HOUSE. THERE IS NO COMPARABLE CASE OF PLOT OF SIMILAR SIZE TO HOLD THAT THE CONSIDERAT ION PAID IS INADEQUATE. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF C IT VS. BHANWARLAL MURWATIYA, 215 CTR 489 HAD AN OCCASION TO CONSIDER THE ADDITION U/S 69 IN THE HANDS OF THE PURCHASER WHEN THE SELLER GAVE DIFFERENT STATEMENTS IN RESPECT OF CONSIDERATION RECEIVED. HON'BLE JURISDI CTIONAL HIGH COURT AT PAGE 7 AND 8 OF THE DECISION HAS OBSERVED AS UNDER: - 7. WE HAVE CONSIDERED THE SUBMISSIONS AND AFTER GOING THROUGH THE ORDERS, ARE OF THE VIEW THAT ALL SAID AND DONE, THE 28 QUESTION AS TO WHAT WAS THE PRICE OF THE LAND AT TH E RELEVANT TIME, IS A PURE QUESTION OF FACT. APART FROM THE FACT, THAT EVEN IF, IT WERE TO BE ASSUMED, THAT THE PRICE OF THE LAND WAS DIFFEREN T THAN THE ONE, RECITED IN THE SALE DEED, UNLESS IT IS ESTABLISHED ON RECORD BY THE DEPARTMENT, THAT AS A MATTER OF FACT, THE CONSIDERA TION, AS ALLEGED BY THE DEPARTMENT, DID PASS TO THE SELLER FROM THE PURCHASER, IT CANNOT BE SAID, THAT THE DEPARTMENT HAD ANY RIGHT T O MAKE ANY ADDITIONS. IT IS A DIFFERENT STORY AS TO, TO WHAT E XTENT AND HOW, THE STATEMENT OF SURESH KUMAR SONI, AS GIVEN BEFORE DIF FERENT AUTHORITIES, AT DIFFERENT TIMES, CAN BE USED AGAINS T THE ASSESSEE. MORE SO, WHEN NONE OF THE WITNESSES WERE EXAMINED B EFORE THE AO, AND THE ASSESSEE DID NOT HAVE ANY OPPORTUNITY T O CROSS EXAMINE THEM. 8. IN ANY CASE, THE QUESTION AS TO WHETHER THE CONSIDERATION OF RS. 61 LACS, OR ANY OTHER HIGHER C ONSIDERATION THAN THE ONE, MENTIONED IN THE SALE DEED, DID PASS FROM THE ASSESSEE TO THE SELLER OR NOT, DOES NONETHELESS REMAIN A QUESTI ON OF FACT, AND IT IS NOT SHOWN BY THE DEPARTMENT, THAT ANY RELEVANT M ATERIAL HAS BEEN IGNORED, OR MISREAD BY THE LEARNED CIT, OR THE LEARNED TRIBUNAL 6.5 WE ARE ALSO AWARE THAT JURISDICTIONAL HIGH COUR T IN THE CASE OF SMT. AMAR KUMARI SURANA VS. CIT,226 ITR 344 HAD AN OCCASION TO CONSIDER THE ADDITION ON ACCOUNT OF UNE XPLAINED INVESTMENT U/S 69B OF THE ACT IN THE HANDS OF THE P URCHASER WHEN THE VALUATION AS DONE BY THE DVO SHOWED THAT MARKET VALUE OF THE PROPERTY IS MORE THAN THE CONSIDERATION SHOWN. HON' BLE RAJASTHAN HIGH COURT HELD THAT BURDEN IS ON THE REVENUE TO PR OVE THAT REAL INVESTMENT EXCEEDS THE INVESTMENT SHOWN IN THE ACCO UNT BOOKS OF THE ASSESSEE. MERELY ON THE BASIS OF FAIR MARKET VA LUE, NO ADDITION CAN BE MADE U/S 69B OF THE ACT BUT ON THE BASIS OF SUFFICIENT MATERIAL ON RECORD, SOME REASONABLE INFERENCE CAN B E DRAWN THAT 29 THE ASSESSEE HAS INVESTED MORE THAN THE AMOUNT SHOW N IN THE BOOKS AND ADDITION CAN BE MADE U/S 69B OF THE ACT. IN THE CASE BEFORE JURISDICTIONAL HIGH COURT, THE VALUATION OFFICER GA VE INSTANCE OF THE SALE OF SIMILAR PLOTS AND RATE OF SALE OF SUCH PLOT WAS RS. 60/- OR RS. 75/- PER SQ. YARD. IN THAT CASE, THE ASSESSEE W AS NOT ABLE TO POINT OUT ANY MISTAKE / LACUNA IN ASCERTAINING THE VALUE OF THE PLOT OF LAND BY VALUER. IT WILL BE USEFUL TO REPRODUCE T HE FOLLOWING PARAGRAPH FROM THE DECISION OF JURISDICTIONAL HIGH COURT. IT IS TRUE THAT THAT THE BURDEN IS ON THE DEPARTM ENT TO ESTABLISH THE FACT THAT THE PROPERTY HAS BEEN SOLD FOR A LESSER CONSIDERATION THAN THE MARKET VALUE. IT IS ALSO TO BE ESTABLISHED THAT THE ACTUAL CONSIDERATION IS MORE THAN THE CONSIDERA TION SHOWN IN THE ACCOUNT BOOK/ SALE DEED. IN THE CASE OF K.P. VE RGHESE (1981), 131 ITR 597 (SC), THEIR LORDSHIPS HAVE OBSERVED THA T BEFORE INVOKING THE POWERS UNDER SUB-SECTION (2) OF SECTIO N 52 OF THE INCOME TAX ACT, 1961, THE BURDEN IS ON THE REVENUE TO PROVE THAT THE ACTUAL CONSIDERATION WAS MORE THAN DISCLOSED BY THE ASSESSEE. BUT THEIR LORDSHIPS HAVE FURTHER OBSERVED THAT THIS BURDEN MAY BE DISCHARGED BY ESTABLISHING THE FACTS AND CIRCUMSTAN CES FROM WHICH A REASONABLE INFERENCE CAN BE DRAWN THAT THE ASSESS EE HAS NOT CORRECTLY DECLARED OR DISCLOSED THE CONSIDERATION R ECEIVED OR PAID BY HIM. AS STATED ABOVE IN THE LOCALITY OF C-SCHEME , JAIPUR, THE ADJOINING PLOTS WERE SOLD AT THE RATE OF RS. 60 OR RS. 75 PER SQ. YARD AND IF WE TAKE THE ESTIMATED RATE TAKEN BY THE APPE LLATE ASSISTANT COMMISSIONER AND THE TRIBUNAL THE RATE OF PLOT IN Q UESTION COMES TO RS. 36 PER SQ. YARD , THAT IS, ROUGHLY HALF OF T HE PREVALENT MARKET RATE IN THE AREA. ADMITTEDLY, NO REASON HAS BEEN SH OWN BY THE ASSESSEE AS TO WHY THE PLOT OF LAND HAS BEEN SOLD T O HER FOR HALF OF THE MARKET RATE. NOR ANY OTHER REASON HAS BEEN SHOW N TO THE INCOME TAX OFFICER AT THE TIME OF ASSESSMENT. EVEN, IN SPITE OF SPECIFIC QUERY, THE ASSESSEE FAILED TO POINT OUT AN Y MISTAKE / LACUNA 30 IN ASCERTAINING THE VALUE OF THE PLOT OF LAND BY TH E VALUER. IN THESE CIRCUMSTANCES, THE ONLY REASONABLE INFERENCE THAT C AN BE DRAWN IS THAT THE ASSESSEE HAS SHOWN LESS AMOUNT IN THE ACCO UNT BOOKS AND SALE DEED THAN THE ACTUAL CONSIDERATION PAID. CONSI DERING THE COMPARABLE CASE AND THE FACTS OF THE CASE, WE FIND NO GROUND TO INTERFERE IN THE ADDITION MADE U/S 69B OF THE I.T. ACT, 1961. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT VS. BHANWAR LAL MURWATIYA (SUPRA) HELD THAT THE ONUS IS ON THE REVE NUE TO ESTABLISH THAT THE ALLEGED CONSIDERATION OVER AND ABOVE THE CONSIDERAT ION SHOWN HAS CHANGED THE HANDS FROM THE SELLER TO PURCHASER. THE ONUS WA S ON THE REVENUE TO HAVE ESTABLISH THE EXCESS CONSIDERATION RECEIVED. WE THE REFORE, FEEL THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITIO N OF RS. 1.38 CRORES. 3.1 THE 2 ND GROUND OF APPEAL OF THE ASSESSEE IS AS UNDER:P ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAD LEGALLY AND FACTUALLY ERRED IN CONF IRMING ADDITION OF RS.13,00,000/- ON ACCOUNT OF UNEXPLAINED CASH FOUND DURING THE COURSE OF SEARCH ON THE BASIS OF INVALID CONFESSION AL STATEMENT ONLY AND ALSO IGNORING THE FACT THAT AT THE TIME OF SEARCH OPERATIONS NO REGULAR BOOKS OF ACCOUNT WAS MAINTAIN ED. IN ABSENCE OF REGULAR BOOKS OF ACCOUNT, HOW THE CASH F OUND COULD BE REGARDED AS UNRECORDED AND UNEXPLAINED; PARTICULARL Y WHEN THE APPELLANT WORKED OUT SUCH CASH BALANCE ON THE BASIS OF THE SEIZED PAPERS AND DOCUMENTS. LIKEWISE, THE LEARNED CIT (A) HAD ALSO IGNORED THESE VITAL FACTS WHILE CONFIRMING SUCH ADD ITION. THUS THE ADDITION SO MADE AND CONFIRMED BY THE AUTHORITIES B ELOW WAS BAD IN LAW AND DESERVE TO BE DELETED SUMMARILY. 31 3.2 DURING COURSE OF SEARCH, CASH TO THE EXTENT OF RS. 10.30 LACS WAS FOUND AT THE PREMISES 59, MANSAROVAR COLONY, KALWAR ROAD, JHOTWARA, JAIPUR. A SUM OF RS. 10.00 LACS WAS SEIZED . DURING THE COURSE OF SEARCH, THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF CASH AN D THE ASSESSEE VIDE REPLY TO QUESTION NO. 21 ACCEPTED THAT CASH OF RS. 10.00 LACS IS OUT OF UNDISCLOSED INCOME AND THEREFORE, OFFERED THE SAME FOR TAXATION PURPOSES. THE CASH OF RS. 14.21 LACS WAS ALSO FOUND AT THE RESIDENTIAL PR EMISES OF THE ASSESSEE. THUS OUT OF TOTAL CASH FOUND AT THE RESIDENTIAL AN D BUSINESS PREMISES TO THE EXTENT OF RS. 24.51, THE ASSESSEE SURRENDERED A SUM OF RS. 23.00 LACS AS UNDISCLOSED INCOME. THE RELEVANT QUESTION AND ANSWE R HAS BEEN REPRODUCED BY THE AO AT PAGE 5 OF THE ASSESSMENT ORDER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE STATED BEFORE THE AO THAT A SUM OF RS. 13.00 LACS IS REFLECTED IN THE CASH BOOK OF THE ASS ESSEE AND RS. 10.00 LACS IS REFLECTED IN M/S. GUMAN FURNITURE & SERVICES (P) LT D.. THE CASH BALANCE AS ON THE DATE OF SEARCH IN THE CASE OF THE ASSESSEE W AS TO THE EXTENT OF RS. 35,65,199.37. THE CASH BALANCE AS PER CASH BOOK OF M/S. GUMAN FURNITURE & SERVICES (P) LTD. IS TO THE EXTENT OF RS. 39,20,044 .98. ACCORDING TO THE AO, THE ASSESSEE HAS NOT PRODUCED ANY SUPPORTING VOUCHE RS AND THEREFORE, THE COMPUTERIZED BOOKS OF ACCOUNTS CANNOT BE CONSIDERED AS RELIABLE. A SUM OF RS. 10.00 LACS HAS BEEN ADDED IN M/S. GUMAN FURNITU RE & SERVICES (P) LTD. 32 AND A SUM OF RS. 13.00 LACS HAS ALSO BEEN ADDED TO THE TOTAL INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. THE AO WHILE MAK ING THE ADDITION OBSERVED AS UNDER:- 2.3. I HAVE CONSIDERED THE SUBMISSION OF THE LD. A.R AND HAVE PERUSED THE MATERIAL ON RECORD. IT IS NOTICED THAT DURING THE COURSE OF SEARCH, THE APPELLANT IN HIS STATEMENT RE CORDED U/S 132(4), IN REPLY TO QUESTION NO. 21, HAS ADMITTED RS. 13 LA KHS OUT OF RS. 14.21 LAKH FOUND FROM THE RESIDENCE, TO BE THE UNDI SCLOSED INCOME AND OFFERED IT FOR TAXATION. NOW THE APPELLANT HAS TRIED TO EXPLAIN THAT THE CASH BALANCE WAS AVAILABLE AS PER BOOKS AN D THE STATEMENT GIVEN DURING THE CORUSE OF SEARCH WAS NOT UNDER PRO PER PHYSICAL AND MENTAL CONDITION. I HAVE CONSIDERED THIS ARGUME NT. IT IS UNDISPUTED AND RATHER ADMITTED FACT THAT BOOKS OF A CCOUNTS OF THE APPELLANT WAS NOT FOUND MAINTAINED DURING THE COURS E OF SEARCH 3.3 BEFORE THE LD. CIT(A), THE ASSESSEE HAS MADE TH E FOLLOWING SUBMISSIONS:- THUS THE SOURCE OF AVAILABLE CASH BALANCE OF RS. 23. 00 LACS IN THE SAID PLOTS IS COMPLETELY EXPLAINED/VERIFIABLE FROM THE AUTHENTIC RECORD AND AS SUCH THERE WAS NO ALLEGED UNEXPLAINED INVESTMENT OF RS. 23.00 LACS ON ACCOUNT OF CASH BALANCE. B) NO DEFECT POINTED OUT IN BOOKS OF ACCOUNTS PRODUCED DURING ASSESSMENT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE CAS H BOOK WAS SUBMITTED BEFORE THE A.O. TO VERIFY THE CASH BALANCE AS ON THE DATE OF S EARCH. AS PER CASH BOOK, ON THE DATE OF SEARCH THE CASH BALANCE WAS RS. 3565199.37. (PB PAGE 126) WHILE RECASTING THE BOOKS OF ACCOUNTS, THE ASSESSE E HAS RECORDED THE CORRECT PAYMENTS/AND RECEIPTS IN CHRONOLOGICAL ORDER. THE L EARNED AO HAS MADE SEPARATE ADDITION FOR THE RECEIPTS WHICH HE FOUND NON-GENUIN E (CASH CREDITS), AND SEPARATE ADDITION FOR THE PAYMENTS WHICH HE FOUND UNDER RECO RDED (UNEXPLAINED INVESTMENT IN PLOTS/PROPERTIES- THOUGH RECORDED BUT HE MADE THE A DDITION). THE CASH BOOK IS NOTHING BUT RECORDING OF THE RECEIPTS AND PAYMENTS TRANSACTION IN CHRONOLOGICAL ORDER. THE LEARNED 33 AO REJECTED THE CASH BOOK WITHOUT POINTING OUT SPEC IFIC DEFECT IN THE RECORDING OF RECEIPT OR PAYMENTS IN CASH BOOK. C) THE CASE OF THE ASSESSEE IS COVERED BY THE DECIS ION OF THE HONBLE ITAT JAIPUR BENCH IN THE CASE OF SHRI RAJENDRA KR. KEDIA V/S. DCIT 22 TAX WORLD, 506 . WHEREIN HONBLE ITAT JAIPUR BENCH HAVE OBSERVED THAT WHERE THE BOOKS OF ACCOUNT ARE NOT PROPERLY MAINTAINED, THE SAME COULD BE SUBSEQUENTLY PREPARED AND RE-CASTED ON THE BASIS OF HIS BANK STATEMENT, VOUCHERS AND OTHER RELATED D OCUMENTS OF SALES AND PURCHASE WHICH COULD BE RELIED UPON FOR THE PURPOSE OF MAKING THE INCOME TAX ASSESSMENTS. D) STATEMENTS OF THE ASSESSEE U/S 132(4) OF INCOME TAX ACT THE LD. A.O. HAS MENTIONED THAT THE ASSESSEE HAS SU RRENDERED THIS AMOUNT AS UNEXPLAINED INCOME IN HIS STATEMENT RECORDED U/S 132(4) OF INCO ME TAX ACT. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E ASSESSEE HAS SUBMITTED BEFORE THE LD AO (PB PAGE 69) THAT THE STATEMENTS BEFORE THE SEARCH WERE MADE UN DER HEAVY MENTAL PRESSURE AND THE SAME WERE RETRACTED IMMEDIATELY. T HE SUBMISSION OF THE ASSESSEE BEFORE THE LD AO WAS AS UNDER:- THE QUERIES RAISED ARE REGARDING ADDITION TO BE MAD E ON THE BASIS OF THE STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF SEARCH. IN T HIS CONNECTION BEFORE SUBMITTING THE HEAD/ITEM WISE REPLY REGARDING ALLEGED UNDISCLOSED INCOME, THE ASSESSEE SUBMITS THE FOLLOWING FACTS FOR CONSIDERATION:- 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 TILL 17.11.2007. IN VIEW OF THE ABOVE FACTS IT IS APPARENT THAT THE ASSESSEE NEITHER PHYSICALLY NOR MENTALLY FIT TO UNDERSTAND AND REPLY THE VARIOUS QU ESTIONS ASKED BY THE SEARCH PARTY UNDER DURESS, MENTAL PRESSURE AND TENSE ATMOSPHERE. THUS IT WOULD BE WRONG AND BAD IN LAW TO RELY UPON THE SAID STATEMENT OF THE ASSESSEE RECORD ED U/S 132(4) OF THE I.T. ACT, DURING THE COURSE OF SEARCH. IN THIS CONNECTION THE ASSESSEE A LSO SUBMITS THAT BECAME TO KNOW ABOUT TOTAL UNDISCLOSED INCOME FROM THE DAILY NEWSPAPERS AND AFTER GOING THROUGH 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 OUT AND ACCORDINGLY THE ASSESSEE SENT A W RITTEN REQUEST THAT THE ABOVE SAID ALLEGED HUGE AMOUNT OF UNDISCLOSED INCOME NOT SURRE NDERED BY HIM. THEREAFTER REMINDER ON 20.11.2007 AND 21.11.2007 WAS ALSO SENT. PHOTOCO PY OF THE UPC ACKNOWLEDGMENT AND COPY OF LETTER IS ENCLOSED HEREWITH. FURTHER IN COME HAS BEEN GOT SURRENDERED WITHOUT CONSIDERING THE BORROWINGS FROM VARIOUS BANKS AMOUN TING TO RS.1,586.91 LACS BY THE ASSESSEE, HIS BUSINESS CONCERNS AND HIS FAMILY MEMB ERS. THE CASH FLOW CHART HAS BEEN PREPARED AFTER TAKING INTO ACCOUNT SAID PROCEEDINGS . THE SUBMISSIONS ARE VERIFIABLE FROM THE CASH FLOW CHART AND DOCUMENTARY EVIDENCE FILED. IN VIEW OF THE ABOVE FACTS AND SUBMISSION MADE THE ASSESSEE AGAIN SUBMITS THAT THE ALLEGED DISCLOSURE MADE IN THE 34 STATEMENT RECORDED U/S 132(4) OF I.T. ACT IS NOT A RELIABLE ONE IN THE EYES OF LAW AND NO ADVERSE INFERENCE DESERVES TO BE DRAWN ON THE BASIS OF SAID STATEMENT. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS:- (I) HONBLE APPEX COURT IN PULLANGODE RUBBER PRODU CE CO LTD VS STATE OF KERALA [1973] 91 ITR 18 HAS HELD THAT AN ADMISSION IS AN EXTREMELY IMPORTAN T PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIV E. IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. (II) GARGIDIN JWALA PRASAD VS CIT (1974) 96 ITR 97 (ALL) HELD THAT THE ADDITION MERELY BASED ON STATEMENT OF WITNESSES CANNOT BE MADE. III) CIT VS G.KRISHNAN (1994) 210 ITR 707 MAD. HELD THAT ADDITION CANNOT BE MADE MERELY ON THE BAS IS OF STATEMENT. IV) ACIT V/S ASHOK KUMAR JAIN 32 TW 115 (ITAT JAIPU R) IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. 3.4 THE LD. CIT(A) HAS CONFIRMED THE ADDITION MADE BY THE AO AFTER OBSERVING AS UNDER:- IN FACT, NO BOOKS OF ACCOUNTS WERE MAINTAINED I N THE REGULAR COURSE OF BUSINESS AND IT WAS ONLY AFTE R THE SEARCH THAT APPELLANT PREPARED MEMORANDUM OF BOOKS OF ACCO UNTS. IN VIEW OF THESE FACTS, THE STATED CASH BALANCE AS PER THE MEMORANDUM OF BOOKS OF ACCOUNTS CAN NOT AT ALL BE R ELIED UPON AND IS REJECTED. AS REGARDS ARGUMENT OF STATEMENT R ECORDED U/S 132(4) BEING NOT UNDER PHYSICALLY AND MENTALLY FIT CONDTION, THERE IS NO SUCH EVIDENCE ON RECORD. MOREOVER, EVEN IF STATEMENT ARE CONSIDERED TO BE GIVEN UNDER SOME MIS TAKEN BELIEF, THAN ALSO HEAVY BURDEN LIES ON THE APPELLAN T TO REBUT THE CONTENTS OF STATEMENT WITH COGENT EVIDENCE. APPELLA NT HAS SQUARELY FAILED TO FURNISH SUCH STRONG EVIDENCE OR EXPLANATION ON THIS POINT. ACCORDINGLY, A.O. WAS JUSTIFIED IN M AKING 35 ADDITION OF RS. 13 LAKHS BEING UNEXPLAINED CASH FOU ND AND SEIZED DURING THE COURSE OF SEARCH. 3.5 BEFORE US, THE LD. AR HAS MADE THE FOLLOWING SU BMISSIONS:- WHILE MAKING AND CONFIRMING THIS ADDITION, THE AUTHORITIES BELOW HAD RELIED UPON HEAVILY ON THE CO NFESSIONAL STATEMENT AS RECORDED DURING THE COURSE OF SEARCH OPERATIONS. TH E LEARNED AO HAD DISCUSSED THIS ADDITION AT PAGE NO. 5 OF HIS ASSESS MENT ORDER. WHILE QUOTING THE EXTRACT FROM THE CONFESSIONAL STATEMENT OF THE APPELLANT VERBATIM, HE HAD QUESTIONED THE AUTHENTICITY OF THE BOOKS AS PRODUCED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCE EDINGS IN SUPPORT OF HIS CLAIM OF THE AVAILABILITY OF THE FUNDS SO FOUND ON THE DATE OF SEARCH, ON THE GENERAL PLEA THAT SUCH BOOKS WERE WITHOUT SUPPORTIN G VOUCHERS, THEREFORE COULD NOT BE RELIED UPON. ACCORDINGLY HE HAD RUBBIS HED THE CLAIM OF THE APPELLANT AND MADE ADDITION OF RS.13 LAC IN THE CAS E OF THE APPELLANT. IN APPEAL, THE ADDITION SO MADE BY THE AO WAS DISPU TED VEHEMENTLY AS DISCUSSED AT PAGES NO. 3 TO 6 OF THE APPEAL ORDER. IT WAS CONTENDED BY THE APPELLANT THAT THE FINDINGS OF THE LEARNED AO ON THE POINT WERE FACTUALLY AND LEGALLY INCORRECT AS NO DEFECT W HAT-SO-EVER COULD BE POINTED OUT BY THE AO IN THE BOOKS AS GOT PREPARED BY THE APPELLANT AT THE INSTANCE OF THE DEPARTMENT. IN ABSENCE OF SUCH AN E XERCISE AND WITHOUT BRINGING ON RECORD ANY SPECIFIC DEFECT OR DEFICIENC Y, THE AUTHENTICITY OF SUCH BOOKS COULD NOT BE QUESTIONED ON FLIMSY GROUND S AND RELYING HEAVILY ON THE CONFESSIONAL STATEMENT. IN SUPPORT OF SUCH C ONTENTIONS, NUMBER OF JUDICIAL CITATIONS INCLUDING THE CITATION OF HONORA BLE ITAT, JAIPUR BENCH, JAIPUR IN THE CASE OF SHRI RAJENDRA KR. KEDIA V/S DCIT 22TAX WORLD, 506 WERE RELIED UPON IMPRESSING UPON THE FACT THAT NO VALID ADDITION CAN BE MADE ON THE BASIS OF SUCH INVALID C ONFESSIONAL STATEMENT; PARTICULARLY WHEN SUPPORTING CORROBORATIVE DOCUMENT ARY EVIDENCE IN THE FORM OF BOOKS WAS FORTHCOMING. HOWEVER, THE LEARNED CIT (A) WAS ALSO NOT WILLING TO ACCEPT SUCH CONTENTIONS AND TURNED D OWN THE CLAIM OF THE APPELLANT ON THE SAME PLEA AS THAT OF AO. THE CONCL USIONS OF THE HONORABLE CIT (A) ARE FACTUALLY AND LEGALLY INCORRE CT FOR THE FOLLOWING REASONS: (I) IT IS AN UNDISPUTED FACT THAT AT THE TIME OF SEARCH OPERATIONS, THERE WERE NO REGULAR BOOKS OF ACCOUNT . THIS FACT STOOD DULY ADMITTED BY THE LEARNED AO AND CIT (A) IN THE BODY OF THEIR RESPECTIVE ORDERS. IN THE CIRCUMSTANCES, IT IS PRACTICALLY IMPOSSIBLE TO ADMI T OR CONFESS THE FACT AS TO WHETHER THE FUNDS AS FOUND A T THE TIME OF SEARCH OPERATIONS WERE DULY ACCOUNTED FOR OR NOT . 36 OBVIOUSLY THE FACT SO ADMITTED IN THE CONFESSIONAL STATEMENT IN ABSENCE OF REGULAR BOOKS AT THE TIME O F SEARCH OPERATION WAS FACTUALLY INCORRECT AND THEREFORE THE ADMISSION MADE ON THE BASIS OF SUCH INCORRECT FACTS IS NOT LEGALLY MAINTAINABLE. (II) AGAIN IT IS ALSO AN UNDISPUTED FACT THAT THE APPELL ANT HAD BEEN SUFFERING FROM CANCER AND AT THE GIVEN POINT O F TIME HE WAS NOT PROPER FRAME OF MIND DUE TO ILLNESS, SEA RCH ORDEALS OF PROLONGED AND CONTINUOUS PROCEEDINGS OF TWO DAYS AND ANXIETY OF A RECENT FAMILY FUNCTION ETC. A S INFORMED IMMEDIATELY AFTER SEARCH OPERATIONS VIDE L ETTERS DATED 20.11.2007 & 21.11.2007). THUS THE APPELLANT WAS NOT MENTALLY AND PHYSICALLY FIT TO ADMIT ANY CONTROVERSIAL POINT; PARTICULARLY IN ABSENCE OF REGULAR BOOKS. A PPARENTLY THE ADMISSION SO MADE IN ABSENCE OF ANY MATERIAL ON RECORD IS NOT MAINTAINABLE AS HELD IN NUMBER OF JUDICIAL C ITATION REFERRED TO IN THE WRITTEN SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. (PB 7-8 )THEY HAD BRUSHED ASIDE ALL SUCH CITATIONS AND FINDINGS WITHOUT SPECIFYING ANY REASON. THUS THE FINDINGS SO ARRIVED AT ARE BAD IN LAW AND ARE NOT WELL REASONED TO THIS EXTENT. (III) AGAIN IT IS INCORRECT ON THE PART OF THE AUTHORITIE S BELOW TO SAY THAT THE BOOKS AS PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WERE NOT VERIFIABLE IN ABSEN CE OF SUPPORTING VOUCHERS. ON PERUSAL OF THE SAID BOOKS, IT WOULD BE NOTED THAT ALL THE INCOMINGS AND OUT-GOINGS OF T HE FUNDS ARE FULLY VOUCHED AND VERIFIABLE WITH THE HELP OF B ANK STATEMENTS AND SALE AND PURCHASE AGREEMENTS. IT WOU LD FURTHER BE NOTED THAT NONE OF THE AUTHORITIES BELOW COULD POINT OF A SINGLE TRANSACTION WOULD WAS NOT SUPPORT ED BY THE BANK STATEMENT OR OTHER INSTRUMENTS. FROM SUCH BOOKS, IT WOULD BE NOTED THAT ON THE DATE OF SEARCH, THERE WAS CASH BALANCE OF RS.35,65,199.37 (AS PER COPY LYING AT PA GE NO. 88 OF P.B). IN VIEW OF ABOVE DISCUSSIONS, THE ADDITION OF RS.13 LAC AS MADE AND CONFIRMED BY THE AUTHORITIES BELOW IS APPARENTL Y BAD IN LAW AND DESERVE TO BE DELETED. 3.6 ON THE OTHER HAND, THE LD. DR DREW OUR ATTENTIO N TO THE STATEMENT RECORDED AT THE TIME OF SEARCH. AT THAT TIME, THE A SSESSEE ADMITTED THAT CASH 37 REPRESENTS THE UNDISCLOSED INCOME. THE SPONTANEOUS REPLY AT THE TIME OF SEARCH SHOULD CARRY MORE WEIGHT AS COMPARED TO THE REPLY FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THE VOUCHERS TO SUBSTANTIATE THE ENTRIES RECORDED I N THE CASH BOOK. THUS CASH BALANCE AS SHOWN IN THE CASH BOOK IS NOT VERIFIABLE AND THE AMOUNT IN CASH FOUND AT THE TIME OF SEARCH CANNOT BE CONSIDERED AS DISCLOSED. 3.7 WE HAVE HEARD BOTH THE PARTIES. IT IS TRUE THAT THE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS REGULARLY. AFTER S EARCH OPERATION, THE ASSESSEE PREPARED THE CASH BOOK TO SHOW THE RECEIPT S AND EXPENSES. IT IS NOT THE CASE OF REVENUE THAT CASH RECEIPTS SHOWN IN THE CASH BOOK CAN NOT BE VERIFIED. IT IS ALSO NOT THE CASE OF THE REVENUE TH AT THE ASSESSEE HAS POSTPONED THE CASH PAYMENTS IN THE CASH BOOK TO SHOW THE INFL ATED CASH BALANCE. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF HU KAM CHAND JAIN VS. ITO, 324 ITR 197 HAS OBSERVED THAT IT IS OPEN TO THE ASS ESSEE TO SHOW WITH THE MATERIAL THAT ADMISSION IS NOT CORRECT. IF NO MATER IAL IS PRODUCED THEN IT IS TO BE CONSIDERED THAT ADMISSION HAS NOT BEEN DISLODGED . IN THE INSTANT CASE, THE A HAS PRODUCED THE CASH BOOK THOUGH CASH BOOK HAS B EEN PREPARED AFTER THE DATE OF SEARCH. THE HON'BLE CHATTISGARH HIGH COURT IN THE CASE OF ITO VS. VIJAY KUMAR KESAR 327 ITR 497 HAD AN OCCASION TO CO NSIDER THE CASE IN WHICH THE ASSESSEE HAS RETRACTED FROM DISCLOSURE FO R UNDISCLOSED INCOME 38 MADE BY HIM DURING THE SURVEY PROCEEDINGS. THE ADDI TION MADE ON ACCOUNT OF EXCESS CASH IN STOCK WAS DELETED BY ACCEPTING U PDATE BOOKS OF ACCOUNTS PREPARED BY THE ASSESSEE. THERE WERE PRIMARY EVIDEN CES ON RECORD FOR ACCEPTANCE OF CASH. THE HON'BLE CHATTISGARH HIGH CO URT IN THE CASE OF ITO VS. VIJAY KUMAR KESAR (SUPRA) HAS HELD AS UNDER:- FROM PERUSAL OF THE ORDER OF THE AO, IT APPEARS T HAT THE AO DISREGARDED THE BOOKS OF ACCOUNTS PRODUCED BY TH E ASSESSEE DURING ASSESSMENT PROCEEDINGS U/S 143(3) FOR THE PE RIOD AFTER IST APRIL, 1997 AND OTHER PRIMARY RECORDS SOLELY ON THE GROUND THAT THE ASSESSEE HAD MADE CONFESSIONAL STATEMENT D URING SURVEY PROCEEDINGS AND VOLUNTARY OF TAX AGAINST THE INCOME FROM UNDISCLOSED SOURCES SURRENDERED DURING SURVEY PROCEEDINGS IN THE FORM OF CASH AND SURPLUS STOCK. THE PRIMARY EVIDENCE IN THE FORM OF PURCHASE BILLS, VOUCHERS, G IFTS ETC. WERE REJECTED AS THE SAME WERE PRODUCED AT THE TIME OF A SSESSMENT AFTER CONSIDERABLE PERIOD AND RETRACTION STATEMENT WAS MADE AFTER MORE THAN 3-1/2 MONTHS AND THE SAME WAS AN AF TERTHOUGHT. FROM THE RECORD, IT ALSO APPEARS THAT THE AO BEFORE REJECTING THE PRIMARY EVIDENCE HAD VERIFIED THE VOUCHERS, PURCHAS E BILLS, GIFTS ETC. FROM THE PARTIES FROM WHOM IT WAS SHOWN TO BE PURCHASED AND THE DONORS ON WHOSE NAMES ENTRIES WERE MADE IN THE BOOKS OF ACCOUNTS WERE ALSO INTERROGATED. IT ALSO APPEARS THAT ALL OF THEM CONFIRMED THE ENTRIES AND VERIFIED AND TRANSAC TIONS, HOWEVER, THE SAME DISBELIEVED BY THE AO ON THE GROU ND THAT THE DONORS WERE CLOSE RELATIVES OF THE ASSESSEE, TH E DONATION 39 WAS MADE IN CASH JUST TO ENABLE THE ASSESSEE FOR TH E PURPOSE OF HIS ACCOUNTING TO SHOW THAT HE MADE PURCHASES FROM THE MONEY RECEIVED BY HIM BY WAY OF DONATION. THE LD. CIT(A ) ON APPRECIATION OF MATERIAL AVAILABLE ON RECORD ACCEPT ED THE EXPLANATION OFFERED BY THE ASSESSEE AND ALSO ACCEPT ED THE BOOKS OF ACCOUNTS FILED ALONGWITH THE RETURN BY THE ASSES SEE AS THE ENTRIES IN THE BOOKS OF ACCOUNTS WERE SUPPORTED BY THE PRIMARY EVIDENCE. THE LD. CIT(A) ALSO ACCEPTED THE EXPLANAT ION THAT THE STATEMENTS WERE MADE BY THE ASSESSEE WITHOUT UNDERS TANDING THE IMPORT OF THE SAME AS HE WAS UNDER STRESS DUE T O SUICIDAL DEATH OF HIS DAUGHTER. THE LD. CIT(A) ALSO CONSIDER ED THE OTHER ASPECT THAT THE PRIMARY EVIDENCE PRODUCED BY THE AS SESSEE ALSO REFLECTS IN THE SALES TAX RETURN FILED BY THE ASSES SEE, WHICH WERE PRODUCED BEFORE THE APPELLATE AUTHORITY, AND THE SA ME WAS SUBSEQUENTLY CONFIRMED BY THE TRIBUNAL. FROM THE IN STRUCTION NO. 286/2/2003 DATED. 10 TH MARCH 2003, IT IS EVIDENT THAT THE BOARD HAD ISSUED INSTRUCTION TO ITS OFFICE NOT TO E XTRACT CONFESSIONAL STATEMENT BY WAY OF ADMISSION FROM THE ASSESSEE AT THE TIME OF SEARCH, SEIZURE OR SURVEY OPERATIONS . IT IS ALSO SETTLED LAW THAT THE ADMISSION OF A PERSON IS AN IM PORTANT PIECE OF EVIDENCE, HOWEVER, THE SAME IS NOT CONCLUSIVE PULLAGODE RUBBER & PRODUCE & CO. LTD. VS. STATE OF KERALA, 19 72 CTR (SC): (1973) 91 ITR 18 (SC) 3.8 WE THEREFORE, FEEL THAT AO WAS NOT JUSTIFIED IN INCLUDING THE SUM OF RS. 10.00 LACS AS UNDISCLOSED INCOME OF THE ASSESSE E BECAUSE THE CASH 40 BALANCE AS PER UPDATE CASH BOOK SHOWED THE CASH BAL ANCE EXCEEDING RS. 10.00 LACS 4.1 THE GROUND NO.3 OF THE ASSESSEE IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAD LEGALLY AND FACTUALLY ERRED IN CONFIRMING THE ADDITION OF RS.1,64,186/- OUT OF TOT AL ADDITION OF RS.30,00,000/- MADE BY THE AO. ON ACCOU NT OF UNEXPLAINED GOLD / PRECIOUS STONES IGNORING THE EXPLANATION OF THE APPELLANT REGARDING ACQUISITION OF SUCH JEWELLERY AND OTHER DOCUMENTARY EVIDENCES AS PROCUR ED DURING THE COURSE OF ASSESSMENT AND APPEAL PROCEEDI NGS. THE ADDITION SO CONFIRMED IS BAD IN LAW AND DESERVE S TO BE DELETED. 4.2 THE FACTS IN THIS GROUND ARE AS UNDER:- 3.1 THE A.O HAS MADE ADDITION BY OBSERVING AS B ELOW:- DURING SEARCH OPERATION, THE JEWELLERY OF RS. 38, 70,593/-AS PER ANN. J1,J2,J3,J4 AND J5 OF PANCHNAMA DATED 17.11.2005 WERE FOUND. THE ASSESSEE HAS NOT EXPLAINED THE SOURCE ABOVE JE WELLERY NEITHER DURING THE COURSE OF SEARCH OPERATION NOR DURING ASSESSMENT PR OCEEDING EXCEPT SAYING THAT THERE ARE THREE FAMILY MEMBERS AND THEY RECEIVED GOLD JEWELLE RY AT THE TIME OF THEIR MARRIAGE AND OTHER OCCASION. THUS THEY HAVE JEWELLERY AS STRIDHA N. LOOKING TO THE STATUS OF THE FAMILY OTHER FACTORS THE JEWELLERY OF RS. 8,70,593/- IS TR EATED AS EXPLAINED AND THE REMAINING JEWELLERY OF RS. 30,00,000/- IS TREATED AS UNEXPLAI NED INVESTMENT AND THE SAME IS ADDED TO THE TOTAL INCME OF THE ASSESSEE FOR THE YEAR 200 8-09. 3.2 THE SUBMISSION OF THE ASSESSEE IS AS FOLLOWS:- A) THE LD AO MADE THE ADDITION WITHOUT PERUSING THE EXPLANATION OF THE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS. THE LD AO MADE THE ADDITION WITHOUT SEEING THE EXP LANATION OF THE ASSESSEE SUBMITTED DURING THE COURSE OF THE ASSESSMENT PROCE EDINGS. (PB PAGE 96 TO 101 AND DOCUMENTS FILED PB PAGE 106-114). THE EXPLANATION OF THE ASSESSEE BEFORE THE LD AO WAS AS UNDER:- SHRI MOHANLAL KHANDELWAL & SMT. MOHINI DEVI KHANDEL WAL. ANNEXURE.J (PB PAGE 102) 41 JEWELLERY FOUND FROM LOCKER NO. 69 SBBJ IN NAME OF SHRI MOHAN LAL KHANDELWAL & SMT MOHINI DEVI KHANDELWAL (PARENTS OF THE ASSESSEE). AMOUNT. GOLD JEWELLERY RS. 5,43,308/- (WEIGHT 428. M 310 GM.) SILVER ITEMS. RS. 79,125/- (WEIGHT 4200.000 GM ) ANNEXURE J-4 (PB PAGE 105) JEWELLERY FOUND FROM BED ROOM OF SHRI MOHANLAL KHAN DELWAL & SMT. MOHINI DEVI KHANDELWAL. AMOUNT. GOLD JEWELLERY RS. 8,69,653/- (WEIGHT 896.230 GM) SILVER ITEMS. RS. 27,256/- (WEIGHT 1435 GM) TOTAL OF ANNEXURE J AND J-4. AMOUNT. GOLD JEWELLERY. RS.14,12,961/- (WEIGHT 1324.540 G M) SILVER ITEMS. RS. 1,06,381/- (WEIGHT 5635.000 GM) GOLD JEWELLERY/GOLD COINS . TOTAL NET WEIGHT OF GOLD JEWELLERY GOLD COINS FO UND DURING THE COURSE OF SEARCH FROM BED ROOM & BANK LOCKER OF SHRI MOHAN LAL KHANDELWAL WAS 1324.540 GRAMS VALUED AT RS. 14,12,961/-. OUT OF TH IS JEWELLERY THE JEWELLERY WEIGHING 128.564 GRAMS WAS PURCHASED FROM M/S. MEHANDI JEWEL LERS BY SHRI TIKAM KHANDELWAL AND KEPT IN LOCKER OF PARENTS AS PER DETAIL HERE UN DER:- BILL NO. MJ/0117/07 DATED 29.10.2007 FOR RS. 6,79,7 00/- (NET WEIGHT 128.564 GRAMS) PAID VIDE CHEQUE NO. 631074 DATED 02.01.2008 FROM BANK A CCOUNT NO. 48283 OF SHRI TIKAM KHANDELWAL (PB PAGE 113) . BILL NO. MJ/0119/07 FOR RS. 79,274/- DATED 5-11-200 7 (NET WEIGHT 0.860 GRMS) PAID VIDE CHEQUE NO. 631072 DATED 02-01-2008 FROM BANK ACCOUN T NO. 48283 OF SHRI TIKAM KHANDELWAL. (PB PAGE 114) THESE BILLS WERE ALSO SEIZED FROM THE POCKET OF ASS ESSEE SHRI SHANKAR KHANDELWAL DURING THE COURSE OF SEARCH PROCEEDINGS CARRIED OUT AT THE RESIDENTIAL PREMISES OF THE ASSESSEE. AS SHRI TIKAM KHANDELWAL WAS NOT MAINTAINING BANK L OCKER IN HIS NAME AND AS SUCH THE JEWELLERY WAS PUT IN THE LOCKER OF SHRI MOHAN LAL K HANDELWAL. APART FROM THE ABOVE SAID JEWELLERY PURCHASED BY SHRI TIKAM KHANDELWAL JEWELL ERY ORNAMENTS HAVING APPROX. 42 WEIGHT OF 350.000 GRAMS WERE RECEIVED BY HIS WIFE A ND SHRI TIKAM KHANDELWAL AT THE TIME OF MARRIAGE FROM BOTH SIDES OF THE RELATIVES. REMAINING JEWELLERY WEIGHING (1,324.540-(128.564+350.000)= 845.976 GRAMS. BELONG TO SMT. MOHINI DEVI KHANDELWAL W/O SHRI MOHAN LAL KHANDELWAL AND SHRI M OHAN LAL KHANDELWAL. THE MARRIAGE OF SHRI MOHAN LAL KHANDELWAL TOOK PLACE BE FORE 45 YEARS. THE GOLD RATE AT THAT TIME WAS ABOUT 300-400 PER TEN GRAM. THE SAID GOLD JEWELLERY FOUND AT THE TIME OF SEARCH WAS RECEIVED BY SHRI MOHAN AND HIS WIFE AT THE TIME OF MARRIAGE FROM BOTH SIDES OF THE RELATIVE AND THEREAFTER ON THE OTHER AUSPICIOUS OCC ASIONS I.E. ON THE BIRTH OF CHILDREN, MARRIAGE OF CHILDREN AND OTHER YEARLY FESTIVALS. T HUS LOOKING TO THE ALL FACTS AND CIRCUMSTANCES THE TOTAL WEIGHT OF JEWELLERY FOUND I S REASONABLE AND ALSO AS PER CBDTS CIRCULAR REGARDING POSSESSION OF JEWELLERY BY A FAM ILY AND AS SUCH SOURCE OF ACQUISITION OF JEWELLERY EXPLAINED ABOVE DESERVES TO BE ACCEPTE D. SILVER ITEMS :- THE TOTAL WEIGHT OF SILVER ITEMS WAS 5.635 KG. VALUED AT RS. 1,06,381/- WERE MEAGER. SAID SILVER ITEMS WERE RECEIVED BY THE ASSESSEE, HIS WIFE AT THE TIME OF MARRIAGE AND THEREAFTER ON VARIOUS OTHER OCCASIONS FROM FRIENDS AND RELATIVES. IT IS VERIFIABLE FROM THE INVENTORY ITEMS THAT ITEMS ARE UTENSILS ETC. AND ARE OF OLD MAKE AND DESIGN AND AS SUCH IT PROVES THAT THE SAID ITEMS WE RE ACQUIRED LONG BACK AND THAT TIME THE VALUE WAS VERY LOW. TOTAL WEIGHT OF SILVER FOUN D IS REASONABLE AND SOURCE OF ACQUISITION AS EXPLAINED ABOVE DESERVES TO BE ACCEP TED. SHRI SHANKAR KHANDELWAL & SMT. GUMAN KHANDELWAL. ANNEXURE J-1 (PB PAGE 103) JEWELLERY FOUND FROM LOCKER NO. 23 SBBJ IN THE NAME OF SHRI SHANKAR KHANDELWAL & SMT. GUMAN KHANDELWAL. AMOUNT. GOLD JEWELLERY. RS. 6,20,465/- (WEIGHT 646.900 GMS ) SILVER ITEMS. RS. 17,749/- (WEIGHT 782.000 GM ) ANNEXURE J-2. (PB PAGE 103) JEWELLERY FOUND FROM BED ROOM OF SHRI SHANKAR KHAND ELWAL AMOUNT. GOLD JEWELLERY . RS . 16,86,142/- (WEIGHT 325.070 GM .) SILVER ITEMS. RS. 8,468/- (WEIGHT 450.000 GM) 43 TOTAL OF ANNEXURE J-1 & J-2 AMOUNT. GOLD JEWELLERY RS. 23,06,607/- (WEIGHT 971.970 GM) SILVER ITEMS. RS. 26,217/- (WEIGHT 832.000 G M) GOLD JEWELLERY/GOLD COINS. TOTAL NET WEIGHT OF GOLD JEWELLERY/GOLD COIN FOUND DURING THE COURSE OF SEARCH FROM BED ROOM AND BANK LOCKER OF S HRI SHANKAR KHANDELWAL WAS 971.970 GRAMS VALUED AT RS. 23,06,607/-. THE JEWELL ERY WEIGHING 140.373 GRAMS WAS PURCHASED BY THE ASSESSEE FROM M/S. MEHANDI JEWELLE RS AS PER DETAIL HERE UNDER:- BILL NO. MJ/0116/07 DATED 29.10.2007 FOR RS. 7,02,7 93/- (NET WEIGHT 139.733 GRAMS) PAID VIDE CHEQUE NO. 627979 DATED 03.01.2008 FROM B ANK ACCOUNT NO. 47082. BILL NO. MJ/0118/- FOR RS. 70,576/- DATED 5-11-2007 (NET WEIGHT 0.640 GRAMS) PAID VIDE CHEQUE NO. 627980 DATED 03.01.2008 FROM BANK ACCOUT NO. 47082. THESE BILLS WERE SEIZED FROM THE POCKET OF THE ASSESSEE DURING THE C OURSE OF SEARCH PROCEEDINGS CARRIED OUT AT THE RESIDENTIAL PREMISES OF THE ASSESSEE. REMAINING JEWELLERY WEIGHING 831.597 GRAMS BELONGS TO THE WIFE OF ASSESSEE SMT. GUMAN KHANDELWAL AND THE ASSESSEE HIMSELF. THE MARR IAGE OF THE ASSESSEE TOOK PLACE BEFORE 15 YEARS. THE GOLD RATE AT THAT TIME WAS ABO UT RS. 5,000/- PER 10 GRAM. THE GOLD JEWELLERY FOUND OTHER THAN GOLD JEWELLERY PURCHASE D AS ABOVE AND FOUND AT THE TIME OF SEARCH WAS RECEIVED BY THE ASSESSEE HIS WIFE AT THE TIME OF MARRIAGE FROM BOTH SIDES OF THE RELATIVE AND THEREAFTER ON THE OTHER AUSPICIOUS OCCASIONS I.E. ON THE BIRTH OF CHILDREN, MARRIAGE OF CHILDREN AND OTHER YEARLY FESTIVALS. TH US LOOKING TO THE ALL FACTS AND CIRCUMSTANCES THE TOTAL WEIGHT OF JEWELLERY FOUND I S REASONABLE AND ALSO AS PER CBDTS CIRCULAR REGARDING POSSESSION OF JEWELLERY BY A FAM ILY AND AS SUCH SOURCE OF ACQUISITION OF JEWELLERY EXPLAINED ABOVE DESERVES TO BE ACCEPTE D. SILVER ITEMS : THE TOTAL WEIGHT OF SILVER ITEMS WAS 832.00 GRAM S VALUED AT RS. 26,217/-. THE SILVER ITEMS WERE RECEIVED BY THE ASSESSEE, HIS WIFE AT THE TIME OF MARRIAGE AND THEREAFTER ON VARIOUS OTHER OCCASIONS FROM FRIENDS AND RELATIVES. IT IS VERIFIABLE FROM THE INVENTORY ITEMS THAT ITEMS ARE UTENSILS ETC. AND AR E OF OLD MAKE AND DESIGN AND AS SUCH IT PROVES THAT THE SAID ITEMS WERE ACQUIRED LONG BACK AND THAT TIME OF THE VALUE WAS VERY LOW. TOTAL WEIGHT OF SILVER FOUND IS REASONABLE AND SOURCE OF ACQUISITION AS EXPLAINED ABOVE DESERVES TO BE ACCEPTED. SHRI TIKAM KHANDELWAL ANNEXURE J-2 (PB 104) 44 JEWELLERY FOUND FROM BED ROOM OF SHRI TIKAM KHANDEL WAL AND SMT. RENU KHANDELWAL. AMOUNT. GOLD JEWELLERY RS. 1,51,925/- (WEIGHT 157.700 GMS) SILVER ITEMS. RS. 12,232/- (WEIGHT 650.000 GM S) APART FROM THE ABOVE SAID JEWELLERY WEIGHING 157.70 0 GRAMS, GOLD ORNAMENTS WEIGHING 128.564 GRAMS PURCHASED BY SHRI TIKAM KHANDELWAL AS EXPLAINED HERE IN ABOVE AND GOLD JEWELLERY WEIGHING 350.000 GRAMS WERE LAYING I N THE LOCKER OF HIS FATHER SHRI MOHAN LAL KHANDELWAL. THUS THE ASSESSEE HIS WIFE WE RE HAVING TOTAL GOLD JEWELLERY WEIGHING (157.700 + 128.564+ 350.00) = 636.264 GRAM S. SOURCE OF ACQUISITION OF JEWELLERY WEIGHING 157.700 GRAMS IS ALREADY EXPLAIN ED IN PARA (1) OF THIS LETTER. THE REMAINING GOLD JEWELLERY (636.264-128.564 ) = 507.7 00 GRAMS BELONGS TO WIFE OF THE ASSESSEE SMT. RENU KHANDELWAL AND THE ASSESSEE HIMS ELF. THE SAID GOLD JEWELLERY WEIGHING 507.700 GRAMS FOUND AT THE TIME OF SEARCH WAS RECEIVED BY THE ASSESSEE AND HIS WIFE AT THE TIME OF MARRIAGE FROM BOTH SIDES OF THE RELATIVE AND THEREAFTER ON THE OTHER AUSPICIOUS OCCASIONS I.E. ON THE BIRTH OF CHILDREN, MARRIAGE OF CHILDREN AND OTHER YEARLY FESTIVALS. THUS LOOKING TO THE ALL FACTS AND CIRCUM STANCES THE TOTAL WEIGHT OF JEWELLERY FOUND IS REASONABLE AND ALSO AS PER CBDTS CIRCULAR REGARDING POSSESSION OF JEWELLERY BY A FAMILY AND AS SUCH SOURCE OF ACQUISITION OF JE WELLERY EXPLAINED ABOVE DESERVES TO BE ACCEPTED. THUS SOURCE OF ACQUISITION OF JEWELLERY IS VERIFIAB LE FROM THE DOCUMENTARY EVIDENCES AND OTHER CIRCUMSTANTIAL EVIDENCES. FURTHER IT IS ALSO PLACED ON RECORD THAT WATER TIGHT DEMARCATION FOR DIFFERENT JEWELLERY ITEM HELD BY TH E ASSESSEE AND HIS FAMILY IS NOT POSSIBLE IN VIEW OF THE FACTS THAT ASSESSEE AND HIS FAMILY MEMBERS ARE LIVING IN JOINT FAMILY. THE TOTAL GOLD JEWELLERY FOUND DURING THE COURSE OF SEARCH PROCEEDINGS WAS 2454.210 GRAMS AND OUT OF WHICH JEWELLERY WEIGHING 269.797 W AS PURCHASED IN THE YEAR 2007-08 FOR WHICH PAYMENT WAS DULY MADE THROUGH CHEQUES AND PURCHASES BILLS WERE ALSO SEIZED BY DEPARTMENT DURING SEARCH PROCEEDINGS. REMAINING JEWELLERY WEIGHING (2454.210- 269,797)- 2184.413 GRAMS IS FOUND IS REASONABLE AND ALSO AS PER CBDTS CIRCULAR REGARDING POSSESSION OF JEWELLERY BY A FAMILY AND A S SUCH SOURCE OF ACQUISITION OF JEWELLERY EXPLAINED ABOVE DESERVES TO BE ACCEPTED. B) SURRENDER WAS NOT VOLUNTARY DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E ASSESSEE HAS SUBMITTED BEFORE THE LD AO (PB PAGE 69) THAT THE STATEMENTS BEFORE THE SEARCH WERE MADE UN DER HEAVY MENTAL PRESSURE AND THE SAME WERE RETRACTED IMMEDIATELY. T HE SUBMISSION OF THE ASSESSEE BEFORE THE LD AO WAS AS UNDER:- THE QUERIES RAISED ARE REGARDING ADDITION TO BE MA DE ON THE BASIS OF THE STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF SEARCH. IN T HIS CONNECTION BEFORE SUBMITTING THE 45 HEAD/ITEM WISE REPLY REGARDING ALLEGED UNDISCLOSED INCOME, THE ASSESSEE SUBMITS THE FOLLOWING FACTS FOR CONSIDERATION:- 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 TILL 17.11.2007. IN VIEW OF THE ABOVE FACTS IT IS APPARENT THAT THE ASSESSEE NEITHER PHYSICALLY NOR MENTALLY FIT TO UNDERSTAND AND REPLY THE VARIOUS QU ESTIONS ASKED BY THE SEARCH PARTY UNDER DURESS, MENTAL PRESSURE AND TENSE ATMOSPHERE. THUS IT WOULD BE WRONG AND BAD IN LAW TO RELY UPON THE SAID STATEMENT OF THE ASSESSEE RECORD ED U/S 132(4) OF THE I.T. ACT, DURING THE COURSE OF SEARCH. IN THIS CONNECTION THE ASSESSEE A LSO SUBMITS THAT BECAME TO KNOW ABOUT TOTAL UNDISCLOSED INCOME FROM THE DAILY NEWSPAPERS AND AFTER GOING THROUGH 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 OUT AND ACCORDINGLY THE ASSESSEE SENT A W RITTEN REQUEST THAT THE ABOVE SAID ALLEGED HUGE AMOUNT OF UNDISCLOSED INCOME NOT SURRE NDERED BY HIM. THEREAFTER REMINDER ON 20.11.2007 AND 21.11.2007 WAS ALSO SENT. PHOTOCO PY OF THE UPC ACKNOWLEDGMENT AND COPY OF LETTER IS ENCLOSED HEREWITH. FURTHER IN COME HAS BEEN GOT SURRENDERED WITHOUT CONSIDERING THE BORROWINGS FROM VARIOUS BANKS AMOUN TING TO RS. 1,586.91 LACS BY THE ASSESSEE, HIS BUSINESS CONCERNS AND HIS FAMILY MEMB ERS. THE CASH FLOW CHART HAS BEEN PREPARED AFTER TAKING INTO ACCOUNT SAID PROCEEDINGS . THE SUBMISSIONS ARE VERIFIABLE FROM THE CASH FLOW CHART AND DOCUMENTARY EVIDENCE FILED. IN VIEW OF THE ABOVE FACTS AND SUBMISSION MADE THE ASSESSEE AGAIN SUBMITS 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 INFERENCE DESERVES TO BE DRAWN ON THE BASIS OF SAID STATEMENT. C) THE TOTAL JEWELLERY FOUND BY THE SEARCH PARTY FR OM THE FAMILY MEMBERS OF THE ASSESSEE WAS AS UNDER:- S.NO PLACE NAME NET WEIGHT 1 LOCKER NO 69 SBBJ MOHAN LAL KHANDEWLAL & SMT MOHANI DEVI 428.31 2 BED ROOM MOHAN LAL KHANDEWLAL & SMT MOHANI DEVI 896.230 3. LOCKER NO. 23 SBBJ SHANKER KHANDELWAL & SMT GUMAN KHANDELWAL 646.90 4 BED ROOM SHANKER KHANDELWAL & SMT GUMAN KHANDELWAL 325.07 5 BED ROOM TIKAM KHANDELWAL & SMT RENU KHANDELWAL 157.70 TOTAL 2454.210 46 D) THE ASSESSEE, HIS FATHER AND HIS BROTHER WERE LI VING IN JOINT FAMILY UNDER COMMON KITCHEN AND ROOF AND THE FAMILY MEMBERS WERE USING THE JEWELLERY OF EACH OTHERS OR IN OTHER WORDS THE FAMILY MEMBERS WERE US ING THE JEWELLERY COMMONLY, THEREFORE THE AVAILABILITY OF JEWELLERY SHOULD BE C ONSIDERED IN TOTALITY. THE FAMILY MEMBERS CONSISTS THE FOLLOWING PERSONS:- S.NO NAME STATUS RELATION WITH THE ASSESSEE. 1. SHRI MOHAN LAL KHANDELWAL MARRIED GENT FATHER 2. SMT MOHANI DEVI MARRIED LADY MOTHER 3. SHRI SHANKER KHANDELWAL MARRIED GENT SELF 4. SMT GUMAN KHANDELWAL MARRIED LADY WIFE 5. MR. ANKUR UNMARRIED SON SONS 6. MR. ARPIT UNMARRIED SON SONS 7. TIKAM KHANDELWAL MARRIED GENT BROTHER 8. MRS. RENU KHANDELWAL MARRIED LADY WIFE OF BROTHER 9. KU. PALAK UNMARRIED DAUGHTER DAUGHTER 10. MR. HONEY UNMARRIED SON SONS E) CBDT CIRCULAR NO. 1916 OVER AND ABOVE THE SUBMISSIONS MADE ABOVE, WE SUBMI T THAT EVEN IN NORMAL CASES, WHERE THE ASSESSEE ARE NOT W. T. PAYERS THE CBDT HA S ISSUED GUIDELINES PRESCRIBING THE NORMS FOR SEIZURE OF GOLD JEWELLERY DURING THE COURSE OF SEARCH. AS PER CIRCULAR NO. 1916 DATED: 11.05.1994 THE BOARD HAS PRESCRIBED SUCH LIMIT AT 500 GMS. IN THE CASE OF A MARRIED LADY. THE INTENTION OF CBDT IS TO TREA T THE JEWELLERY EXPLAINED UPTO A REASONABLE EXTENT. IT IS CUSTOMARY IN HINDU FAMILY TO RECEIVE JEWELLERY ON MARRIAGE AND OTHER AUSPICIOUS OCCASIONS LIKE BIRTH OF SON, MARRI AGE OF SON ETC. THIS PRACTICE IN THE SOCIETY CANNOT BE OVERLOOKED. FURTHER, IT CANNOT BE PRESUMED THAT ALL THE JEWELLERY WAS PURCHASED ON JUST BEFORE THE DAY OF SEARCH. A PERSO N TO WHOM THE DEPARTMENT IS GOING TO SEARCH; CANNOT BE A PERSON NOT HAVING JEWELRY OF EVEN 500 GRAM. THE CBDT AFTER CONSIDERING ALL THESE FACTS AND PREVAILING PRACTICE IN SOCIETY, HAS PRESCRIBED A LIMIT OF REASONABLE HOLDING OF THE JEWELLERY BY THE FAMILY M EMBERS. ACCORDINGLY, AS PER THE CIRCULAR EVEN IN THE NORMAL COURSE THE CREDIT TO THE EXTENT FOLLOWING JEWELLERY SHOULD BE GIVEN. S.NO NAME STATUS EXPLAINABLE AS PER CBDT INSTRUCTION (GRAM) 1. SHRI MOHAN LAL MARRIED GENT 100 47 KHANDELWAL 2. SMT MOHANI DEVI MARRIED LADY 500 3. SHRI SHANKER KHANDELWAL MARRIED GENT 100 4. SMT GUMAN KHANDELWAL MARRIED LADY 500 5. MR. ANKUR UNMARRIED SON 100 6. MR. ARPIT UNMARRIED SON 100 7. TIKAM KHANDELWAL MARRIED GENT 100 8. MRS. RENU KHANDELWAL MARRIED LADY 500 9. KU. PALAK UNMARRIED DAUGHTER 250 10. MR. HONEY UNMARRIED SON 100 TOTAL 2350 THUS, THE SEARCH PARTY FOUND TOTAL JEWELRY OF 2454. 10 GRAM AND PURCHASE OF JEWELLERY TO THE EXTENT 269.797 GRAMS IS SUPPORTED BY PURCHASE B ILLS. THE BALANCE JEWELLERY IS EXPLAINED JEWELLERY AS COVERED BY REASONABLE HOLDIN G IN VIEW OF THE CBDT INSTRUCTION NO. 1916. THE RELIANCE IS ALSO PLACED ON THE FOLLOWING DECISI ONS:- (I) COMMISSIONER OF INCOME TAX VS. RATANLAL VYAPARILAL JAIN HIGH COURT OF GUJARAT TAX APPEAL NOS. 661 & 662 OF 2009 DATED 19 TH JULY, 2010 (2010) 45 DTR (GUJ) 290 HELD THAT THE INSTRUCTION NO. 1916, DT. 11TH MAY, 1992 WHICH LAYS DOWN GUIDELINES FOR SEIZURE OF JEWELLERY AND ORNAMENTS I N THE COURSE OF SEARCH TAKES INTO ACCOUNT THE QUANTITY OF JEWELLERY WHICH WOULD GENER ALLY BE HELD BY THE FAMILY MEMBERS OF AN ASSESSEETHOUGH THE SAID CIRCULAR HAS BEEN IS SUED FOR THE PURPOSE OF LAYING DOWN GUIDELINES FOR SEIZURE OF JEWELLERY, UNLESS AN YTHING CONTRARY IS SHOWN, IT CAN BE SAFELY PRESUMED THAT THE SOURCE TO THE EXTENT OF TH E JEWELLERY STATED IN THE CIRCULAR STANDS EXPLAINED. (II) CIT VS KAILASH CHAND SHARMA [2005] (2005) 198 CTR (RAJ) 201; 146 TAXMAN 376 (RAJASTHAN) HELD THAT TRIBUNAL WAS JUSTIFIED IN DELETING ADDIT ION ON ACCOUNT OF JEWELLERY HAVING REGARD TO CBDT INSTRUCTION NO. 1916, DT. 11T H MAY, 1994 (III) CIT VS M.S. AGARWAL (HUF) MP HIGH COURT (2008) 11 DTR (MP) 169 HELD THAT TRIBUNAL WAS JUSTIFIED IN DELETING ADDIT ION ON ACCOUNT OF JEWELLERY HAVING REGARD TO CBDT INSTRUCTION NO. 1916, DT. 11T H MAY, 1994 (IV) SMT. PATI DEVI VS ITO AND ANOTHER 240 ITR 727 (KARN ATAKA) RELYING UPON CBDT INSTRUCTION DATED 11.5.94 HAVE HE LD THAT 500 GMS OF GOLD JEWELLERY ORNAMENTS PER MARRIED LADY 250 GRAMS PER UNMARRIED LADY AND 100 GRAMS PER MALE MEMBERS OF THE FAMILY WERE NEED NOT TO BE SEIZED AS THE SAME WERE CONSIDERED REASONABLE POSSESSION BY THE CBDT. (V) DCIT CENTRAL CIRCLE-3, JAIPUR VS SHRI RAJENDRA KUMAR SANCHETI (ITAT JAIPUR) 48 THE COPY OF THE ORDER OF ITAT JAIPUR AND CIT CENT RAL (APPEAL) JAIPUR IS ENCLOSED HEREWITH WHEREIN HONBLE ITAT HELD THAT CI T(A) WAS JUSTIFIED IN DELETING ADDITION ON ACCOUNT OF JEWELLERY HAVING REGARD TO C BDT INSTRUCTION NO. 1916, DT. 11TH MAY, 1994 (VI) NAVRATAN DUGGAR VS DCIT ( ITSSA NO. 1/JP/2000) FACTS OF THIS CASE ARE SIMILAR TO THE APPELLANT ASS ESSEE. IN THIS CASE GOLD JEWELLERY OF 500 GRAM PER MARRIED LADY WAS CONSIDERED AS EXPLAINED F OLLOWING THE CBDT INSTRUCTION. VII) KANAK CHAND JAIN VS VS DCIT 27 TAXWORLD 377 IT AT JAIPUR BENCH FACTS OF THIS CASE ARE SIMILAR TO THE APPELLANT ASS ESSEE. IN THIS CASE GOLD JEWELLERY OF 500 GRAM PER MARRIED LADY WAS CONSIDERED AS EXPLAINED F OLLOWING THE CBDT INSTRUCTION VIII) TODARMAL MISHRA VS ACIT 24 TAXWORLD 88 ITAT J P BENCH HELD THAT THE INSTRUCTIONS ISSUED BY CBDT ARE FULLY APPLICABLE AND ADDITION MADE ON ACCOUNT OF JEWELLERY WAS DELETED. IX) KAILASH CHAND SHARMA VS. DCIT 25 TAX WORLD, 349 IT AT JP BENCH HELD THAT THE INSTRUCTIONS ISSUED BY CBDT ARE FULLY APPLICABLE AND ADDITION MADE ON ACCOUNT OF JEWELLERY WAS DELETED. HONBLE MP HIGH COURT IN THE CASE OF AGARWAL WAREHOUSING & LEASING LIMITED VS CIT(2002) 257 ITR 235 (MP) HAS HELD THAT THE ORDERS PASSED BY THE TRIBUNAL ARE BINDING ON ALL REVENUE AUTHORITIES FUNCTIONING UNDE R THE JURISDICTION OF THE TRIBUNAL. HELD THAT CIT(A) NOT ONLY COMMITTED JUDICIAL IMPROP RIETY BUT ALSO ERRED IN LAW IN REFUSING TO FOLLOW THE ORDER OF THE TRIBUNAL-EVEN I F HE HAD SOME RESERVATIONS ABOUT THE CORRECTNESS OF THE DECISION OF THE TRIBUNAL, HE HAD TO FOLLOW THE ORDER. SILVER ITEMS THE FOLLOWING SILVER ITEMS WERE FOUND FROM THE POSS ESSION OF VARIOUS FAMILY MEMBERS. S.NO PLACE NAME NET WEIGHT (SILVER ITEMS SILVER COINS 1. LOCKER NO 69 SBBJ MOHAN LAL KHANDEWLAL & SMT MOHANI DEVI 4200.000 41 2 BED ROOM MOHAN LAL KHANDEWLAL & SMT MOHANI DEVI 1435.00 1 2. LOCKER NO. 23 SBBJ SHANKER KHANDELWAL & SMT GUMAN KHANDELWAL 782.000 118 3 BED ROOM SHANKER KHANDELWAL & SMT GUMAN KHANDELWAL 450.000 0 49 4 BED ROOM TIKAM KHANDELWAL & SMT RENU KHANDELWAL 650.000 0 7517.00 160.00 THE SILVER ITEMS FOUND FROM THREE FAMILIES ARE VER Y REASONABLE CONSIDERING THE FAMILY STATUS. THESE ITEMS WERE RECEIVED BY THE FAMILY MEM BERS OF THE ASSESSEE ON VARIOUS AUSPICIOUS OCCASIONS LIKE MARRIAGE, BIRTH OF SON ET C. IT IS ALSO A PRACTICE TO HAVE SILVER COINS FOR DEEPAWALI POOJA. THE PARTS OF THE ITEMS F OUND FROM THE POSSESSION OF SHRI MOHAN LAL KHANDELWAL ARE ANCESTRAL. THEREFORE, NO ADDITION DESERVES TO BE MADE ON THIS ACCOUNT. 4.3 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISONS HELD AS UNDER:- 3.3. I HAVE CONSIDERED THE SUBMISSION OF THE LD. A.R AND HAVE PERUSED THE MATERIAL ON RECORD. IT IS SEEN FRO M THE PAPER BOOK PAGE 96 TO 101 AND 106 TO 114 THAT THE APPELLANT HA S FILED EXPLANATION BEFORE THE A.O. WHICH REMAINED TO BE CO NSIDERED BY THE A.O. MOREOVER, THE A.O. HAS MADE ADDITION ON A SUMMARY BASIS WITHOUT EVEN CONSIDERING NORMAL ACQUSITON OF THE JEWELLERY IN THE FAMILY. I AGREE WITH THE ARGUMENT OF THE APP ELLANT THAT IN VIEW OF THE DECISION OF JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS KAILASH CHAND SHARMA (2005) 198 CTR 201 AND DECI SION OF GUJARAT HIGH COURT IN THE CASE OF CIT VS. RATAN LAL VYAPARI LAL JAIN (2010) 45 DTR GUJ 290, WHEREIN HON;BLE COURT H AS HELD THAT THOUGH THE SAID CIRCULAR HAS BEEN ISSUED FOR THE PU RPOSE OF LAYING DOWN GUIDELINES FOR SEIZURE OF JEWELLERY UNLESS ANY THING CONTRARY IS SHOWN, IT CAN BE SAFELY PRESUMED THAT THE SOURCE TO THE EXTENT OF THE JEWELLERY STATED IN THE CIRCULAR STANDS EXPLAIN ED. THESE DECISIONS HAVE BEEN FOLLOWED IN VARIOUS OTHER CASES BY THE HONBLE ITAT. IN THE INSTANT CASE OF THE APPELLANT GROUP, I T WAS SEEN THAT FAMILY OF THE APPELLANT, HIS PARENTS AND FAMILY OF HIS BROTHER ARE RESIDING TOGETHER AND JEWELLERY WAS FOUND FROM THE BEDROOM OF ALL THE THREE SUB-FAMILIES AND THE A.O. HAS ALSO CONSID ERED TOTAL JEWELLERY FOUND IN THE CASE OF APPELLANT. IN THE LI GHT OF AFORESAID DECISION OF THE HONBLE HIGH COURT, CONSIDERING 10 MEMBERS IN 50 THE FAMILY OF APPELLANT, INCLUDING MOTHER, FATHER, SELF, WIFE, BROTHERS, BROTHERSS WIFE, 3 SONS/ NEPHEW AND ONE D AUGHTER, I AGREE WITH THE ARGUMENT OF THE A.R THAT JEWELLERY TO THE EXTENT OF 2350 GM IS TO BE CONSIDERED AS REASONABLY EXPLAINED. FUR THER, THE ARGUMENT OF THE A.R. THAT JEWELLERY TO THE EXTENT O F 269.797 GMS IS SUPPORTED BY PURCHASE BILL IS NOT ACCEPTED IN VIEW OF THE FACT THAT NO EVIDENCE HAS BEEN FILED REFLECTING THAT PAYMENTS FOR PURCHASE HAVE BEEN MADE FROM RECORDED SOURCE. ACCORDINGLY, O UT OF TOTAL JEWELLERY OF 2454.10 GMS, 2350 GMS IS HELD EXPLAINE D AND REMAINING 104.10 GMS IS HELD AS UNEXPLAINED, THE VA LUE OF WHICH TAKEN ON PROPORTIONATE BASIS COMES TO RS. 1,64,186/ -. IN BRIEF, ADDITION OF RS. 1,64,186/- IS SUSTAINED AND BALANCE ADDITION OUT OF RS. 30 LAKHS MADE ON LUMPSUM BASIS, BEING RS. 28,3 5,814/- IS DELETED. 4.4 DURING THE COURSE OF PROCEEDINGS BEFORE US, THE LD. AR HAS FILED THE SUBMISSIONS AS UNDER:- THE LEARNED AO HAD DISCUSSED THIS ADDITION AT PAG E NO. 5 & 6 OF THE ASSESSMENT ORDER. WHILE MAKING SUCH ADDITION, T HE LD. AO DID NOT DISCUSS THE DETAILED WRITTEN REPLY AS SUBMITTED BY THE APPELLANT EXPLAINING THEREIN ACQUISITION OF EACH AND EVERY JEWELLERY ITE MS ASSESSEE-WISE, ROOM WISE, LOCKER-WISE AND OTHER POINT-WISE WITH REFEREN CE TO THE BOARDS INSTRUCTIONS ON THE SUBJECT. THE LEARNED AO SIMPLY TURNED DOWN EXPLANATION WITH PET FINDING THAT THE EXPLANATION S O FURNISHED WAS NOT SATISFACTORY. APPARENTLY THE FINDINGS SO ARRIVED AT THE LEARNED AO WERE ILLOGICAL AND FACTUALLY INCORRECT. IN APPEAL, THE LEARNED CIT (A) HAD DISCUSSED SUCH E XPLANATION AT LENGTH IN HIS APPEAL ORDER AT PAGE NO.6 TO 16 AND H AD ACCEPTED THE SAME IN TO-TO. HOWEVER GOING BY THE NORMS OF CBDT CIRCULAR, THE HONORABLE CIT (A) HAD OPINED THAT ACQUISITION OF THE JEWELLERY IT EMS WEIGHING 2350 GRAMS WAS PROPERLY EXPLAINED AND BALANCE JEWELLERY ITEMS WEIGHING 104.10 (BEING IN EXCESS OF SUCH LIMIT) WAS TAKEN AS UN-EXPLAINED AND ADDITION OF RS.1,64,186/- ON THIS ACCOUNT WAS CONFI RMED WITH THE FOLLOWING FINDINGS AS RECORDED IN PARA 3.3 AT PAGE NO. 16: 51 FURTHER THE ARGUMENT OF THE A.R. THAT JEWELLERY TO THE EXTENT OF 269.797 GMS IS SUPPORTED BY PURCHASE BILL IS NOT ACCEPTED IN VIEW OF THE FACT THAT NO EVIDENCE HAS BEEN FILED REFLECTING THAT PAYMENT FOR PURCHASE HAVE BEEN MADE FROM RECORDED SOURCE. IN THIS REGARD, IT IS SUBMITTED THAT THE ABOVE FIND INGS ARE FACTUALLY INCORRECT. WHILE ARRIVING AT SUCH FINDINGS, THE LEA RNED CIT (A) DID NOT TAKE NOTE OF THE PURCHASE OF THE JEWELLERY ITEMS IN THE NAMES OF SVS. SHANKAR KHANDELWAL AND TIKAM KHANDELWAL FROM M/S MAHENDI JEWELLERS, HOWARAH VIDE BILLS NO. MJ/0116/07, MJ/0118/07 DATE D 29.10.2007 & 5.11.2007 RESPECTIVELY (IN THE NAME OF SHANKARLAL KHANDELWAL) & BILLS NO. MJ/0117/07 & MJ/0119/07 DATED 29.10.2007 & 5.11.2007 RESPECTIVELY (IN THE NAME OF TIKAM KHANDELWAL). HERE IT WOULD BE WORTH NOTING THAT SUCH PURCHASE BILLS WERE DULY FOU ND AT THE TIME OF SEARCH OPERATION AND WERE ALSO LYING SEIZED WITH THE DEPAR TMENT . MORE-OVER PAYMENT OF THESE PURCHASES WERE MADE BY A/C PAYEE C HEQUES ONLY AS EVIDENT FROM THE BANK STATEMENT, THE COPY OF BILLS AND COPY OF THE RELEVANT EXTRACT FROM THE BANK STATEMENT OF BILLS SHOWING TH EREIN SUCH PAYMENT IS SUBMITTED HEREWITH FOR YOUR KIND PERUSAL AND VERIFI CATION IN PB AT S. NO. 208 TO 215 . IN VIEW OF ABOVE DETAILS AND DOCUMENTARY EVIDENCE S, THE FINDINGS OF THE LEARNED CIT (A) WOULD APPEAR TO BE FACTUALLY INCORRECT AND THEREFORE DESERVE TO BE QUASHED. ACCORDINGLY, THE P ART ADDITION OF RS.1,64,186/- AS CONFIRMED BY THE HONORABLE CIT(A) ON THE BASIS OF SUCH INCORRECT FINDINGS MAY KINDLY BE DELETED. 4.5 REVENUE IN GROUND NO. 1 OF ITS APPEAL IS AGGRIE VED AGAINST GRANTING OF RELIEF OF RS. 28,35,814/- . 4.6 DURING THE COURSE OF PROCEEDING BEFORE US, THE LD. DR HAS STATED THAT THE ASSESSEE WAS UNABLE TO EXPLAIN THE SOURCE OF JE WELLERY NEITHER DURING THE COURSE OF SEARCH OPERATION NOR DURING THE COURSE OF ASSESSMENT PROCEEDINGS EXCEPT SAYING THAT THERE ARE FAMILY MEMBERS AND TH EY RECEIVED THE GOLD JEWELLERY AT THE TIME OF THEIR MARRIAGES AND OTHER OCCASIONS. THE AO HAS RIGHTLY ESTIMATED THE DISCLOSED JEWELLERY AT RS. 8, 70,593/-. 52 4.7 WE HAVE HEARD BOTH THE PARTIES. IT IS NOTICED T HAT THE LD. CIT(A) HAS REFERRED TO THE DECISION OF JAIPUR BENCH IN WHICH I T HAS BEEN HELD THAT JEWELLERY TO THE EXTENT MENTIONED IN CIRCULAR NO. 1916 SHOULD BE CONSIDERED AS EXPLAINED. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KAILASH CHAND SHARMA (SUPRA) HAD AN OCCASION TO CONSIDER TH E FOLLOWING QUESTION OF LAW. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN GIVING RELI EF OF UNDISCLOSED JEWELLERY OF 195.85 GRAMS EVEN THOUGH T HE AO AND THE LD. CIT(A) HAD GIVEN RELIEF AS PER CBDT INSTRUCTION NO. 1916 DATED 11 TH MAY, 1994 THOUGH WEALTH TAX RETURNS WERE NOT FILED BY THE FAMILY MEMBERS FOR THE BLOCK ASSESSMENT PERIOD. 4.8 THE FINDINGS GIVEN BY THE TRIBUNAL WERE NOT DI STURBED BY THE HON'BLE JURISDICTIONAL HIGH COURT. IN THE CASE BEFORE HON'B LE JURISDICTIONAL HIGH COURT, THE REVENUE HAS NOT AGITATED UPON THE ACCEPT ANCE OF JEWELLERY AS DISCLOSED AS PER GUIDELINES GIVEN IN CBDT INSTRUCTI ON N. 1916.THE REVENUE IS AGGRIEVED IN NOT CONFIRMING THE ADDITION ON ACCO UNT OF UNDISCLOSED JEWELLERY WHICH WAS BEYOND THE QUANTUM OF JEWELLERY MENTIONED IN INSTRUCTION NO. 1916. AFTER GOING THROUGH THE DECIS ION OF HON'BLE JURISDICTIONAL HIGH COURT AND CONSIDERING THE ORDER OF JAIPUR BENCH IN 53 VARIOUS CASES, WE HOLD THAT THE LD. CIT(A) WAS JUST IFIED IN DELETING THE ADDITION ON ACCOUNT OF JEWELLERY TO THE EXTENT OF RS. 28,35,814/- ON THE BASIS OF CBDT INSTRUCTION NO 1916. HENCE, ON THE ISSUE OF ADDITION ON ACCOUNT OF JEWELLERY, THE GROUND OF APPEAL OF THE ASSESSEE AS WELL AS OF THE REVENUE ARE DISMISSED. 5.1 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.3,21,000/- OUT OF TO TAL ADDITION OF RS.19,22,600/- AS MADE BY THE A.O. U/S 40A(3) OF THE ACT BEING 100% OF THE CASH OUT- GOINGS ALLEGEDLY TO HAVE BEEN MADE FOR EARNING BUSINESS INCOME WITHOUT APPRECIATING THE LEGAL SPIR IT OF THE STATUE ON THE POINT AND ALSO WITHOUT APPRECIATING THE FACTS OF THE CASE AND THE ACTUAL NATURE OF SUCH OUTGOINGS ETC IN RIGHT PERSPECTIV E. AS THE DISALLOWANCE OF RS.3,21,000/- AS CONFIRMED BY THE LD CIT(A) IS BAD IN LAW DESERVES TO BE DELETED. 5.2 THE AO DURING THE COURSE OF ASSESSMENT PROCEEDI NGS NOTICED THAT THE ASSESSEE HAS MADE PAYMENT IN CASH FOR PURCHASE OF T HE PROPERTIES WHICH HAVE BEEN CONSIDERED AS STOCK IN TRADE. THE TOTAL C ASH PURCHASES ARE TO THE 54 EXTENT OF RS. 19,22,600/- AND THESE RELATE TO 09 PR OPERTIES. THE DETAILS ARE AVAILABLE AT PAGE 6 OF THE ASSESSMENT ORDER. 5.3 BEFORE THE AO, IT WAS SUBMITTED THAT THE ASSESS EE GOT HANDSOME DISCOUNT BY MAKING PAYMENT IN CASH. THE IDENTITY OF THE PAYEE AND GENUINENESS OF THE PAYMENTS IS NOT DOUBTFUL. BEFORE THE AO, THE ASSESSEE RELIED UPON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KANTI LAL PURSOTAM & CO. VS. CIT, 155 ITR 519 IN WH ICH THE HON'BLE JURISDICTIONAL HIGH COURT HELD THAT PROVISO TO SUB- SECTION (3) SHOW THAT THE PROVISIONS ARE NOT ABSOLUTELY MANDATORY. THE RIGOUR OF THE RESTRICTION HAS ALSO BEEN LESSENED BY RULE 6DD WHICH GIVES A DISCRE TIONARY POWER TO THE AO TO ALLOW DEDUCTION OF PAYMENTS EXCEEDING THE PAYMEN T SPECIFIED IN CERTAIN CASES. THE AO WAS NOT SATISFIED WITH THE CONTENTION OF THE ASSESSEE. THE AO REFERRED TO THE DECISION OF HON'BLE APEX COURT IN T HE CASE OF ATTAR SINGH GURMUKH SINGH VS. ITO 191 ITR 667 IN WHICH IT HAS B EEN HELD THAT PAYMENTS MADE FOR PURCHASING STOCK IN TRADE ARE ALS O COVERED BY THE WORD EXPENDITURE. RELIANCE HAS BEEN PLACED ON THE DECI SION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF NATHALAL JETHALAL VS. CI T 199 ITR 757. THE AO ACCORDINGLY DISALLOWED A SUM OF RS. 19,22,660/- U/S 40A (3) OF THE ACT. 5.4 BEFORE THE LD. CIT(A), THE ASSESSEE FILED THE C HART IN WHICH DETAILS OF PAYMENTS MADE AGAINST THE PURCHASES OF PLOTS WAS SU BMITTED. THE LD. CIT(A) 55 CONFRONTED THIS CHART TO THE AO AND AFTER CONSIDERI NG THE CHART HELD THAT A SUM OF RS. 3.21 LACS IS DISALLOWABLE U/S 40A (3) OF THE ACT. THIS IS WITH REFERENCE TO THE PLOT NO. 26, MITRA NAGAR. THE DETA ILS ARE AS UNDER:- PLOT NO. 26, MITRA NAGAR. 8,51,000 THIS PLOT WAS PURCHASED BY ASSESSEE FROM SHRI KOSHALAYA DEVI FOR RS. 8,51,000/- IN WHICH RS. 3,21,000/- PAID CASH AND RS. 5,30,000/- PAID THROUGH ACCOUNT PAYEE CHEQUE OF GUMAN FURNITURE & SERVICES PVT LTD ON BEHALF OF ASSESSEE. KINDLY REFER THE LEDGER AT PAGE 170 TO 172 OF PAPER BOOK. THUS ONLY CASH PAYMENT FOR PURCHASES OF THIS PLOT WAS RS. 3,21,000/- AS AGAINST RS. 8,51,000/- ADDED BY AO. 5.5 THE LD. CIT(A) THEREFORE, CONFIRMED THE ADDITIO N OF RS. 3.21 LACS AFTER OBSERVING AS UNDER:- 4.3 I HAVE CONSIDERED THE SUBMSISON OF THE A. R AND HAVE PERUSED THE MATERIAL ON RECORD. THIS ISSUE HAS BEEN DISCUSSED IN DETAIL IN THE APPEAL NO. 570/09-10 FOR A.Y 2005-06 VIDE ORDER DATED 29.12.10 IN THE CASE OF APPELLANT AND IT WAS HELD THAT 40A(3) IS ATTRACTED IN THE CASE OF PAYMENT MADE IN CASH IN EXCESS OF RS . 20,000/- BY THE APPELLANT. BY FOLLOWING THE SAME REASONING AND DISC USSION AS DONE IN APPEAL ORDER FOR A.Y 2005-06, IT IS HELD THAT A.O. WAS LEGALLY JUSTIFIED IN MAKING DISALLOWANCE U/S 40A (3). HOWEVER, AS REGARD S VARIOUS FACTUAL MISTAKES POINTED OUT BY THE A.R. AS MENTIONED IN TH E AFORESAID CHART, THE VARIOUS ENTRIES WERE CLARIFIED BY THE A.R. TO THE A.O., WHO WAS PRESENT IN THE APPEAL HEARING AND THESE WERE ALSO CLARIFIED TO THE UNDERSIGNED. THE FACTS METNIOEND BY THE A.R FROM SR. NO. 1 TO 9 OF THE AFORESAID CHART WERE FOUND CORRECT BY THE A.O. AND BY THE UNDERSIGN ED. ACCORDINGLY, IT IS HELD THAT 40A (3) IS NOT ATTRACTED IN RESPECT OF AFORESAID AMOUNT TOTALING TO RS. 16,01,600/- AND THEREFORE THE DISAL LOWANCE TO THAT EXTENT 56 IS DELETED. THE DISALLOWANCE OF REMAINING AMOUNT OF RS. 3,21,000/- IS UPHELD. 5.6 DURING THE COURSE OF PROCEEDING BEFORE US, THE LD. AR HAS FILED THE FOLLOWING SUBMISSIONS. IN APPEAL PROCEEDINGS, A DETAILED REPLY ON THE PO INT WAS SUBMITTED BEFORE THE HONORABLE CIT (A) EXPLAINING T HEREIN THE REAL SPIRIT OF THESE PROVISIONS AND ALSO THE DETAILS OF THE MOD E OF PAYMENT IN EACH AND EVERY PAYMENT AS PER COPY OF THE WRITTEN SUBMIS SIONS PLACED IN THE PAPER BOOK AT PAGE NO. 17 TO 23 . HAVING CONSIDERED SUCH EVIDENCES AND DETAILS, THE HONORABLE CIT (A) HAD DELETED ADDI TION OF RS.16,01,600/- WHERE NO VIOLATION U/S 40A(3) OF THE ACT WAS NOTED . HOWEVER, HE WAS NOT WILLING TO CONSIDER OUR OTHER ARGUMENTS ON THE PLEA THAT ALL THE OUT- GOINGS INCLUDING THE CASH PAYMENTS FOR ACQUIRING T HE STOCKS IN TRADE ATTRACTED THESE PROVISIONS AND CONFIRMED ADDITION O F RS.3,21,000/- ONLY ON ACCOUNT OF CASH PAYMENT (IN PART) MADE FOR PURCHASI NG A PLOT NO. 26, MITRA NAGAR , JAIPUR. THE HONORABLE CIT (A) HAD SUMMARILY TURNE D DOWN OUR OTHER ARGUMENTS AS LISTED AT S.NO. 17 TO 23. IN THE WRITTEN SUBMISSIONS CITING THEREIN NUMBER OF JUDICIAL CITATIONS ON THE POINT ( PB 21 & 22) AND ALSO THE INTERPRETATION OF THE OBSERVATIONS OF HONO RABLE SUPREME COURT IN THE CASE OF ATTAR SINGH GURUMUKH SINGH ETC. VS ITO (1991) 191 ITR 667 (SC). ). IT APPEARED THAT THE LEARNED AUTHORITIES BELOW DID NOT APPRECIATE THE DECISION OF THE HONORABLE SUPREME CO URT IN RIGHT PERSPECTIVE. THE SAID JUDGMENT HAS BEEN ELABORATELY DEALT WITH AND INTERPRETED BY HONORABLE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT VS CHAUDHARY & CO. WHILE INTERPRETING THE ABOVE JUDGMENT OF HONORABLE SUPREME COURT, THE HONORABLE HIGH COURT O F ALLAHABAD (1995) 129 CTR (ALL) 101 OPINED BUSINESS EXPENDITU RE-DISALLOWANCE U/S 40A (3)- ASSESSEE PRODUCED EVIDENCE THAT THE PA YEE INSISTED ON CASH PAYMENT- IDENTITY OF PAYEE WAS DISCLOSED AND G ENUINENESS OF PAYMENT ALSO ESTABLISHED- DISALLOWANCE U/S 40 A (3) WAS NOT CALLED FOR- THE OBJECT OF SECTION 40A (3) IS THAT NO FICTI TIOUS AMOUNT SHOULD BE ALLOWED AS REVENUE EXPENDITURE AND NOT THAT CASH PAYMENT CAN NEVER BE MADE. ON THE BASIS OF SUCH INTERPRETATION ONLY, THE HONO RABLE ITAT, JAIPUR BENCH JAIPUR HAVE TAKEN THE SAME VIEW IN THE CASE OF M/S PACL INDIA LTD VS ACIT CIRCLE-3, JAIPUR HOLDING THE REIN THAT BUSINESS EXPENDITURE-DISALLOWANCE U/S 40A (3)- APPL ICABILITY OF RULE 6DD(H)- CLAUSE (H) OF RULE 6DD TAKES OUT OF THE PUR VIEW OF SECTION 40A (3) SUCH CASH PAYMENT WHICH IS MADE IN A VILLA GE OR TOWN WHICH IS NOT SERVED BY ANY BANK TO ANY PERSON WHO O RDINARILY RESIDES OR IS CARRYING ON ANY BUSINESS IN SUCH VI LLAGE OR TOWN- IN THE INSTANT CASE, ADMITTEDLY THE SELLERS OF THE LAND AR E VILLAGERS ENGAGED IN FARMING ACTIVITIES AND RESIDING AT PLACES WHICH ARE NOT SERVED BY ANY BANK. 57 IN FACT, THE FINDINGS OF THE HONORABLE APEX COURT I N THE ABOVE REFERRED CASE RATHER SUPPORT OUR VIEW AS THE PLOT I .E. 26, MITRA NAGAR, JAIPUR WHEREIN PART PAYMENT OF RS.3,21,000/- (OUT OF TOTAL INVESTMENT OF RS.8,51,000/-) WAS DISALLOWED U/S 40A(3) OF THE ACT . IN FACT THE SAID PLOT WAS NOT SOLD DURING THE YEAR UNDER CONSIDERATION IN RESPECT OF W HICH ADDITION OF RS.3,21,000/- WAS CONFIRMED BY THE CIT (A). IN THE CIRCUMSTANCES, THE INVESTMENT IN THE SAID PLOT COUL D NOT BE REGARD AS OUT- GOING FOR EARNING THE BUSINESS INCOME DURING THE Y EAR. HOWEVER, THE CIT (A) DID NOT DEAL WITH ALL THESE FACTS AND ARGUMENTS IN HIS APPEAL ORDER WHILE REJECTING OUR CLAIM. THUS TO THIS EXTENT THE ORDER OF THE LEARNED CIT (A) IS NOT WELL REASONED ORDER AND IS BAD IN LAW. THE AUTHORITIES BELOW DID NOT TAKE NOTE OF THESE CI TATIONS WHILE RELYING ON THE BOARDS PRESS NOTE DATED 8 TH MAY, 1969 TO TURN DOWN THE CLAIM OF THE APPELLANT. IN FACT, THEY HAVE MISINTER PRETED THE BOARDS INSTRUCTIONS ON THE POINT. IN FACT, THIS PRESS NOTE TALKS ABOUT THE PLACE WHERE THE RECIPIENTS ARE RESIDING AND NOT THE PLACE WHERE THE PAYMENT IS MADE. THIS POINT HAS BEEN DIRECTLY DEALT WITH BY THE ABO VE REFERRED JUDICIAL AUTHORITIES IN VERY CLEAR TERMS. HOWEVER, THE AUTHORITIES BELOW HAVE RUBBISHED SUCH IMPORTANT CITATION WITHOU T DISCUSSIONS AND GIVING SPECIFIC FINDINGS ON THE POINT. IN SHORT, T HE FINDINGS OF THE AUTHORITIES BELOW ON THE POINT ARE ASSAILED FOR THE FOLLOWING REASONS: (I) AT THE OUT-SET, YOUR HONORS WOULD APPRECIATE THAT F OR INVOKING PROVISIONS OF SECTION 40(A)(3) OF THE ACT THE REAL INTENTION FOR CARRYING OUT A TRANSACTION IS TO BE LOOKED IN TO DECIDE THE NATUR E OF A PARTICULAR PAYMENT. WHETHER A PARTICULAR PAYMENT IS OF EXPENDITURE N ATURE OR OF INVESTMENT NATURE WOULD BE DECIDED BY THE INTENTION OF CARRYING OUT SUCH TRANSACTION ONLY. IF THE INTENTION IS TO MAKE INVESTMENT ONLY THEN THESE PROVISIONS WOULD NOT COME INTO PLAY AND IF SU CH OUT-GOING IS MADE FOR ACQUIRING THE STOCKS IN TRADE ONLY THEN THESE P ROVISIONS WOULD COME INTO PLAY. IN THE PRESENT CASE, THE AUTHORITIES BEL OW DID NOT DWELL UPON THE ACTUAL INTENTIONS OF THE APPELLANT. IN ABSENCE OF SUCH AN EXERCISE, THESE PROVISIONS COULD NOT BE INVOKED LEGALLY AND VALIDLY . MORE-OVER, HERE IT WOULD BE RELEVANT TO MENTION HERE THAT INITIALLY, T HE APPELLANT MADE PAYMENT FOR PURCHASE OF THE SAID WITH THE INTENTION OF MAKING AN INVESTMENT ONLY. HOWEVER, SUBSEQUENTLY WHEN IT WAS FOUND ECONOMICALLY VIABLE TO CONVERT SUCH INVESTMENT AS BUSINESS STOCK , THE SAID PLOT WAS PUT AS STOCK IN TRADE. SUCH INTENTION OF THE APPELLANT IS EVIDENT FROM THE FACT THAT THE PLOT UNDER CONSIDERATION WAS NOT SOLD DURING THE YEAR UNDER CONSIDERATION. THIS FACT WAS BROUGHT TO THE NOTICE OF THE AUTHORI TIES BELOW TO SHOW HIS REAL INTENTION OF MAKING INVESTME NT IN THE SAID PLOT. HOWEVER THEY WERE NOT WILLING TO CONSIDER THIS FACT AND RUBBISHED THE SAME WITHOUT ANY REASON OR WITHOUT BRINGING ANY MAT ERIAL ON RECORD TO REBUT SUCH CLAIM OF THE APPELLANT. 58 (II) ON GOING THROUGH THE RELEVANT PROVISIONS OF THE ACT , IT WOULD BE NOTED THAT THE WORDS SUCH EXPENDITURE SHALL NOT BE ALLOWED AS A DEDUCTION ARE OF RELEVANCE. IN THE INSTANT CASE, THE APPELLANT HAD NOT CLAIME D THE IMPUGNED PAYMENTS AS DEDUCTION. THEREFORE NO ADDITION CAN BE MADE AGAINST SUCH CASH PAYMENT. (III) AGAIN IT WAS ALSO RELEVANT TO SEE AS TO WHEN THESE PROVISIONS WOULD BE ATTRACTED I.E. IN THE YEAR WHEN THE INVESTMENT WAS MADE OR IN THE YEAR WHEN SUCH PROPERTY WAS SOLD? DESPITE OF SPECIFIC RE QUEST ON THE POINT AS MADE VIDE PARA NO.3 OF THE WRITTEN SUBMISSION, THE AUTHORITIES BELOW DID NOT DECIDE THIS POINT. IN ABSENCE OF SPECIFIC ADJUD ICATION ON THE POINT, THE ORDER SO PASSED IS BAD IN LAW AS PER JUDICIAL DISCI PLINE AND DESERVES TO BE QUASHED. (IV) IT IS A SETTLED LAW AS OPINED BY THE JUDICIAL AUTHO RITIES IN NUMBER OF CASES THAT FOR ADMINISTERING THE LAW JUDICIOUSLY IT IS AL WAYS DESIRABLE TO TAKE A PRACTICAL AND PRAGMATIC VIEW TO THE PROBLEM. KINDLY REFER TO THE JUDGMENT OF HONORABLE CALCUTTA HIGH COURT IN THE CASE OF GIRDHARI LAL GOENKA VS CIT REPORTED IN 179 ITR 122 THAT ITO HAS TO TAKE A PRAG MATIC VIEW OF THE MATTER. THE ITO SHOULD TAKE A PRACTICAL APPROACH TO PROBLEM AND STRIKE A BALANCE BETWEEN THE DIRECTION OF LAW AND HARDSHIP T O THE ASSESSEE. HE SHOULD NOT ENMESH HIMSELF IN TECHNICALITIES . AFTER ALL, THE OBJECT IS NOT TO DEPRIVE THE ASSESSEE OF THE DEDUCTION WHICH HE IS O THERWISE ENTITLED TO CLAIM WHERE THE AMOUNT WAS PAID IN CASH OR RECEIVED IN CASH. THE ASSESSING OFFICER HAS TO FIND OUT WHETHER THE TRANS ACTION IS GENUINE OR NOT AND IF HE FINDS THAT THE TRANSACTION IS GENUINE, HE SHOULD ALLOW THE DEDUCTION, THE CIRCULAR OF THE BOARD IS NOT EXHAUSTIVE; IT IS ONLY ILLUSTRATIVE AND THE ASSESSING OFFICER HAS TO TAKE INTO ACCOUNT THE SURROUNDING CIRCUMSTANCES, CONSIDERATIONS OF BUSINE SS EXPEDIENCY AND THE FACTS OF EACH PARTICULAR CASE IN EXERCISING HIS DISCRETION EITHER IN FAVOR OR AGAINST THE ASSESSEE. (V) IT IS ALSO A SETTLED LAW THAT THESE PROVISIONS WOUL D NOT COME INTO PLAY WHERE THE BOOKS RESULTS WERE REJECTED U/S 145 OF TH E ACT AND PROFITS WERE ESTIMATED AS HELD IN THE CASE OF CIT VS BANWARI LAL BANSHIDHAR(1998)148 CTR (ALL) 533 AS UNDER: BUSINESS EXPENDITURE- DISALLOWANCE U/S 40 A (3)- I NCOME ASSESSED AT G.P. RATE- WHERE INCOME IS ASSESSED AT G.P. RATE BY REJECTING THE BOOKS OF THE ASSESSEE U/S 145(1) PROVISO, NO DISALL OWANCE CAN BE MADE SEPARATELY U/S 40 A (3). FOLLOWED BY HONORABLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS SMT. SANTOSH JAIN (2008) 296 ITR (P&H) 324. (VI) AND LASTLY, WHILE DEALING WITH RULE 6DD AND THE REA L SPIRIT ON THE BOARDS CIRCULAR ON THE SUBJECT, THE HONORABLE RAJASTHAN HIGH COURT IN THE 59 CASE OF SMT. HARSHILA CHORDIA VS ITO(2007)208CTR (RAJ) 200 8)298 ITR 349 (RAJ) HAVE OPINED AS UNDER: BUSINESS EXPENDITURE- DISALLOWANCE U/S 40A(3)- EXCE PTIONAL OR UN- AVOIDABLE CIRCUMSTANCES- CIRCUMSTANCES IN WHICH THE CONDITIONS LAID DOWN IN RULE 6DD(J) COULD BE APPLICABLE CAN NOT BE SPELT OUT AND THE CIRCUMSTANCES PROVIDED IN CBDT CIRCULAR ARE NOT EXH AUSTIVE BUT ILLUSTRATIVE- AS PER CIRCULAR NO. 220 DATED 31.05-7 7 CLEARLY STATES THAT RULE 6DD(J) HAS TO BE LIBERALLY CONSTRUED, AND ORDI NARILY WHERE THE GENUINENESS OF THE TRANSACTION AND THE IDENTITY OF THE PAYEE IS ESTABLISHED, THE REQUIREMENT OF RULE 6DD(J) MUST BE DEEMED TO HAS BEEN SATISFIED- GENUINENESS OF THE TRANSACTIONS AND THE IDENTITY OF THE PAYEE IS NOT DISPUTED IN THE PRESENT CASE ALSO, YOUR HONORS WOULD APPRECI ATE THAT IDENTITY OF THE PAYEE IS PROVED, THE GENUINENESS OF THE TRANSACTION IS DULY DOCUMENTED BY THE SALE DEED INSTRUMENTS AND THE AMOUNT OF THE TRANSACTION IS ALSO CERTIFIED BY THE STAMP REGISTRATION AUTHORITIES BY WAY OF DLC RATES ETC. THUS ALL THE THREE INGREDIENTS OF THE GENUINENESS & CORRECTNESS OF THE TRANSACTION AND ALSO THE IDENTITY OF THE PAYEE IS E STABLISHED IN THE PRESENT CASE. IN THE CIRCUMSTANCES, PROVISIONS OF SECTION 4 0A (3) ARE NOT ATTRACTED IN THE PRESENT CASE AND ADDITION MADE ON THE BASIS OF MISINTERPRETATION OF THESE PROVISIONS NEEDS TO BE DELETED. IN VIEW OF ABOVE DISCUSSIONS, IT IS SEEN THAT THE A DDITION MADE AND CONFIRMED ON ACCOUNT OF DISALLOWANCE MADE U/S 40A ( 3) IS BAD IN LAW AND DESERVES TO BE DELETED. 5.7 THE LD. AR HAS ALSO PLACED THE RELIANCE ON THE FOLLOWING DECISIONS. 1. CIT VS. CHOUDHARY & CO.129 CTR 101 (ALL.) 2. CIT VS. BRIJ MOHAN SING & CO. 117 CTR 391 (P&H) 3. PACL INDIA LTD. VS. ACIT, 38 DTR (JP.) (TRIB) 1 4. SMT. HARSHILA CHORDIA VS. ITO 208 CTR 208 (RAJ) 5. CIT VS. BANWARILAL BANSIDHAR, 148 CTR 533 (ALL.) 6. ITO VS. RISHABHDEV TOWNSHIP & DEVELOPERS (P) LTD. (ITA NO.181/JP/2010 ITAT, JAIPUR BENCH ) 60 5.8 ON THE OTHER HAND, THE LD. DR STATED THAT DISAL LOWANCE U/S 40(A)(IA) (3) IS TO BE MADE IN CASE THE PAYMENT IS IN CASH UNTIL AND UNLESS THE PAYMENT IS COVERED BY ANY OF SUB-RULE MENTIONED IN 6DD. THE AS SESSEE HAS NOT BEEN ABLE TO ESTABLISH THAT THE PAYMENTS ARE COVERED IN SUB-RULE 6DD. 5.9 WE HAVE HEARD BOTH THE PARTIES. THE LD. AR DURI NG THE COURSE OF PROCEEDINGS BEFORE US HAS ARGUED THAT NO DISALLOWAN CE U/S 40A(3) CAN BE MADE IN CASE THE BOOKS OF ACCOUNTS ARE REJECTED. OU R ATTENTION WAS DRAWN TOWARDS THE FACT THAT THE AO HAS REJECTED THE BOOKS OF ACCOUNTS AND HAS MADE THE ADDITION ON ACCOUNT OF CONSTRUCTION AND W ORK IN PROGRESS EXPENSES AND HAS ALSO MADE DISALLOWANCE OF TAXI RUNNING EXPE NSES. THE ADDITION MADE UNDER BOTH THE HEADS ARE SUBSTANTIAL. THE HON'BLE J URISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. G.K. CONTRACTORS, 19 DTR 305 HELD THAT IF THE PROFIT IS ESTIMATED BY APPLYING HIGHER NET PROFIT RATE AFTER REJECTING THE BOOKS OF ACCOUNTS BY INVOKING THE PROVISIONS OF SECTION 145( 3)OF THE ACT THEN NO SEPARATE ADDITION CAN BE MADE ON ACCOUNT OF CASH C REDIT U/S 68 OF THE ACT. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SMT. SANTOSH JAIN, 296 ITR 324 HELD THAT SECTION 40A(3) CANNOT BE INVOKED WHEN THE INCOME IS ESTIMATED BY APPLYING THE GROSS PROFI T RATE. THE HON'BLE PUNJAB & HARYANA HIGH COURT FOLLOWED THE DECISION O F THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. BANWARI LAL BANSI DHAR, 229 61 ITR 229. THE JAIPUR TRIBUNAL IN THE CASE OF SINGHAL BUILDERS CONTRACTOR VS. ADDL. CIT, 133 TTJ 102 HAS ALSO HELD THAT ONCE AN I NCOME OF THE ASSESSEE IS ESTIMATED BY APPLYING THE GROSS PROFIT RATE OR NET PROFIT RATE THEN NO DISALLOWANCE CAN BE MADE U/S 40A (3) OR ANY OTHER PROVISIONS. THE PROVISO TO SECTION 40A(3) MAKES AN EXCEPTION THAT CASH PAYM ENT IS NOT TO BE DISALLOWED IF IT IS AN ACCOUNT OF BUSINESS EXPEDIEN CY. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, WE FEEL THAT NO SEPARA TE ADDITION IS REQUIRED TO BE MADE U/S 40A(3) BECAUSE THE BOOKS OF ACCOUNTS HA S BEEN REJECTED AND THERE HAS BEEN . THE ADDITION OF RS. 3.21 LACS MADE U/S 40A(3) IS DELETED. 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 ADDITION OF RS.49,74,730/- @ 15% OF THE EXPENSES CLAIMED BY THE APPELLANT AND DEBITED UNDE R CONSTRUCTION EXPENSES & WIP EXPENSES OUT OF TOTAL ADDITION OF RS. 1,50,00,000/- AS MADE BY THE A.O. UNDER THIS HEAD. WHILE CONFIRMING THIS ADDITION, THE LEAR NED CIT (A) HAD VIRTUALLY GONE BY THE FINDINGS OF THE AO E XCEPT HIS FINDINGS REGARDING 194C OF THE ACT AND RESTRICT ED SUCH DISALLOWANCE TO 15% OF THE EXPENSES AS DEBITED UNDER THIS HEAD ON THE GENERAL PLEA THAT SUCH EXPENSES WERE NOT PROPERLY VOUCHED AND VERIFIABLE. APPARENTLY IN ABSENCE OF ANY SPECIFIC INSTANCE OR DISCREPANCIES O F THE EXPENSES OF SUCH NATURE, NO DISALLOWANCE COULD BE M ADE WITHOUT ANY BASIS. THUS THE ADDITION SO CONFIRMED I S BAD IN LAW AND DESERVES TO BE DELETED. 62 6.2 THE REVENUE IN GROUND NO. 2 OF IT APPEAL IS AGG RIEVED AGAINST REDUCING THE ADDITION OF RS. 49,74,730/-AS AGAINST RS. 1.50 CRORES MADE BY THE AO. 6.3 THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED FO LLOWING EXPENSES INCURRED DURING THE YEAR. CONSTRUCTION A/C RS. 2,39,54,413/- WIP EXPENSES RS. 92,10,455/- RS. 3,31,64,868/- THE AO NOTICED THAT THE PAYMENTS HAVE BEEN MADE IN THE NAMES OF MOST OF THE PARTIES AND LABOUR PAYMENTS WILL BE COVERED FOR DEDUCTION OF TDS U/S 194C OF THE ACT. THE AO THEREFORE, REFERRED THAT TH E EXPENSES ARE DISALLOWABLE U/S 40(A)(IA). ACCORDING TO THE AO, TH E PAYMENTS MADE AND EXPENSES CLAIMED ARE NOT VERIFIABLE. THE CLOSING ST OCK VALUED AT RS. 4,26,78,663/- DO NOT GIVE ANY BIFURCATION OF THE C ONSTRUCTION COST AT VARIOUS SITES AND INCLUDED IN THE COST. THE AO ALSO OBSERVE D THAT THE ASSESSEE HAS RAISED LOANS ON WHICH INTEREST HAS BEEN PAID BUT S UCH LOANS HAVE BEEN GIVEN TO GROUP CONCERNS WITHOUT INTEREST. THE AO ACCORDIN GLY MADE DISALLOWANCE OF RS. 1.50 CRORES. 6.4 BEFORE THE LD. CIT(A), THE ASSESSEE MADE FOLLOW ING SUBMISSIONS:- 1.THE LEARNED AO DISALLOWED THE EXPENSES ON ACCOUNT OF (I) EXPENSES NOT SUPPORTED BY VOUCHER (II) OUT OF INTEREST CLAIMED AND (III) A GAINST PROVISIONS OF SECTION 40(A)(IA) 63 OF INCOME TAX. THE LD AO MADE ADHOC AND LUMP SUM AM OUNT OF RS. 1,50,00,000/- WITHOUT BIFURCATING THE DISALLOWANCE UNDER THESE TH REE HEAD. 2. NOT FURNISHING OF LEDGER ACCOUNT OF WIP EXPENSES THE LD. AO HAS ALLEGED THAT THE ASSESSEE HAS NOT FU RNISHED LEDGER ACCOUNT OF WIP EXPENSES. AT PAGE 2, THE LD AO CATEGORICALLY ADMITT ED THAT THE ASSESSEE HAS PRODUCED BOOKS OF ACCOUNT IN RESPECT OF HIS PROPERTY BUSINES S AND OTHER BUSINESSES. THE WIP EXPENSES REPRESENTS TO HEADING OF GROUP SUMMARY OF VARIOUS ACCOUNTS SUCH AS INTEREST, FINANCIAL EXPENSES ETC. THE GROUP SUMMARY IS GIVEN IN AUDITED STATEMENT OF ACCOUNT (PB PAGE 19). THE LEDGER ACCOUNT OF THE VARIOUS ACCOUNTS UNDER G ROUP SUMMARY WIP EXPENSES IS PART OF THE BOOKS OF ACCO UNT PRODUCED BEFORE THE LD AO. THE COPY OF LEDGER ACCOUNT OF FURTHER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS SUBMITTED DETAILED CHA RT (ENCLOSED AS PB PAGE 537/II) SHOWING NAME OF SELLER, PARTICULARS OF PROPERTY SO LD, CONSTRUCTION AREA, PURCHASE COST OF LAND, CONSTRUCTION COST, CONSTRUCT ION COST PER SQ.FT, AND APPROPRIATION OF INTEREST (NAMED AS WIP), NAME OF PURCHASER, DATE OF SALE AND PROFIT IN EACH PROPERTY. 3. PAYMENTS IN CASH AND NOT SUPPORTED BY VOUCHERS:- IN CONSTRUCTION BUSINESS, THE PAYMENTS ARE OF LESS THAN RS. 20000/- WHICH IS PERMISSIBLE IN LAW. IT IS WELL KNOWN FACT THAT PAYM ENT OF LABOUR, STONE, BAJARI, GRIT ETC CANNOT BE MADE BY CHEQUE. FURTHER, NO SUPPORTING VO UCHERS OF SUCH EXPENSES CAN BE OBTAINED. THE DEPARTMENT HAS CARRIED OUT INTENSIVE SEARCH AND SEIZURE OPERATION AND ALL THE DOCUMENTS WHATEVER AVAILABLE WITH THE ASSES SEE WAS SEIZED BY THE DEPARTMENT. THE ASSESSEE HAS NOTHING TO PRODUCE THE FRESH VOUCH ERS BEFORE THE AO. 4. PAYMENTS ATTRACTS THE PROVISIONS OF SECTION 40 A (IA):- DURING THE YEAR THE ASSESSEE HAS NOT MADE ANY SUCH PAYMENT WHICH WAS LIABLE FOR TDS AS THE CONSTRUCTION WORK WAS CARRIED OUT BY ENG AGING THE DIRECT LABOUR OR WHERE THE PETTY AMOUNT WAS PAID ON CONTRACT AND THE SAME WAS BELOW TO LIMIT SPECIFIED U/S 194C OF INCOME TAX ACT. FURTHER THE BOOKS OF ACCOUN TS OF ASSESSEE ARE AUDITED U/S 44AB OF INCOME TAX ACT AND THE AUDITORS OF THE ASSE SSEE ALSO REPORT THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS. 5. LOAN TAKEN IN INTEREST WAS UTILIZED FOR GIVING INTEREST FREE LOAN TO FAMILY MEMBERS AND GROUP CONCERNS. THE FINDINGS OF THE LD AO IS WRONG AND AGAINST THE FACTS. THE LD AO FAILED TO APPRECIATE THE BOOKS OF ACCOUNT, BALANCE SHEET AND TRIAL BALANCE PRODUCED BEFORE HIM. THE COPY OF THE BALANCE SHEET IS AT (PB PAGE 16-31) . IN THIS REGARD WE SUBMIT THAT THE ASSESSEE HAS OWN CAPITAL OF RS. 1,88,63,63 7.66 AND INTEREST FREE FUNDS FROM VARIOUS PERSONS WERE OF RS. 5,12,54,315.10 (SEE PB PAGE 503) AS AGAINST INTEREST FREE LOANS AND ADVANCES GIVEN BY THE ASSESSEE OF RS. 496 79673.21 (PB PAGE 504). THE LD. AO HAS NOT PIN POINTED WHICH LOAN WAS UTILI ZED FOR GIVING INTEREST FREE LOAN TO GROUP BUSINESS CONCERN OR FAMILY MEMBERS. 64 6. WIP EXPENSES OF RS. 92,10,455/- NOT SUPPORTED BY VOUCHERS. THE MAJOR PART OF THE WIP EXPENSES IS INTEREST PAID TO FINANCIAL INSTITUTIONS AND BANK. THE AMOUNT AGAINST THIS HEAD IS RS. 68,62,622/-, 1, 31,433/-, 3,27,855/- 2,43,634/- 6,74,785/- 1,03,769/-, 84,393/- AND 77,600/- TOTALL ING TO RS. 85,06,091/- OUT OF THE TOTAL AMOUNT RS. 92,10,455/- UNDER THE HEAD WIP (PB PAGE 261) . THE SAID AMOUNT IS VERIFIABLE FROM THE BANK STATEMENTS. THE OTHER EXPE NSES LIKE LOAN PROCESSING EXPENSES, BANK CHARGES FORECLOSURE CHARGES, INSURAN CE CHARGES ARE OF SUCH TYPE WHICH CAN EASILY BE VERIFIED FROM BANK STATEMENTS. 7. THE ASSESSEES TOTAL TURNOVER WERE OF RS. 2,28 ,27,775/- + RS. 13,46,905/- = 2,41,74,690/- AND THE GROSS PROFIT WAS OF RS. 76,00 ,056/- WHICH COMES TO 41.44% OF THE TURNOVER. THE LD AO HAS MADE ADDITION OF RS. 1, 50,00,000/- WHICH RESULTS IN GP OF RS. 2,26,00,056/- WHICH GIVES VERY HUGE GP RATE OF 93.49% WHICH IS NOT POSSIBLE AT ALL IN THIS TRADE. WHERE THE INCOME IS DETERMINE D 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 BY INC OME-TAX DEPARTMENT, THE METHOD SHOULD BE ADOPTED, WHICH APPROXIMATES MOST NEAR TO THE TRUTH. 8. THE ASSESSEE HAS INCURRED CONSTRUCTION & WIP EX PENSES OF RS. 3,31,64,868/-. IT IS UNDISPUTED FACT THAT THE ENTIRE CONSTRUCTION EXPENS ES AND WIP EXPENSES WERE NOT CHARGED TO REVENUE OR SAY DEBITED TO PROFIT & LOSS ACCOUNT, BUT PART OF THE EXPENSES WERE CARRIED TO BALANCE SHEET AS CLOSING STOCK. KI NDLY SEE PAPER BOOK PAGE 16. THEREFORE THE SUBJECT MATTER OF THE DISALLOWANCE SH OULD BE ONLY THOSE EXPENSES WHICH HAS BEEN DEBITED TO PROFIT & LOSS ACCOUNT. 9. FURTHER, THE WIP EXPENSES MAINLY PERTAIN TO INT EREST PAID BY THE ASSESSEE FOR THE LOANS OBTAINED BY HIM FOR PURCHASING THE PLOTS. THE INTEREST EXPENSES ARE FULLY VERIFIABLE HENCE DISALLOWANCE CANNOT BE MADE ON ACC OUNT OF WIP EXPENSES. 10. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSEE HAS SUBMITTED ESTIMATED CONSTRUCTION COST PER SQ. FT., CERTIFIED BY TWO DIFFERENT ARCHITECTS (PB PAGE 263 & 264). FURTHER, DURING THE COURSE OF ASSESSMENT PROCEEDING S THE ASSESSEE HAS SUBMITTED DETAILED CHART (ENCLOSED AS PB PAGE 5 37/II) SHOWING NAME OF SELLER, PARTICULARS OF PROPERTY SOLD, CONSTRUCTION AREA, PURCHASE COST OF LAND, CONSTRUCTION COST, CONSTRUCTION COST PER SQ.FT, AND APPROPRIATION OF INTEREST (NAMED AS WIP), NAME OF PURCHASER, DATE OF SELL AND PROFIT IN EACH PROPERTY. (COPY ENCLOSED HEREWITH) THE LD AO HAS NOT POINTED OUT ANY DEFECT IN THE ABOVE SAID CHART SUBMITTED BEFORE HIM BY THE ASSESSEE. 11. EVEN IF THE BOOKS OF ACCOUNTS ARE NOT FOUND PR OPER THAN THE PROPER WAY TO ESTIMATE THE PROFIT BY APPLYING PROFIT RATE ON THE GROSS RECEIPTS. 12. THE LD AO MADE ADHOC DISALLOWANCE OF RS. 1,50, 00,000/- ON ARBITRARY AND WHIMSICAL MANNER AND WITHOUT ANY BASIS. THE LD AO H AD NOT CITED ANY COMPARABLE CASE TO JUSTIFY THE ADDITION MADE BY HIM. THE ESTIM ATE OF THE AO IS NOT BASED ON 65 MATERIAL; OR REPORT OF TECHNICAL PERSON BUT IT IS W ILD ESTIMATE; NOT TENABLE IN THE EYES OF LAW. THE ESTIMATION IS NOT BASED ON ANY COGENT M ATERIAL OR EVIDENCE BUT BASED ON SUSPICION, SURMISES, CONJECTURES, AND IMAGINATIONS. IN MAKING AN ASSESSMENT U/S 143(3)/144, THE ASSESSING OFFICER IS NOT ENTITLED T O MAKE A PURE GUESS AND MAKE AN ASSESSMENT WITHOUT REFERENCE TO ANY EVIDENCE OR ANY MATERIAL AT ALL. THERE MUST BE SOMETHING MORE THAN BARE SUSPICION TO SUPPORT THE A SSESSMENT U/S 143(3)/144. RELIANCE IS PLACE ON :- A) DHAKESHWARI COTTON MILLS LTD. VS. CIT (1954) 26 ITR 775 (SC) B) BADRI & CO. (P) LTD., VS. CIT (1993) 144 ITR 35 2 (KAR), C) OMAR SALAY MOHAMMED SAIT VS. CIT (1959) 37 ITR 151 (SC) D) UMA CHARAN SHAW BROS. VS. CIT (1959) 37 ITR 271 (SC). IN VIEW OF THE ABOVE SUBMISSION, THE ADDITION MADE BY THE AO DESERVES TO BE DELETED. THE APPELLANT PRAYS YOUR HONOR TO KINDL Y DELETE THE ADDITION MADE BY THE A.O. 6.5 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S REDUCED THE ADDITIONS AFTER OBSERVING AS UNDER:- 5.3 I HAVE CONSIDERED THE SUBMISSION OF TH E A.R AND HAVE PERUSED THE ASSESSMENT ORDER AND RELEVANT RECORD. A S REGARDS THE REASONING GIVEN BY THE A.O. THAT THE APPELLANT HAS NOT DEDUCTED TDS AND PROVISIONS OF SECTION 40(A)(IA) ARE ATTRACTED, IT I S SEEN THAT THE A.O. HAS HIMSELF NOT DISALLOWED ANY EXPENDITURE U/S 40(A)(IA ) THOUGH SAME WAS SPECIFICALLY MENTIONED TO BE DONE IN SUBSEQUENT PA RA. AND MOREOVER SAME WAS DISALLOWED IN A.Y 2005-06( THOUGH NOT UPH ELD BY THE UNDERSIGNED). MOREOVER, THE A.R. HAS RIGHTLY POINTE D OUT THAT OUT OF TOTAL CONSTRUCTION AND WIP EXPENSES, THE MAJOR EXPENSES I S ON ACCOUNT OF INTEREST PAID TO FINANCIAL INSTITUTIONS AND BANK AN D ALSO IN THE PURCHASE OF CONSTRUCTION MATERIAL AND MOREOVER, THE CONSTRUCTIO N WORK HAS BEEN CARRIED OUT BY ENGAGING DIRECT LABOUR OR ONLY PETTY AMOUNT WAS PAID ON CONTRACT, WHICH WAS BELOW THE LIMIT SPECIFIED U/S 1 94C. MOREOVER, THE 66 A.R HAS ALSO POINTED OUT THAT THE BOOKS OF ACCOUNTS HAVE BEEN AUDITED AND AUDITORS HAVE ALSO REPORTED THAT THE APPELLANT WAS NOT LIABLE TO DEDUCT TDS. CONSDIERING THESE FACTS, THIS ARGUMENT OF THE A.O., FOR MAKING DISALLOWANCE IS NOT HAVING ANY FORCE. MOREOVER OTHER ARGUMENT OF THE A.O. FOR MAKING DI SALLOWANCE IS REGARDING INTEREST FREE ADVANCES. I AGREE WITH THE SUBMISSION OF THE A.R. THAT INTEREST FREE LOAN TAKEN ARE SUFFICIENT IN THE CASE OF APPELLANT TO MAKE INTEREST FREE ADVANCES AND THUS OCCASION FOR DISALLOWING INT EREST PAID ON INTEREST BEARING FUNDS WILL NOT ARISE. TOTAL INTERST FREE FU NDS/LOANS TAKEN FROM VARIOUS PERSONS ARE RS. 5,12, 54,315/-, ( AS PER PAPER BOOK PAGE 503) AS AGAINST THE INTEREST FREE LOANS AND ADVANCES GIVEN BY THE APPEL LANT TOTALING TO RS. 4,96,79,673/- ( AS PER P.B PAGE 504). THE A.R HAS A LSO POINTED OUT THAT APART FROM INTEREST FREE FUNDS AVAILABLE, THE APPEL LANT OWN CAPITAL OF RS. 1,88,63,637/- IS ALSO AVAILABLE. THUS THIS ARGUMENT OF THE A.O. FOR MAKING DISALLOWANCE IS ALSO NOT VALID. 5.3.1 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 OPERATION THAT APPELLA NT THROUGH ITS A.R. PREPARED THE MEMORANDUM OF BOOKS OF ACCOUNTS ON THE BASIS OF WHATEVER DOCUMENTS WERE AVAILABLE AT THAT POINT OF TIME. ACCORDINGLY, IT IS QUITE EVIDENT THAT THE MEMORANDUM BOOKS OF ACCOUNTS NOW PREPARED AFTER THE SEARCH AND SEIZURE OPERATION, BEING NOT PREPARED IN THE REGULAR 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 VERIFIABLE. IT I S ALSO UNDISPUTED THAT BILLS AND VOUCHERS WERE NOT PRODUCED FOR VERIFICATION BEFORE THE A.O. 5.3.2 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 BE FORE THE A.O. AND NOW 67 FURNISHED AT P.B. PAGE 537, IT IS NOTICED THAT CONS TRUCTION EXPENSES IN RESPECT OF DIFFERENT PLOTS SOLD DURING THE YEAR HAVE BEEN SHOW N AT HIGHLY VARYING RATE STARTING FROM RS . 111.97 PER SQ.FT TO RS. 204.58 PER SQ.FT, RS. 215.99 PER SQ.FT AND RS. 254.84 PER SQ.FT. IT IS SEEN THAT IN PERIOD RELEVANT TO A.Y 2007-08, THE RATES WERE VERYING 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.F T, RS. 345.12 PER SQ.FT, RS. 465.85 PER SQ.FT, RS. 509.66 PER SQ. FT, RS. 703.7 8 PER SQ. FT, RS. 856.40 PER SQ. FT, RS. 908.13, PER SQ. FT, RS. 1064.94 PER SQ .FT , RS. 1242.51 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 CONSTRUCTION EXPENSES AND FOR THAT MATTER ANY OTHER EXPENSES ARE NOT AVAILABLE WITH THE APPELLANT . DURING THE COURSE OF APPELLATE PROCEEDINGS, IT TRANSPIRED THAT THESE EXPENSES HAVE BEEN TAKEN PURELY ON ESTIMATED BASIS . 5.3.3 AS ALREADY MENTIONED, THE COST OF CONSTRUC TION PER SQ.FT TAKEN IN RESPECT OF THESE PLOTS IS VARYING FROM AS LOW AS RS. 111.97 PER SQ. FT TO AS HIGH AS RS. 254.84 PER SQ.FT DURING THE YEAR AND AS LOW AS RS. 75.14 PER SQ.FT TO AS HIGH AS RS. 1433.93 PER SQ.FT IN PERIOD RELEVANT TO A.Y 2007-08. THERE IS NO PROPER EXPLANATION FOR SUCH A WIDE VARIATION, EXCEP T THAT THE GENERAL EXPLANATION OF LOW COST HAVING LOWER QUALITY CONSTRUCTION, WITHOUT SPECIFYING THE NUMBER OF ROOMS CONSTRUCTED, CARPET AREA, BUILT-UP AREA, N ATURE 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 CEILING I.E PLASTERED OR POP; SINGLE STOREY OR DUPLEX; NUMBER OF TOILETS OR OTHER DETAIL S, WHICH CAN JUSTIFY LOWER RATE OF RS. 111.97 PER SQ.FT ON ONE SIDE AND HIGHER RATE OF RS. 254.84 PER SQ.FT ON OTHER SIDE. CONSIDERING THESE FACTS AND CIRCUMSTANCES OF THE C ASE AND THE LEGAL POSITION AS MENTIONED ABOVE, THE DISALLOWANCE IS CALLED FOR IN THE INSTANT CASE NOT ON ALL THE REASONS MENTIONED BY THE A.O. BUT ONLY ON VERY FEW REASONS GIVEN BY A.O. AND ALSO THE VARIOUS OTHER REASONS MENTIONED HEREINABO VE BY THE UNDERSIGNED. NOW COMING TO THE REASONABILITY OF ESTIMATION, THE A.R HAS RIGHTLY POINTED OUT THAT 68 CONSIDERING THE DISALLOWANCE OF RS. 150 LAKHS DONE BY THE A.O., G.P. RATE WILL GO UPTO 93.49%., WHICH IS NOT POSSIBLE IN THIS TRADE. THE A.O. HAS MADE THE DISALLOWANCE WITHOUT BRINGING ANY OTHER ADVERSE MAT ERIAL ON RECORD. MOREOVER, A.O. HAS MADE DISALLOWANCE ON PURELY ADHOC BASIS. B ESIDES ABOVE, THE A.O. HAS ALSO NOT FOLLOWED ANY CONSISTENCY WHILE MAKING DISA LLOWANCE 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 ADHOC BASIS WHICH IS JUSTIFIABLY NEED S TO BE REDUCED. CONSIDERING THAT BOOKS OF ACCOUNTS HAVE NOT BEEN MAINTAINED IN THE REGULAR COURSE AND THE EXPENSES HAVE BEEN DEBITED MAINLY ON ESTIMATED BASI S AND OTHER DEFECTS AS MENTIONED BY THE UNDERSIGNED IN THE EARLIER PARAGRA PHS, CERTAIN REASONABLE DISALLOWANCE NEED TO BE CALLED FOR ON THIS ACCOUNT. IN OTHER CASES OF THIS GROUP THE INTEREST FREE ADVANCES GIVEN WAS FOUND TO BE MORE T HAN THE INTEREST FREE LOANS AVAILABLE AND ACCORDINGLY THE DISALLOWANCE OUT OF C ONSTRUCTION AND WIP EXPENSES AT HIGHER RATE WAS UPHELD CONSIDERING PART INTEREST DI SALLOWANCE INCLUDABLE IN THE OVERALL DISALLOWANCE. HOWEVER IN THE INSTANT CASE O F THE APPELLANT, THE INTEREST FEE ADVANCES GIVEN ARE NOTICED TO BE LESS THAN THE INTE REST FREE LOAN TAKEN, THEREBY NOT REQUIRING INTEREST DISALLOWANCE. CONSIDERING THE TO TALITY OF FACTS AND CIRCUMSTANCES, IT WILL BE APPROPRIATE TO SUSTAIN THE DISALLOWANCE TO THE EXTENT OF 15% OUT OF THE EXPENSES CLAIMED AS DONE IN APPEAL OF APPELLANT FOR EARLIER YEARS, WHICH COMES TO RS 49,74,730/- AND BALANCE OF RS 1,00,25,270/- IS DELETED. 6.6 BEFORE US, THE LD. AR HAS FILED THE FOLLOWING S UBMISSIONS. 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 194,194D, 194D & 194J ETC. A S SUCH NO ADDITION WAS CALLED FOR ON THIS ACCOUNT AS WELL (AS PER PAGE NO. 23-24 OF THE APPEAL 69 ORDER). HE WAS HOWEVER OF THE VIEW THAT THE EXPENS ES INCURRED ON CONSTRUCTION WORKS WERE NOT PROPERLY VERIFIABLE AND THERE WAS VAST VARIATION IN THE COST OF CONSTRUCTIONS SHOWN FOR DI FFERENT SITES. FOR THE PURPOSE, HE HAD ALSO QUOTED RATES OF CERTAIN SITES WITH DIFFERENT YEARS TO ARRIVE AT SUCH FINDINGS AND ACCORDINGLY CONCLUDED T HAT THESE EXPENSES BEING NOT PROPERLY VOUCHED WERE DISALLOWED @ 15% OF THE EXPENSES CLAIMED. ACCORDINGLY HE HAD CONFIRMED ADDITION OF R S. 49,74,730/- AS AGAINST RS. 1,50,00,000/- MADE BY THE AO. WHILE CON FIRMING SUCH ADDITION @ 15% OF THE EXPENSES CLAIMED, THE LD. CIT (A) DID NOT DISCUSS THE VOLUME OF THE TURN-OVER AND THE TRADING RESULTS ETC. AND ALSO DID NOT ASSIGN ANY REASON TO ESTIMATE SUCH DISALLOWANCE @ 1 5%. APPARENTLY CONFIRMING OF SUCH ADDITION ON THE GENERAL PLEA OF COST VARIATION AT DIFFERENT SITES WITHOUT POINTING OUT ANY SPECIFIC D ISCREPANCY OR DEFECT AND ALSO WITHOUT BRINGING ANY MATERIAL ON RECORD TO SHO W THE EXPENDITURE OF DISALLOWABLE NATURE IS PATENTLY BAD IN LAW AND DE SERVES TO BE DELETED SUMMARILY. IN THE CIRCUMSTANCES, THE ADDITION OF RS .49,74,730/- AS CONFIRMED BY THE CIT (A) IS BROADLY DISPUTED ON FOL LOWING 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 PROVISIONS OF LAW. (KINDLY REFER TO THE FOLLOWING JUDICIAL CITATI ONS WHICH HAVE DIRECT BEARING ON THE FACTS OF THE PRESENT CASE: (A) SHUKRA JEWELLERY LTD. VS. ACIT (COPY SUBMITTED PB 2 21) (B) H.C. CHANDNA (P) LTD. VS DCIT (COPY SUBMITTED PB 222) (II) 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 NET PROFIT OF RS. 76,00,056/- ON THE SALES OF RS.2,41,74,680/- GIVING N.P. RATE 31.44% W HICH WOULD RATHER APPEAR TO BE EXCESSIVE IN VIEW OF THE PREVALENT TREND OF G.P./N.P. IN THI S LINE OF BUSINESS WHICH RUN BETWEEN 8 TO 10% THUS WA RRANTED NO INTERFERENCE AT ALL. HOWEVER AFTER TAKING INTO AC COUNT THE ADDITION OF 49,74,730/- AS CONFIRMED BY THE HONORABLE CIT(A), SUCH N.P. WOULD GO UP TO RS.1,25,74,786/- GIVING N.P. RATE OF 52.02% WHICH IS APPARENTLY ABNORMAL AND UN-COMPARABLE WITH ANY OF THE ASSESSEE IN THIS LINE OF 70 BUSINESS. IT IS A MATTER OF COMMON PRUDENCE THAT WH ERE THE INCOME IS DETERMINED ON ESTIMATION BASIS, THE BEST METHOD OF ESTIMATION SHOULD BE APPLIED, WHICH MUST BE VERY CLOSE TO THE REALITY. T HE HOUSE OF LORDS POINTED IT OUT IN SON INSURANCE OFFICE VS CLARKS 1912 AC 443 THAT WHERE IT BECOMES NECESSARY TO MAKE ESTIMATES BY INC OME-TAX DEPARTMENT, THE METHOD SHOULD BE ADOPTED, WHICH APP ROXIMATES MOST NEAR TO THE TRUTH. (III) THE SCENARIO OF THE TRADING RESULTS WOULD BECOME ALL THE MORE A BSURD WHEN THE ADDITION OF RS. 1,38,70,000/- ON ACCOUNT O F THE SUPPRESSED SALES AS DISCUSSED IN THE FORE-GONE PARAS IS FURTHER TAK EN INTO ACCOUNT TO VISUALIZE THE TRADING RESULTS OF THE APPELLANT. IF ALL THESE ADDITIONS ARE TAKEN TOGETHER FOR ANALYZING THE TRADING RESULTS OF THE APPELLANT, YOUR HONORS WOULD APPRECIATE THAT IN THAT CASE, N.P. WOU LD TOUCH THE ASTRONOMICAL FIGURES OF 110% WHICH IS RATHER IMPOSSIBLE IN ANY TRADE. THE LEARNED CIT (A) HOWEVER DID NOT TAKE NOTE OF ALL TH ESE FACTS AND FIGURES WHILE CONFIRMING THIS ADDITION. (IV) 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.49,74,730/- , THE LEARNED CIT (A) HAD COMMITTED CALCULATED MISTAKE BY TAKING THE ENTIRE AMOUNT OF THE EXPENSES DEBITED UN DER THE HEADS OF CONSTRUCTION EXPENSES AS WELL AS THE EXPENSES DEBI TED UNDER WIP (WHICH INCLUDED INTEREST PAYMENTS OF RS.92,10,455/-) 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 WERE FULLY ALLOWABLE AND DID NOT CALL FOR ANY DISALLOWANCE. HOWEVER, WHILE QUANTIFYING THE DISALLOWANCE OF THE EXPENSES DEBITED UNDER THE HEAD OF CONSTRUCTION EXPENSES, THE FINDIN GS REGARDING INTEREST EXPENSES WAS IGNORED AND THE FIGURES OF THE INTERES T AMOUNT OF RS.85,06,091/- AS DEBITED UNDER WIP WAS ALSO TAKEN INTO TO WORK OUT THE DISALLOWANCE. THUS THE DISALLOWANCE SO QUANTIFIED HAD BEEN OVER-WORKED BY RS.12,60,378/- WHICH NEEDED TO THE REDUCED ACCO RDINGLY. IN VIEW OF ABOVE DISCUSSIONS, THE ADDITION AS CONFI RMED BY THE LEARNED CIT (A) ON THIS ACCOUNT IS NOT FACTUALLY AN D LEGALLY MAINTAINABLE AND DESERVES TO BE DELETED. 6.7 ON THE OTHER HAND, THE LD. DR STATED THAT THE E XPENSES DEBITED BY THE ASSESSEE ARE NOT AT ALL VERIFIABLE. UNDER SUCH CIRC UMSTANCES, THE AO IS LEFT WITH NO ALTERNATIVE BUT TO MAKE AN ESTIMATE OF EXPE NSES TO BE DISALLOWED. 71 THE LD. DR DREW OUR ATTENTION TO THE DETAILS OF THE EXPENSES AVAILABLE IN THE PAPER BOOK FILED BY THE LD. AR. THE LABOUR CHARGES CONSTITUTES AROUND 22% OF THE EXPENSES. IN CONSTRUCTION EXPENSES, THE LABO UR AND OTHER EXPENSES ARE TO THE EXTENT OF 2/3 RD OF CONSTRUCTION EXPENSES ACCOUNT. THE EXPENSES DEB ITED ARE DISPROPORTIONATE TO THE EXPENSES INCURRED FOR M AKING THE CONSTRUCTION. THE LD. DR THEREFORE, SUBMITTED THAT THE AO WAS JUS TIFIED IN DISALLOWING THE EXPENSES. 6.8 WE HAVE HEARD BOTH THE PARTIES. THE ASSESSEE HA S DEBITED THE EXPENSES OF RS. 2,39,54,413/60- UNDER THE HEAD CONSTRUCTION ACCOUNT IN WHICH THE FOLLOWING EXPENSES ARE IN ROUND FIGURES. 1. ARCHITECT EXPENSES RS. 32,500/- 2. BAJRI, RODI, CEMENT BRICKS EXPENSES RS. 19,05, 000/- 3. JOB WORK AT CONSTRUCTION RS. 21,000/- 4. LABOUR CHARGES RS. 52,90,500/- 5. POP EXPENSES RS. 2,65,000/- THUS OUT OF TOTAL EXPENSES OF RS. 2.39 CRORES, THE EXPENSES WHICH ARE IN ROUND FIGURES ARE TO THE EXTENT OF RS. 75.14 LACS. THE LD. CIT(A) HAS REFERRED TO THE COST OF CONSTRUCTION PER SQ.FT ON VARIOUS S ITES FOR THE PERIOD RELEVANT TO ASSESSMENT YEAR 2007-08 AND NOTICED THAT THE RATES VARIED FROM RS. 75.14 PER SQ.FT. TO RS. 1433.93 PER SQ.FT THE LD. CIT(A) HAS GIVEN THE FINDING THAT THE ASSESSEE HAD ADEQUATE FUNDS FOR MAKING ADVANCES TO GROUP CONCERNS. MOREOVER IF THE ADVANCES HAVE BEEN MADE FOR THE PUR POSE OF BUSINESS THEN 72 INTEREST CANNOT BE DISALLOWED IN VIEW OF DECISION O F HON'BLE APEX COURT IN THE CASE OF S.A. BUILDERS LTD. VS. CIT, 288 ITR 1. ONE HAS TO ESTABLISH THE COMMERCIAL EXPEDIENCY OF ADVANCING THE LOAN WITHOUT INTEREST. THERE IS NO FINDING BY THE AO THAT ADVANCES TO THE GROUP CONCER NS WERE NOT FOR THE PURPOSE OF BUSINESS. MOREOVER, IT IS NOTICED THAT T HE ASSESSEE HAS SHOWN THE NET PROFIT RATE OF 31.44%. THUS THE NET PROFIT SOW N CANNOT BE CONSIDERED AS INADEQUATE OR LOW. THERE IS NO BASIS OF MAKING DISA LLOWANCE TO THE EXTENT OF RS. 1.50 CRORES BY THE AO. THE LD. CIT(A) HAS ALSO SUSTAINED THE DISALLOWANCE TO THE EXTENT OF 15% WITHOUT GIVING AN Y FINDING AS TO HOW 15% OF DISALLOWANCE IS CONSIDERED AS APPROPRIATE. LOOKI NG TO THE NET PROFIT RATE DISCLOSED BY THE ASSESSEE AND CONSIDERING THE FACT THAT ALL THE EXPENSES ARE NOT VERIFIABLE FROM THE SUPPORTING VOUCHERS, WE THE REFORE, FEEL THAT IT WILL BE FAIR AND REASONABLE TO SUSTAIN THE DISALLOWANCE TO THE EXTENT OF RS. 2.50 LACS WHICH WILL REPRESENT 1% OF THE TURNOVER FOR THE YE AR UNDER CONSIDERATION. THUS GROUND NO. 5 OF THE ASSESSEE IS PARTLY ALLOWED AND THE GROUND NO. 2 OF THE REVENUE IS DISMISSED. 7.1 GROUND NO. 6 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.3,96,083/- OUT OF TOT AL ADDITION OF RS.6,60,139/- AS MADE BY THE A.O. UNDER THIS HEAD BY DISALLOWING 20% OF THE TAXI EXPENSES OF RS.19,80,417/- SHOWN UNDER THIS HEAD(AS AGAINST 73 1/3 DISALLOWED BY A.O.). WHILE RESTRICTING SUCH DISALLOWANCE BY 20% LD. CIT (A) HAD BEEN GUIDED BY THE FINDINGS OF THE LEARNED A.O. ONLY AS HE HAD FAILED TO POINT OUT ANY SPECIFIC INSTANCE OF DISCREPANCY OR DEFECT. THE ADDITION HAS BEEN CONFIRMED WITH GENERAL FINDINGS WHICH ARE APPARENTLY BAD IN LAW AND DESERVE TO BE DELETED. 7.2 THE REVENUE IN ITS GROUND NO. 3 IS ALSO AGGRIEV ED AGAINST REDUCING THE DISALLOWANCE OF RS. 3,96,083/- AS AGAINST RS. 6,60, 139/- MADE BY THE AO. 7.3 THE ASSESSEE SHOWED GROSS RECEIPTS OF RS. 22,07 ,253/- FROM THE BUSINESS OF TOURS AND TRAVELS AND CLAIMED TAXI RUNN ING EXPENSES OF RS. 19,80,417/-. THUS THE ASSESSEE DISCLOSED THE NET IN COME TO THE EXTENT OF RS. 2,26,836/-.THE AO NOTICED THAT THE ASSESSEE HAS NOT MAINTAINED DAY TO DAY ACCOUNTS AND RECEIPTS ARE NOT VERIFIABLE. THE ASSES SEE HAS NOT PRODUCED ANY SUPPORTING VOUCHERS. INCOME FROM SUCH BUSINESS WAS NOT BEING DISCLOSED IN THE REGULAR RETURN. SINCE RECEIPTS AS WELL AS EXPEN SES WERE NOT AT ALL VERIFIABLE THEREFORE, THE AO DISALLOWED 1/3 RD OF THE EXPENSES OF RS. 19,80,417/- TO THE EXTENT OF RS. 6,60,131/-. 7.4 BEFORE, THE LD. CIT(A), THE ASSESSEE MADE FOLLO WING SUBMISSIONS:- 1. THE ASSESSEE HAS COMPUTED NET PROFIT FROM TAXI BUSINESS AS UNDER:- GROSS RECEIPTS. 22,07,253/- LESS: - DEPRECIATION 44,628/- LESS: TAXI RUNNING EXPENSES (PB 265 TO 292) 19,80, 417/- 74 NET PROFIT FROM TAXI RUNNING BUSINESS. 1,82,208/- THE ASSESSEE HAS FILED DETAILED CALCULATION IN SUPP ORT OF GROSS RECEIPT RS.22,07,253/- PETROL & DIESEL EXPENSES AT RS.12,50,437/- (PB 266- 272)AND DRIVERS SALARY AT RS 3,75,900./- VIDE PB PAGES. (286 - 292). THE ASSESSEE HAS SUBMITTED TRIAL BALANCE BEFORE THE AO WHICH GIVES GROUP SUMMARY OF DIFFEREN T EXPENSES LIKE INTEREST, INSURANCE, REPAIR AND MAINTENANCE ETC. INCURRED FOR RUNNING AND MAINTENANCE OF TAXIES. THE LD. AO DISALLOWED 1/3 RD OF EXPENSES DEBITED AGAINST TAXI EXPENSES. THUS, T HE AO COMPUTED THE INCOME FROM TAXI AS UNDER:- INCOME DECLARED BY THE ASSESSEE. 1,82,207/- ADD EXPENSES DISALLOWED. 6,60,139/- 8,42,346/- THE LD. AO ARBITRARILY DISALLOWED 1/3 RD OF EXPENSES WITHOUT GOING TO THE DETAILS OF THE EXPENSES SUBMITTED BY THE ASSESSEE. (PB 266-272) AND PB PAGES. (286 - 292) . WHERE THE INCOME IS DETERMINED ON ESTIMATION BASIS, THE B EST 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 BY INCOME-TAX DEPARTMENT, THE METHOD SHOULD BE ADOPTED, WHICH APPROXIMATES MOST NEAR TO THE TRUTH. IN THE CASE WHERE THE AO FINDS THE BOOKS OF ACCOUN T OF THE ASSESSEE UNRELIABLE THAN HE SHOULD ESTIMATE THE TAXI INCOME CONSIDERING THE NUMBER OF TAXIES PLIED BY THE ASSESSEE FOR NUMBER OF MONTHS. 7.5 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S REDUCED THE DISALLOWANCE TO RS. 3,96,083 AFTER OBSERVING AS UND ER:- 6.3 I HAVE CONSIDERED THE ARGUMENT OF THE A .R. AND HAVE PERUSED THE ASSESSMENT ORDER AND RELEVANT RECORD. IN ABSENCE OF VOUCHERS AND OTHER DETAILS, THE A.O. WAS JUSTIFIED IN MAKING DISALLOWA NCE OUT OF TAXI RUNNING EXPENSES. HOWEVER, THE DISALLOWANCE IS QUITE EXCESS IVE AND IN VIEW OF THE DISCUSSION MADE IN APPEAL ORDER A.Y 2005-06, THE SA ME IS SUSTAINED TO THE EXTENT OF 20%, WHICH COMES TO RS. 3,96,083/-, RESU LTING INTO RELIEF OF RS. 2,64,056/-. 75 DURING THE YEAR, THE A.O. HAS RIGHTLY NOT MADE ANY DISALLOWANCE OUT OF DEPRICIATION. THE ARGUMENT OF THE A.R OF ESTIMATING THE INCOME ON THE BASIS OF 44AE IS REJECTED, AS 44A E IS APPLICABLE FOR ESTIMATING THE INCOME OF TRUCKS/GOODS CARRIAGES AND THE TAXIS RUN BY THE APPELLANT WILL NOT COME WITHIN THE PURVIEW OF SECTI ON 44AE. 7.6 BEFORE US, THE LD. AR HAS FILED THE FOLLOWING SUBMI SSIONS. IN APPEAL PROCEEDINGS ALSO, THE LD. CIT (A) DID NOT VENTURE TO EXAMINE THE INCOME AND EXPENDITURE ACCOUNT AS FU RNISHED BY THE APPELLANT IN RESPECT OF THESE TAXIS AND PROCEEDED T O DECIDE THIS POINT ON THE SAME FOOTINGS AS DONE BY THE LD. AO AN D OPINED THAT SUCH DISALLOWANCE AS MADE BY THE AO WAS QUITE EXCES SIVE AND ACCORDINGLY REDUCED THE PERCENTAGE OF SUCH DISALLOW ANCE TO 20% FROM 1/3 RD AS MADE BY THE AO FOR THE SAME REASONS AS MENTIONE D BY HIM IN THE A.Y. 2005-06. HOWEVER ON READING OF T HE RELEVANT EXTRACT FROM THE ASSESSMENT ORDER OF THE A.Y. 2005- 06 (PAGE NO.23 &24) YOUR HONORS WOULD OBSERVE THAT IN THE SAID ASS ESSMENT ORDER ALSO THE LD. CIT (A) DID NOT POINT OUT ANY SPECIFIC DISCREPANCY OR DEFECT IN THE DETAILS OF THE INCOME & EXPENDITURE 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 REGAR D WITHOUT ANALYZING THE PROFIT RESULTS AND ALSO WITHOUT POINT ING OUT THE SPECIFIC DISCREPANCIES 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 A ND WERE VERY MUCH AVAILABLE WITH THEM. IN ABSENCE OF SUCH AN EXE RCISE, 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 AN D APPEAL PROCEEDINGS, IT WOULD BE NOTED THAT ON TOTAL RECEIP TS OF RS. 22,07,253/- NET PROFIT SHOWN WAS RS.2,26,635/- (BEF ORE DEPRECIATION) GIVING N.P. RATE OF 10.27% WHICH IS APPARENTLY VERY FAIR AND REASONABLE IN THIS LINE OF BUSINESS AND IS VERY MUCH COMPARABLE. HOWEVER, THE AUTHORITIES BELOW DID NOT LOOK INTO THESE DETAILS AND STRAIGHT-AWAY PROCEEDED TO MAKE A DDITIONS ON ADHOC BASIS BY APPLYING GENERAL PERCENTAGE OF DISAL LOWANCE WITH THE PET-FINDINGS OF UN-VOUCHED EXPENSES. HERE IT WO ULD BE RELEVANT TO MENTION THAT IF THE ADDITION AS CONFIRMED BY THE LD CIT (A) IS TAKEN INTO ACCOUNT THEN THE N.P. WOULD WORK OUT @ 2 8.12% WHICH IS APPARENTLY ABNORMAL AND EXCESSIVE. 76 IN VIEW OF ABOVE DISCUSSIONS, THE ADDITION SO CONFI RMED BY THE LD. CIT (A) DESERVES TO BE DELETED. 7.7 ON THE OTHER HAND, THE LD. DR RELIED UPON THE O RDER OF THE AO. THE LD. DR SUBMITTED THAT THE ASSESSEE WAS NOT SHOWING SOUR CE OF INCOME IN THE REGULAR RETURN OF INCOME. EVEN THE ASSESSEE HAS NOT BEEN MAINTAINING ALL THE NECESSARY RECORDS FOR THE COMPUTATION OF INCOME. IN SUCH CIRCUMSTANCES, ONE IS LEFT WITH NO ALTERNATIVE BUT TO ESTIMATE THE DIS ALLOWANCE. 7.8 WE HAVE HEARD BOTH THE PARTIES. DURING THE YEAR UNDER REFERENCE, THE ASSESSEE HAS SIX TAXIES OUT OF WHICH FIVE TAXIES H AVE BEEN SOLD DURING THE YEAR. THEREFORE, THE CLAIM OF DEPRECIATION IS NOT S UBSTANTIAL ON ACCOUNT OF SALE OF TAXIES. THE RECEIPTS FROM TAX HAVE BEEN ACC EPTED. LOOKING TO THE NUMBER OF THE TAXIES, THE EXPENDITURE INCURRED ON DRIVERS SALARY IS REASONABLE. HENCE, THERE IS NO QUESTION OF MAKING S UBSTANTIAL DISALLOWANCE OUT OF THE EXPENDITURE AS PER FACTS ON RECORD. THE ASSESSEE HAS GIVEN THE DETAILS OF TAXIES WHICH HAVE BEEN PLIED DURING THE YEAR UNDER REFERENCE.IF ONE COMPARES THE PETROL AND DIESEL EXPENSES WITH TH E RECEIPTS THEN ONE CAN VISUALIZE THAT THESE ARE FAVOURABLY COMPARED TO EAC H OTHER. THE AO HAS NOT GIVEN ANY BASIS FOR MAKING DISALLOWANCE OF 1/3 RD OF THE EXPENSES. AFTER MAKING DISALLOWANCE AS MADE BY THE AO, THE NET PROF IT FOR TAXI RUNNING EXPENSES WILL BE TO THE EXTENT OF 40% WHICH IS DIFF ICULT TO ATTAIN. ONE HAS TO CONSIDER THAT THE ASSESSEE IS NOT BASICALLY INVOLVE D IN THIS BUSINESS BUT THE 77 MAIN BUSINESS OF THE ASSESSEE WAS IN THE FILED OF R EAL ESTATE. LOOKING TO THE QUANTUM OF RECEIPTS SHOWN AND THE EXPENSES CLAIMED, WE FEEL THAT IT WILL BE FAIR AND REASONABLE TO ESTIMATE THE NET PROFIT FROM TAXI RUNNING BUSINESS AT RS. 2.00 LACS AS AGAINST RS. 1,82,208/- SHOWN BY TH E ASSESSEE. THUS GROUND NO. 6 OF THE ASSESSEE IS PARTLY ALLOWED WHILE THE G ROUND NO. 3 OF THE REVENUE IS DISMISSED. 8.1 GROUND NO.7 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.73,61,000/- ON ACCOUNT O F UN- EXPLAINED CASH CREDITS OUT OF TOTAL ADDITION OF RS.3,87,00,404/- AS MADE BY THE A.O. UNDER THIS HEA D. WHILE CONFIRMING SUCH ADDITION, THE LD. CIT (A) DID NOT APPRECIATE THE FACTS OF THE RESPECTIVE DEPOSITS IN RIGHT PERSPECTIVE FOR THE DETAILED REASONS AS EXPLAINED D URING THE COURSE OF ASSESSMENT AND APPEAL PROCEEDINGS. TH US THE ORDER OF THE LEARNED CIT (A) IS NOT SELF CONTAI NED AND WELL REASONED FOR CONFIRMING SUCH ADDITION AND IS THEREFORE BAD IN LAW. THE ADDITION SO CONFIRMED BY THE LD. CIT (A) IS BAD IN LAW AND DESERVES TO BE DELETED. 8.2 THE REVENUE IN GROUND NO. 4 IS ALSO AGGRIEVED A GAINST REDUCING THE ADDITION TO RS. 73,61,000/- AS AGAINST ADDITION OF RS. 3,87,00,404/-. 8.3 THE AO NOTICED THAT THE ASSESSEE HAS INTRODUCED FRESH CASH CREDITS DURING THE YEAR AND NO CONFIRMATIONS FROM THE PARTI ES WERE FILED. SOME OF THE PARTIES ARE BOGUS / BENAMI OF THE ASSESSEE AS A DMITTED BY HIM. THE AO AT PAGE 10 AND 11 OF THE ASSESSMENT ORDER HAS GIVEN NA MES OF THE CREDITORS 78 ALONGWITH THE AMOUNT CREDITED IN THEIR NAMES. THE T OTAL CASH CAME TO RS. 3,87,00,404/- AND THIS WAS ADDED TO THE INCOME OF T HE ASSESSEE. 8.4 BEFORE THE LD. CIT(A), ASSESSEE FILED THE CONFI RMATION LETTERS, PROOF OF IDENTITY, AFFIDAVITS AND OTHER DOCUMENTS AS ADDITIO NAL EVIDENCE VIDE LETTER DATED 30 TH APRIL, 2010. THE ASSESSEE HAS FURTHER SUBMITTED TH E COPY OF THE BANK STATEMENT OF THE PARTIES. THE ASSESSEE ALSO MA DE AN APPLICATION FOR ADMISSION OF EVIDENCE. IT WAS SUBMITTED THAT AO NEV ER REQUIRED THE ASSESSEE TO FILE THE CONFIRMATION LETTERS OF CASH CREDITORS . REFERENCE HAS BEEN MADE TO VARIOUS NOTICES ISSUED BY THE AO. THE DETAILS OF SU CH NOTICE HAVE BEEN MENTIONED BY THE LD. CIT(A) PAGE 29 AND 30 OF THE A PPELLATE ORDER. THE LD. CIT(A) REQUESTED THE AO TO EXAMINE THE ADDITIONAL E VIDENCES AND FURNISH HIS REPORT. THE LD. CIT(A) HAS ACCEPTED THE ADMISSI ON OF ADDITIONAL EVIDENCES. 8.5 BEFORE WE PROCEED FURTHER, IT WILL BE USEFUL TO REPRODUCE THE DETAILS OF ADDITIONAL EVIDENCES FILED BY THE ASSESSEE IN RESPE CT OF CASH CREDITORS AND COMMENTS OF THE AO. 1) M/S ARPAN ENTERPRISES LTD . RS.1,50,000/- THE CONFIRMATION LETTER IS PLACED AT PB PAGE 293 . THE CASH CREDITOR IS AN INCOME TAX ASSESSEE AS PAN IS MENTIONED ON CONFIRMATION LETTER . THE CASH CREDITOR HAS ALSO FILED COPY OF INCOME TAX RETURN FOR AY 2004-05, COPY OF W HICH IS AT PB PAGE 294 . DATE AMOUNT. NATURE OF ENTRY EXPLANATION. 5.2.2008 1,00,000 CHEQUE THE COPY OF BANK ACCOUNT OF ARPAN 79 ENTERPRISES IS ENCLOSED. AMOUNT RECEIVED BY CHEQUE NO. 4759 OF UBI A/C NO. 5052. COPY OF BANK ACCOUNT IS ENCLOSED. AT PB 409/II THE SOURCE OF DEPOSIT OF RS.5,00,000/- IS BY CHEQUE CLEARING ON 1.1.2008. 1.3.2008 50,000 JOURNAL ENTRY. THIS IS A JOURNAL ENTRY OF RS. 50,000/- AGAINST THE AMOUNT TRANSFERRED FROM KHANDELWAL BUILDCON PVT. LTD. NO SUM WAS RECEIVED BY THIS CREDIT ENTRY, HENCE NO ADDITION U/S 68 IS ATTRACTED. COMMENTS:- I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R/ DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING DEPOSIT OF RS.1,00,000/- BY CHEQUE. EVIDENCE REGARDING BANK AC COUNT OF ARPAN ENTERPRISES IN UNION BANK OF INDIA HAS BEEN GIVEN AND RS.50,00,00/ - IS JOURNAL ENTRY. DURING APPELLATE PROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSPITE OF NUMBER OF OPPORTUNITY GIVEN. 2) ASHOK PAREEK. RS. 9,00,000/- THE CONFIRMATION LETTER IS PLACED AT PB PAGE 295 . THE COPY OF PAN CARD AND AFFIDAVIT REGARDING GIVING CHEQUE FOR ADVANCE OF BOOKING OF P LOT IS AT PB PAGE NO. 296 297 . THE AO CODE IS ITO WARD 4(2) JAIPUR (PB PAGE 411A/II) DATE AMOUNT. NATURE OF ENTRY EXPLANATION. 10-9-2007 9,00,000 JOURNAL ENTRY THIS IS A JOURNAL ENTRY OF RS. 9,00,0 00/- IN THE ACCOUNT OF GUMAN KHANDELWAL. THE AMOUNT RECEIVED BY CHEQUE NO. 149493 OF BOB. JAIPUR. THE SOURCE OF DEPOSITS BY CHEQUES IN BANK ACCOUNT IS UNDER:- RS. 3,00,000/- ON 7.5.2007, RS. 2,00,000/- ON 6.3.2007 AND RS. 3,00,000/- ON 12.1.2007.. COPY OF BANK ACCOUNT IS AS PER PB PAGE 411/II. THE ASSESSEE FILED AS ADDITIONAL EVIDENCE U/R 46A AND COPY OF ITR FILED WITH WRITTEN SUBMISSIONS. IN VIEW OF THE TRANSFER ENTRIES, NO ADDITION U/S 68 IS ATTRACTED AND DESERVES TO BE DELETED. FURTHER ALL THE INGREDIENTS REQUIRED U/S 68 STANDS SATISFIED. COMMENTS:- I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R/ DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING JOURNAL ENTRY OF RS.9 LAKHS IN THE ACCOUNT OF GUMAN KHANDELWAL. COPY OF BANK ACCOUNT HAS BEEN 80 ATTACHED. DURING APPELLATE PROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSPITE OF NUMBER OF OPPORTUNITY GIVEN. 3) SHRI BHAGIRATH CHAUDHARY. RS. 50,000/- THE CORRECT FIGURE IS RS. 5,00,000/- NOT RS. 50,000/- AS TAKEN BY THE AO THE CONFIRMATION LETTER IS PLACED AT PB PAGE 298 . THE COPY OF PAN CARD, VOTER I.D. AND AFFIDAVIT REGARDING GIVING CHEQUE AS ADVANCE FO R BOOKING OF PLOT IS AT PB PAGE NO. 299 300 . DATE AMOUNT. NATURE OF ENTRY EXPLANATION. 4-7-2007 5,00,000. JOURNAL ENTRY THE ASSESSEE RECEIVED RS. 15,70,000/- FROM MANOHAR LAL CHOUDHARY ON VARIOUS DATES (CONFIRMATION PB PAGE 342), OUT OF WHICH THE ASSESSEE TRANSFERRED RS . 5,00,000/- IN THE ACCOUNT OF SHRI BHAGIRATH CHOUDHARY. THE AO MADE DOUBLE ADDITION, FIRSTLY CREDIT OF RS. 15,70,000/- IN THE NAME OF SHRI MANOHAR LAL CHOUDHARY AND SECONDLY OF RS. 50000/- ( SIC) ON ACCOUNT OF TRANSFER OF MONEY FROM THE ACCOUNT OF SH RI MANOHAR LAL CHOUDHARY. THIS IS JV ENTRY FOR TRANSFER, NO SUM WAS RECEIVED THROUGH THIS ENTRY; NO ADDITION CAN BE MADE U/S 68. COMMENTS:- I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING JOURNAL ENTRY OF NO SOME WAS RECEIVED TO THIS ENTRY. THE AMOUNT HAS BEE N RECEIVED ON TRANSFER OF MONEY FROM THE ACCOUNT OF SHRI MANOHAR LAL CHOUDHARY. DUR ING APPELLATE PROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSP ITE OF NUMBER OF OPPORTUNITY GIVEN. 4 SMT. MOHINI DEVI KHANDELWAL W/O SHRI MOHANLAL KHA NDELWAL. RS.1,25,000/-. THE CREDITOR IS THE MOTHER OF THE ASSESSEE. THE A .O. HAS MENTIONED IT AS UN-NAMED CREDITOR. ADDITIONAL EVIDENCE AT PAGE NO. 301 02 . THE CONFIRMATION LETTER IS PLACED AT PAGE. 301 . AFFIDAVIT GIVING THE AMOUNT TO ASSESSEE IS ALSO P LACED AT PB NO. 302. DATE AMOUNT . NATURE OF ENTRY EXPLANATION. 4-5-2007 25.2.2008 1,00,000 25,000 RECEIPT BY CHEQUE. AMOUNT RECEIVED BY CHEQUES. COPIES OF CONFIRMATION OF ACCOUNTS AND SWORN AFFIDAVIT FILED AS ADDITIONAL EVIDENCE U/R 46A. COMMENTS:- I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS IT WAS MENTIONED AS UNNAMED C REDITOR OF RS. 1.25 LAKHS ASSESSEE HAS NOW GIVEN EVIDENCE REGARDING DEPOSIT OF RS.1,00 ,000/- AND RS.25,00,000/- BY 81 CHEQUE. DURING APPELLATE PROCEEDING ASSESSEE HAD F AILED TO FURNISH SOURCES OF FUND INSPITE OF NUMBER OF OPPORTUNITY GIVEN. 5) SHRI DHARAMRAJ SINGH. RS. 2,50,000/- ADDITIONAL EVIDENCE IS AT PAGE NO. 303 306. CONFIRMATION LETTER IS PLACE AT PB NO. 303 . COPY OF TELEPHONE BILL AND COPY OF PAN CARD AND AFFIDAVIT OF THE CREDITOR PLACED AT PB PAGE NO. 304-306 . THE AO CODE IS ITO WARD 3(1) JAIPUR (PB PAGE 415A/II) DATE AMOUNT. NATURE OF ENTRY EXPLANATION. 12-11-2007 2,50,000 REPAYMENT OF EARLIER ADVANCE BY CHEQUE. THIS IS NOT CASH CREDIT. THE ASSESSEE MADE ADVANCE OF RS. 250000/- BY CHEQUE ON 05/11/2007 AND HE RECEIVED BACK ON 12.11.2007. BOTH THE ENTRIES ARE APPEARING IN BANK STATEMENT OF THE PARTY PB 412-415/II COMMENTS:- I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R/ DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING REPAYMENT OF EARLIER ADVANCE OF RS.2.50 LAKHS ON 05.11.07 HAS BEEN RECEI VED BACK ON 12.11.07. COPY OF BANK ACCOUNT HAS BEEN ATTACHED. DURING APPELLATE PROCEED ING ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSPITE OF NUMBER OF OPPORTUNITY GI VEN. 6).. SHRI DILIP KUMAWAT (AS ASSESSEES BENAMI) RS. 1,18 ,15,000 /- PB PAGE 382-392 (COPY OF ACCOUNT OF PARTY IN BOOKS OF ACCOUNTS OF ASSESSEE, HIS FAMILY MEMBERS AND BUSINESS CONCERNS & ASSOCIATES). THE EN TRY WISE DETAIL IS GIVEN AS UNDER:- DATE. AMOUNT. MODE. PARTICULARS. 3.5.2007 100000 CASH AN AMOUNT OF RS. 1,00,000/- RECEIVED IN CASH F ROM SHRI RAKESH GUPTA (CASH BOOK AT PB PAGE 416/II) , WHO HAS RECEIVED THE AMOUNT OF RS. 6,00,000/- FROM KHANDELWAL BULDING MATERIAL SUPPLIERS BY CHEQUE NO 127602 DATED 02.03.07 (COPY OF BANK A/C (PB PAGE 505 TO 507/II) AND THE SAME WITHDRAWAL BY RAKESH GUPTA IN CASH ON 02.03.07 (PB PAGE 446/II). OUT OF THIS AMOUNT RS. 1,00,000/- PAID BY RAKESH GUPTA TO DILIP KUMAWAT 4.5.2007 500000 CASH AN AMOUNT OF RS. 5,00,000/- RECEIVED IN CASH F ROM SHRI RAKESH GUPTA (CASH BOOK AT PB PAGE 416/II) , WHO HAS RECEIVED THE AMOUNT OF RS. 6,00,000/- FROM KHANDELWAL BULDING MATERIAL SUPPLIERS BY CHEQUE NO 127602 DATED 02.03.07 (COPY OF BANK A/C (PB PAGE 505 TO 507/II) AND THE SAME WITHDRAWAL BY RAKESH GUPTA IN CASH ON 02.03.07 (PB PAGE 446/II). OUT OF THIS AMOUNT RS. 5,00,000/- PAID BY RAKESH GUPTA TO DILIP KUMAWAT 82 7.5.2007 950000 CASH CHEQUE OF RS. 9,50,000/- RECEIVED FROM GUMAN KHANDELWAL WHICH IS VERIFIABLE FROM LEDGER ACCOUNT IN BOOKS OF GUMAN KHANDELWAL AT PB PAGE 385 AND THE SAME WAS WITHDRAWAL IN CASH ON 07.05.07 WHICH IS VERIFIABLE FROM BANK STATEMENT AT PB PAGE 423/II . AFTER WITHDRAWAL THE CASH THE ABOVE AMOUNT PAID TO ASSESSEE WHICH IS VERIFIABLE FROM CASH BOOK AT PB PAGE 416/II . 7.5.2007 400000 CASH BANK LOAN OF RS. 19,00,000/- WAS TAKEN FROM IC ICI BANK ON 7.5.2007 BY SHRI RAKESH GUPTA (STATEMENT AT PB PAGE 445/II) AND THE SAME DEPOSITED IN THE BANK ACCOUNT OF DILIP KUMAWAT (BANK STATEMENT AT PB PAGE 428/II , SHRI DILIP KUMAWAT WITHDRAWAL THE CASH FROM BANK ACCOUNT 07.05.07 (PB PAGE 428/II) AND PAID THE SAME TO ASSESSEE (CASH BOOK PB PAGE 416/II) . 8.5.2007 45000 CHEQUE BANK LOAN OF RS. 19,00,000/- WAS TAKEN FROM ICICI BANK ON 7.5.2007 BY SHRI RAKESH GUPTA (STATEMENT AT PB PAGE 445/II) AND THE SAME DEPOSITED IN THE BANK ACCOUNT OF DILIP KUMAWAT (BANK STATEMENT AT PB PAGE 428/II , OUT OF THIS SHRI DILIP KUMAWAT PAID THIS AMOUNT TO ASSESSEE (BANK STATEMENT PB PAGE 428/II) . 8.5.2007 500000 CASH BANK LOAN OF RS. 19,00,000/- WAS TAKEN FROM IC ICI BANK ON 7.5.2007 BY SHRI RAKESH GUPTA (STATEMENT AT PB PAGE 445/II) AND THE SAME DEPOSITED IN THE BANK ACCOUNT OF DILIP KUMAWAT (BANK STATEMENT AT PB PAGE 428/II , SHRI DILIP KUMAWAT WITHDRAWAL THE CASH FROM BANK ACCOUNT ON 08.05.07 (PB PAGE 428/II) AND PAID THE SAME TO ASSESSEE (CASH BOOK PB PAGE 416/II) . 8.5.2007 20000 JOURNAL ENTRY (T/E) TRANSFER ENTRY FROM ACCOUNT OF TIKAM KHANDELWAL. THE COPY OF ACCOUNT OF SHRI DILIP KUMAWAT IN BOOKS OF TIKAM KHANDELWAL IS AT PB PAGE 388. SHRI DILIP KUMAWAT PAID RS. 20,000/- TO SHRI TIKAM KHANDELWAL ON 08.05.2007 BY CHEQUE (BANK STATEMENT PB PAGE 428/II) OUT OF AMOUNT OF RS. 19,00,000/- DEPOSITED BY BANK LOAN OF RS. 19,00,000/- TAKEN FROM ICICI BANK ON 7.5.2007 BY SHRI RAKESH GUPTA (STATEMENT AT PB PAGE 445/II) AND THE SAME DEPOSITED IN THE BANK ACCOUNT OF DILIP KUMAWAT (BANK STATEMENT AT PB PAGE 428/II). 9.5.2007 900000 CASH BANK LOAN OF RS. 19,00,000/- WAS TAKEN FROM IC ICI BANK ON 7.5.2007 BY SHRI RAKESH GUPTA (STATEMENT AT PB PAGE 445/II) AND THE SAME 83 DEPOSITED IN THE BANK ACCOUNT OF DILIP KUMAWAT (BANK STATEMENT AT PB PAGE 428/II , SHRI DILIP KUMAWAT WITHDRAWAL THE CASH FROM BANK ACCOUNT ON 09.05.07 (PB PAGE 428/II) AND PAID THE SAME TO ASSESSEE (CASH BOOK PB PAGE 416/II) . 12.7.2007 500000 CASH CHEQUE OF RS. 5,00,000/- RECEIVED FROM GUMAN KHANDELWAL (COPY OF ACCOUNT IN BOOKS OF GUMAN KHANDELWAL AT PB PAGE 386) AND THE SAME PAID TO ASSESSEE BY BEARER CHEQUE (BANK STATEMENT AT PB PAGE 425/II). 10.8.2007 900000 CASH CHEQUE OF RS. 10,00,000/- RECEIVED FROM GUMAN FURNITURE & SERVICES PVT LTD (COPY OF ACCOUNT IN BOOKS OF GUMAN FURNITURE AT PB PAGE 392) AND OUT THIS CASH WITHDRAWAL ON 10.08.07 (BANK STATEMENT PB PAGE 425/II) AND PAID TO ASSESSEE (CASH BOOK PB PAGE 416/II) . 10.8.2007 550000 CASH OUT OF OPENING CASH BALANCE (CASH BOOK PAGE NO. 416/II AND PREVIOUS YEAR CASH BOOK PAGE NO. 419 TO 420/II) 23.10.2007 950000 CASH AMOUNT OF RS. 9,50,000/- RECEIVED SHRI GOVIND KRIPA BUILDMART PVT. LTD. (COPY OF BANK A/C AT PB PAGE 450/II) AND THE SAME DEPOSITED IN UCO BANK (PB PAGE NO.438/II) . SHRI DILIP LUMAWAT WITHDRAWAL THIS AMOUNT CASH ON 23.10.07 (BANK STATEMENT PB PAGE 438/II) AND PAID THE SAME TO ASSESSEE (CASH BOOK PB PAGE 416/II) . 5.11.2007 500000 CASH AMOUNT RECEIVED BY CHEQUE NO. 178200 OF SBBJ FROM SHANKAR KHANDELWAL (COPY OF LEDGER A/C PB PAGE 417/II AND COPY OF BANK A/C PB PAGE 432/II) AND THE SAME WITHDRAWAL IN CASH ON 05.11.07 AND PAID TO ASSESSEE (CASH BOOK PB PAGE 416/II). 7.11.2007 900000 CASH AMOUNT OF RS. 9,50,000/- RECEIVED FROM SHRI GOVIND KRIPA BUILDMART PVT. LTD. (COPY OF BANK A/C AT PB PAGE 451/II) AND THE SAME DEPOSITED IN UCO BANK (PB PAGE NO.440/II) . SHRI DILIP KUMAWAT WITHDRAWAL THIS AMOUNT CASH ON 07.11.07 (BANK STATEMENT PB PAGE 440/II) AND PAID THE SAME TO ASSESSEE (CASH BOOK PB PAGE 416/II) . 17.12.2007 400000 CHEQUE OUT OF OPENING CASH BALANCE (CASH BOOK PAGE NO. 416/II AND PREVIOUS YEAR CASH BOOK PAGE NO. 419 TO 420/II) RS. 4,00,000/- DEPOSITED IN CASH BY SHRI KUMAWAT IN SBBJ A/C AND CHEQUE NO. 565760 OF SBBJ ISSUED TO THE ASSESSEE (COPY OF BANK A/C PB PAGE 432/II). 84 20.12.2007 600000 CHEQUE OUT OF OPENING CASH BALANCE (CASH BOOK PAGE NO. 416/II AND PREVIOUS YEAR CASH BOOK PAGE NO. 419 TO 420/II) RS. 6,00,000/- DEPOSITED IN CASH BY SHRI KUMAWAT IN SBBJ A/C AND CHEQUE NO. 525987 ISSUED TO THE ASSESSEE . (COPY OF BANK A/C PB PAGE 433/II). 24.12.2007 950000 CHEQUE OUT OF OPENING CASH BALANCE (CASH BOOK PAGE NO. 416/II AND PREVIOUS YEAR CASH BOOK PAGE NO. 419 TO 420/II) RS. 9,50,000/- DEPOSITED IN CASH BY SHRI KUMAWAT IN SBBJ A/C AND CHEQUE NO. 216861 ISSUED TO THE ASSESSEE. (COPY OF BANK A/C PB PAGE 433/II). 9.1.2008 600000 CASH AMOUNT OF RS. 6,00,000/- RECEIVED FROM SHRI GUMAN FURNITURE & SERVICES PVT LTD. (COPY OF A/C IN BOOKS OF GUMAN FURNITURE & SERVICES PVT LTD AT PB PAGE 392) AND THE SAME DEPOSITED IN UCO BANK (PB PAGE NO. 440/II) . SHRI DILIP KUMAWAT WITHDRAWAL THIS AMOUNT CASH ON 09.01.08 (BANK STATEMENT PB PAGE 440/II) AND PAID THE SAME TO ASSESSEE (CASH BOOK PB PAGE 416/II) . 1.3.2008 950000 CHEQUE OUT OF OPENING CASH BALANCE (CASH BOOK PAGE NO. 416/II AND PREVIOUS YEAR CASH BOOK PAGE NO. 419 TO 420/II) RS. 9,50,000/- DEPOSITED IN CASH BY SHRI KUMAWAT IN SBBJ A/C AND CHEQUE NO. 216862 OF SBBJ ISSUED TO THE ASSESSEE (COPY OF BANK A/C PB PAGE 433/II). 13.3.2008 300000 CHEQUE OUT OF OPENING CASH BALANCE (CASH BOOK PAGE NO. 416/II AND PREVIOUS YEAR CASH BOOK PAGE NO. 419 TO 420/II) RS. 6,00,000/- DEPOSITED IN CASH BY SHRI KUMAWAT IN BOB AND CHEQUE NO. 046296 OF BOB ISSUED TO THE ASSESSEE . (COPY OF BANK A/C PB PAGE 426/II). 17.3.2008 300000 CHEQUE OUT OF OPENING CASH BALANCE (CASH BOOK PAGE NO. 416/II AND PREVIOUS YEAR CASH BOOK PAGE NO. 419 TO 420/II) RS. 6,00,000/- DEPOSITED IN CASH BY SHRI KUMAWAT IN BOB AND CHEQUE NO. 046297 OF BOB ISSUED TO THE ASSESSEE . (COPY OF BANK A/C PB PAGE 426/II). TOTAL 11815000 COMMENTS:- I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R/ DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING RECEIPT OF RS. 1,00,000/- IN CASH ON 03.02.2007 AND FURTHER CASH O F RS.5 LAKHS RECEIVED ON 04.05.2007. ASSESSEE HAS SUBMITTED THAT AMOUNT OF RS.1,00,000/- HAS BEEN RECEIVED FROM RAKESH GUPTA AND FURTHER THIS AMOUNT WAS RECEIVED SH. RAKE SH GUPTA FROM KAHNDELWAL BUILDING 85 MATERIAL SUPPLIERS WHICH HAS WITHDRAWN BY RAKESH GU PTA ON 02.03.2007 AND PAID TO SH. DILIP KUMAWAT ON 03.05.2007, THUS DIFFERENCE OF CA SH WITHDRAWN OF PERIOD IS ABOUT TWO MONTHS WHICH SEEMS TO BE UNBELIEVABLE AND NOT REASO NABLE, THUS THIS CASH CREDIT SHOULD NOT BE ACCEPTED. SIMILARLY ASSESSEE HAS SUBMITTED T HAT AMOUNT OF RS.5,00,000/- HAS BEEN RECEIVED FROM RAKESH GUPTA AND FURTHER THIS AMOUNT WAS RECEIVED SH. RAKESH GUPTA FROM KAHNDELWAL BUILDING MATERIAL SUPPLIERS WHICH H AS WITHDRAWN BY RAKESH GUPTA ON 02.03.2007 AND PAID TO SH. DILIP KUMAWAT ON 04.05. 2007, THUS DIFFERENCE OF CASH WITHDRAWN OF PERIOD IS ABOUT TWO MONTHS WHICH SEEMS TO BE UNBELIEVABLE AND NOT REASONABLE, THUS THIS CASH CREDIT SHOULD NOT BE ACC EPTED. DURING APPELLATE PROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSP ITE OF NUMBER OF OPPORTUNITY GIVEN. REGARDING FURTHER RECEIVED OF CASH ON FOLLOWING DAT ES AS UNDER: DATE AMOUNT MODE 7.5.2007 950000 CASH COMMENTS- ASSESSEE HAS GIVEN THAT THIS AMOUNT HAS B EEN RECEIVED FROM GUMAN KHANDELWAL WHO HAS WITHDRAWN THE CASH FROM THE BANK ACCOUNT WHICH HAS GIVEN AS PER P.B.423/II ON 07.05.2007 AND GIVEN ON THE SAME DAY TO DILIP KUMAWAT WHO HAS GIVEN FURTHER TO THE ASSESSEE. REGARDING FURTHER RECEIVED OF AMOUNT ON FOLLOWING D ATES AS UNDER: DATE AMOUNT MODE 7.5.2007 400000 CASH 8.5.2007 45000 CHEQUE 8.5.2007 500000 CASH 9.05.2007 900000 CASH COMMENTS- ASSESSEE HAS GIVEN THAT THIS AMOUNT HAS B EEN RECEIVED FROM RAKESH GUPTA WHO HAS TAKEN LOAN OF RS.19 LAKHS FROM ICIC BANK ON 07.05.2007 SAME WAS DEPOSITED ON BANK ACCOUNT OF DILIP KUMAWAT BY WITHDRAWAL OF CASH FROM BANK ACCOUNT ON 07.05.2007/08.05.2007 AND 09.05.2007. ASSESSEE HAS GIVEN BANK ACCOUNT OF RSKESH GUPTA AND FURTHER LOAN EVIDENCE OF RS.19 LAKHS FROM ICICI BANK. REGARDING FURTHER RECEIVED OF CASH ON FOLLOWING DAT ES AS UNDER: DATE AMOUNT MODE 12.07.07 500000 CASH 10.08.07 900000 CASH 23.10.07 950000 CASH 05.11.07 500000 CASH 07.11.07 900000 CASH 09.01.08 600000 CASH 08.05.07 20000 JOURNAL ENTRY 86 COMMENTS- I) ASSESSEE HAS GIVEN THAT THE AMOUNT OF RS. 5 LAKHS RECEIVED ON 12.07.07 FROM GUMAN KHANDELWAL WHICH WAS WITHDRAWN BEARER CH EQUE (BANK ACCOUNT STATEMENT GIVEN) II). ASSESSEE HAS GIVEN THAT THE AMOUNT OF RS. 9 LA KHS RECEIVED ON 10.08.07 FROM GUMAN FURNITURE SERVICES AND PVT. LTD. WHICH WAS WITHDRAW N BEARER CHEQUE ON 10.08.2007 (BANK ACCOUNT STATEMENT AND CASH BOOK GIVEN) III). ASSESSEE HAS GIVEN THAT THE AMOUNT OF RS. 9.5 LAKHS RECEIVED ON 23.10.07 FROM SH. GOVIND KRIPA BUILDMART PVT. LTD. AND DEPOSITED IN UCO BANK OF DILIP KUMAWAT WHICH WAS WITHDRAWN ON 23.10.2007. (BANK ACCOUNT ST ATEMENT AND CASH BOOK GIVEN). IV). ASSESSEE HAS GIVEN THAT THE AMOUNT OF RS. 5 LA KHS RECEIVED BY DILIP KUMAWAT FROM SHANKAR KHANDELWAL SBBJ BANK A/C. AND SAME WIT HDRAWN IN CASH ON 05.11.07 AND PAID TO THE ASSESSEE (BANK ACCOUNT STATEMENT GI VEN). V). ASSESSEE HAS GIVEN THAT THE AMOUNT OF RS. 9.5 L AKHS RECEIVED FROM SH. GOVIND KRIPA BUILDMART PVT. LTD. AND DEPOSITED IN UCO BANK A/C. OF DILIP KUMAWAT AND SAME WITHDRAWN IN CASH ON 07.11.07 AND PAID TO THE ASSESSEE (BANK ACCOUNT STATEMENT GIVEN). VI). ASSESSEE HAS GIVEN THAT THE AMOUNT OF RS. 6 LA KHS RECEIVED FROM SH. GUMAN FURNITURE AND SERVICES PVT. LTD. AND DEPOSITED IN U CO BANK A/C. OF DILIP KUMAWAT AND SAME WITHDRAWN IN CASH ON 09.01.08 AND PAID TO THE ASSESSEE (BANK ACCOUNT STATEMENT GIVEN). VII). ASSESSEE SUBMITTED THAT AMOUNT OF RS.20,00,00 0/- HAS BEEN RECEIVED BY JOURNAL ENTRY AND THIS IS TRANSFER ENTRY FROM TIKAM KHANDEL WAL ( COPY OF BANK A/C. IN BOOKS OF TIKAM KHANDELWAL HAS BEEN GIVEN AT P.B.388 ). REGARDING FURTHER RECEIVED OF AMOUNT ON FOLLOWING D ATES AS UNDER: DATE AMOUNT MODE 17.12.07 450000 CHEQUE 20.12.07 600000 CHEQUE 24.12.07 950000 CHEQUE 01.03.08 950000 CHEQUE 13.03.08 300000 CHEQUE 17.03.08 300000 CHEQUE ASSESSEE HAS SUBMITTED THAT AMOUNT OF RS.35,50,000/ - HAS BEEN GIVEN OUT OF OPENING CASH BALANCE OF SH. DILIP KUMAWAT. ASSESSEE HAS NO T SUBMITTED ANY CASH FLOW STATEMENT OF DILIP KUMAWAT WHO IS BENAMI FURTHER IT IS UNVERIFIABLE, THE ABOVE AMOUNTS OF RS.35,50,000/- HAVE BEEN DEPOSITED IN CA SH ON DIFFERENT DATES AND CHEQUE ISSUED, THUS THE CASH DEPOSITS REPRESENTS UNDISCLOS ED MONEY DEPOSITED BY THE ASSESSEE FOR TAKING CASH CREDIT FROM THE BENAMI WHICH HAS BE EN ALREADY ACCEPTED BY THE 87 ASSESSEE SHANKAR KHANDELWAL IN HIS AFFIDAVIT, THUS NO RELIEF SHOULD BE ALLOWED TO THE ASSESSEE.(COPY OF BANK A/C. IN BOOKS OF TIKAM KHAND ELWAL HAS BEEN GIVEN AT P.B.388). 7. YADAV TRADERS. RS. 7,00,000/- ADDITIONAL EVIDENCE IS AT PAGE NO. 307 309 . CONFIRMATION LETTER IS PLACED AT PB PAGE NO. 307 . COPY OF PAN CARD AND SWORN AFFIDAVIT IS PLACED AT PB PAGE NO. 308 -309. DATE AMOUNT . NATURE OF ENTRY EXPLANATION. 17-08-07 20.8.07 23.8.07 2,00,000 2,00,000 3,00,000 RECEIPT BY CHEQUES. AMOUNT RECEIVED BY CHEQUES FOR BOOKING OF PLOT AS A DVANCE. COPIES OF CONFIRMATION, SWORN AFFIDAVIT, PAN CARD FILED AS ADDITIONAL EVIDENCE U/R 46A WITH WRITTEN SUBMISSION . IN VIEW OF THE FACTS NO ADDITION U/S 68 IS ATTRACTED A ND DESERVES TO BE DELETED. FURTHER ALL THE INGREDIENTS REQUIRED U/S 68 STANDS SATISFIED. THE COPY OF BANK STATEMENT IS AT PB PAGE 453 TO 454/II AND AO CODE AT PB PAGE 454-A/II COMMENTS:- I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS IT WAS MENTIONED THAT THIS AM OUNT WAS RECEIVED BY CHEQUE FOR BOOKING OF PLOT AS ADVANCE. ASSESSEE HAS FILED CONF IRMATION, BANK STATEMENT, WARD DETAILS. DURING APPELLATE PROCEEDING ASSESSEE HAD F AILED TO FURNISH SOURCES OF FUND INSPITE OF NUMBER OF OPPORTUNITY GIVEN. 8. SHRI TARUN AGARWAL RS. 9,50,000/- ADDITIONAL EVIDENCE IS AT P.B. PAGE NO. 310 311 . CONFIRMATION LETTER IS PLACED AT PB PAGE NO. 310 AND AFFIDAVIT IS PLACED AT PB PAGE. NO 311. DATE AMOUNT . NATURE OF ENTRY EXPLANATION. 24.12.07 9,50,000 RECEIPT BY CHEQUE. AMOUNT RECEIVED BY CHEQUE NO. 216761 OF SBBJ FOR BOOKING OF PLOT AS ADVANCE. THE DEPOSIT OF RS. 9,50 ,000/- WAS CREDITED IN THE BANK ACCOUNT OF TARUN AGARWAL B Y CLEARANCE OF CHEQUE. COPIES OF CONFIRMATION AND SWO RN AFFIDAVIT FILED AS ADDITIONAL EVIDENCE U/R 46A WITH WRITTEN SUBMISSIONS. IN VIEW OF THE FACTS NO ADDITION U/S 6 8 IS ATTRACTED AND DESERVES TO BE DELETED. FURTHER ALL T HE INGREDIENTS REQUIRED U/S 68 STANDS SATISFIED. THE COPY OF BANK STATEMENT IS AT PB PAGE 455/II AND AO CODE AT PB PAGE 455-A/II COMMENTS:- I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS IT WAS MENTIONED THAT THIS AM OUNT WAS RECEIVED BY CHEQUE FOR BOOKING OF PLOT AS ADVANCE. ASSESSEE HAS FILED CONF IRMATION, BANK STATEMENT, WARD 88 DETAILS. DURING APPELLATE PROCEEDING ASSESSEE HAD F AILED TO FURNISH SOURCES OF FUND INSPITE OF NUMBER OF OPPORTUNITY GIVEN. 9 . SUSHIL JHALANI (ASSESSEES BENAMI) RS. 11,46,000/- ADDITIONAL EVIDENCES AT PB PAGE 367-375 (COP Y OF ACCOUNT OF PARTY IN BOOKS OF ACCOUNTS OF ASSESSEE, HIS FAMILY MEMBERS AND BUS INESS CONCERNS & ASSOCIATES). JOURNAL ENTRY PASSED IN THE ACCOUNT SHRI SUSHIL JHA LANI BY DEBITING THE ACCOUNT OF KHANDELWAL HOSIERY & BARTAN BHANDAR (PROP. SHRI SUS HIL JHALANI (COPY OF A/C AT PB PAGE 456/II) AND SHRI SHANKAR KHANDELWAL (ASSESSEE). THE EXPLAN ATION OF AMOUNT RECEIVED FROM KHANDELWAL HOSIERY & BARTAN BHANDAR I S AS UNDER: - DATE AMOUNT. NATURE OF ENTRY EXPLANATION. 01.04.07 (OPENING BALANCE) 5,52,000 OPENING BALANCE OUT OF AMOUNT OF RS. 6,00,000/- TRANSFERRED FROM A/C OF MEENA GUPTA ON 27.12.06 WHICH WAS PAID TO MEENA GUPTA ON 27.12.06 FROM CHEQUE RECEIVED FROM GUMAN FURNITURE & SERVICES PVT LTD. THE COPY OF A/C OF MEENA GUPTA AND A/C OF KHANDELWAL HOSIERY & BARTAN BHANDAR IN BOOKS OF GUMAN FURNITURE & SERVICES PVT LTD IS ENCLOSED AT PB PAGE NO.__________. 01.01.07 1,99,000 JOURNAL ENTRY TRANSFER FROM A/C OF LALLU RAM JHALANI. RS. 1,99,000/- PAID TO SHRI LALLU RAM JHALANI ON 19.08.06 BY CHEQUE DRAWN ON PNB (COPY OF BANK STATEMENT AT PB PAGE 483) 16.05.07 1,75,000 CHEQUE CHEQUE GIVEN OUT OF PERSON AL LOAN OF RS. 2,63,938/- TAKEN FROM ICICI. 28.09.07 3,20,000 CHEQUE CHEQUE GIVEN OUT OF PERSON AL LOAN OF RS. 3,72,613/- TAKEN FROM ABN AMRO BANK. 20.10.07 (-) 1,00,000 CHEQUE CHEQUE GIVEN BACK BY ASSESSEE. TOTAL 11,46,000 COMMENTS:- I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS IT WAS MENTIONED THAT THIS IS JOURNAL ENTRY PASSED IN THE ACCOUNT SHRI SUSHIL JHALANI BY DEBITING THE ACCOUNT OF KHANDELWAL HOSIERY & BARTAN BHANDAR PROP. SHRI SUSHIL JHALANI AND SHRI SHNAKAR KHANDELWAL ASSESSEE. ASSESSEE HAS FURTHER GIVEN THAT THE AMOUNT OF RS.5.52 LAKHS AND 1.99 LAKHS IS JOURNAL ENTRY RECEIVED ON OUT OF AMOUNT OF RS.6 LAKHS TRANSFERRED FROM ACCOUNT OF MEENA GUPTA ON 27.12.06 WHICH WAS PAID TO MEENA GUPTA ON 27.12.06 FROM CHEQUE RECEIVED FROM GUMAN FURNITURE AND SERVICES PVT. LTD. AND FURTHER RS.1.99 LAKHS WAS TRANSFERRED FROM ACCOUNT OF LALLU RAM JHALANI ( COPY OF BANK ST ATEMENT GIVEN). DURING APPELLATE PROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSPITE OF NUMBER OF OPPORTUNITY GIVEN. 89 FURTHER THREE CHEQUES DATED 16.05.07 FOR 1.75 LAKH S, DATED28.09.07 FOR RS.3.20 LAKHS GIVEN TO THE ASSESSEE OUT OF PERSONAL LOAN OF RS.2, 63,938/- AND RS.3,72,613/- TAKEN FROM ABN AMRO BANK. DURING APPELLATE PROCEEDING ASS ESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSPITE OF NUMBER OF OPPORTUNITY GI VEN. 10. GOPAL LAL SAINI RS. 95,51,000/-. ADDITIONAL EVIDENCE AT PB PAGE 393-398 (COPY OF ACC OUNT OF PARTY IN BOOKS OF ACCOUNTS OF ASSESSEE, HIS FAMILY MEMBERS AND BUSINE SS CONCERNS & ASSOCIATES). THE AMOUNT WAS RECEIVED IN CASH BY ASSESSEE OUT OF FUNDS DEPOSITED IN BANK ACCOUNT OF THESE PERSONS BY OTHER FAMILY MEMBERS, BUSINESS CONCERNS & ASSOCIATES.) THE ENTRY WISE EXPLANATION OF ASSESSEE IS AS UNDER: - DATE A MOUNT. MODE PARTICULARS. 1.4.2007 7,50,000 JOURNAL JOURNAL ENTRY FROM A/C OF DILIP KUMAWAT. COPY OF A/C OF DILIP KUMAWAT AT PB PAGE 417/II AND COPY OF GOPAL LAL SAINI AT PB PAGE 458/II. 21.4.2007 2,00,000 CASH OUT OF CASH RECEIVED FROM S HRI TIKAM KHANDELWAL ON 21.04.07. THE COPY OF ACCOUNT OF PARTY IN BOOKS OF TIKAM KHANDELWAL IS AT PB PAGE 396 AND CASH BOOK OF GOPAL LAL SAINI AT PAGE 459/II. 27.4.2007 2,00,000 CASH OUT OF CASH RECEIVED FROM S HRI TIKAM KHANDELWAL ON 21.04.07. THE COPY OF ACCOUNT OF PARTY IN BOOKS OF TIKAM KHANDELWAL IS AT PB PAGE 396 AND CASH BOOK OF GOPAL LAL SAINI AT PAGE 459/II. 1.5.2007 4,00,000 CASH RS. 4,00,000/- CASH WITHDRAW N FROM BANK OF BARODA A/C ON 01.05.07 (COPY OF BANK A/C AT PB PAGE 462A/II) . THE AMOUNT WAS WITHDRAWN OUT OF CHEQUE OF RS. 45,00,000/- DEPOSITED IN BANK ACCOUNT WHICH WAS RECEIVED FROM SHRI TIKAM KHANDELWAL (COPY OF ACCOUNT IN BOOKS OF TIKAM KHANDELWAL AT PB PAGE 396). SHRI TIKAM KHANDELWAL GAVE RS. 45,00,000/- FROM HOUSING LOAN TAKEN FROM ICICI BANK. ( COPY OF LOAN STATEMENT AT PB PAGE 461). 11.6.2007 3,00,000 CASH AMOUNT DEPOSITED IN CASH WI TH ASSESSEE OUT OF OPENING CASH BALANCE WITH HIM AMOUNTING TO RS. 3,61,200/-. COPY OF CASH BOOK AT PB PAGE 459/II. THE OPENING CASH BALANCE WAS OUT OF CASH RS. 6,00,000/- RECEIVED FROM SMT. GUMAN KHANDELWAL ON 21.09.06. 21.7.2007 7,00,000 CASH AMOUNT RECEIVED IN CASH FR OM SHRI TIKAM KHANDELWAL ON 21.07.07 THE COPY OF ACCOUNT OF PARTY IN BOOKS OF TIKAM KHANDELWAL IS AT PB PAGE 396 AND CASH BOOK OF GOPAL LAL SAINI AT PAGE 459/II. 90 21.10.2007 3,00,000 CASH AMOUNT RECEIVED IN CASH FROM GUMAN KH ANDELWAL ON 21.10.2007. THE COPY OF ACCOUNT OF PARTY IN BOOKS OF GUMAN KHANDELWAL IS AT PB PAGE 395 AND CASH BOOK OF GOPAL LAL SAINI AT PAGE 460/II. 2.11.2007 3,34,000 CASH AMOUNT RECEIVED IN CASH FRO M GUMAN KHANDELWAL ON 02.11.07. THE COPY OF ACCOUNT OF PARTY IN BOOKS OF GUMAN KHANDELWAL IS AT PB PAGE 395 AND CASH BOOK OF GOPAL LAL SAINI AT PAGE 460/II. 2.11.2007 3,84,000 CASH AMOUNT RECEIVED IN CASH FRO M GUMAN KHANDELWAL ON 02.11.07. THE COPY OF ACCOUNT OF PARTY IN BOOKS OF GUMAN KHANDELWAL IS AT PB PAGE 395 AND CASH BOOK OF GOPAL LAL SAINI AT PAGE 460/II. 2.11.2007 3,84,000 CASH AMOUNT RECEIVED IN CASH FRO M GUMAN KHANDELWAL ON 02.11.07. THE COPY OF ACCOUNT OF PARTY IN BOOKS OF GUMAN KHANDELWAL IS AT PB PAGE 395 AND CASH BOOK OF GOPAL LAL SAINI AT PAGE 460/II. 6.11.2007 55,00,000 JOURNAL ENTRY JOURNAL ENTRY BY DEBITING THE ACCOUNT OF GOVIND KRIPA BUILDMART PVT LTD. THE COPY OF ACCOUNT OF GOVIND KRIPA BUILDMART IS AT PB PAGE 406 . 8.11.2007 99,000 JOURNAL ENTRY JOURNAL ENTRY BY DEBITING THE ACCOUNT OF GUMAN FURNITURE & SERVICES PVT LTD. THE COPY OF ACCOUNT OF GOPAL LAL SAINI IN BOOKS OF ACCOUNTS OF GUMAN FURNITURE & SERVICES PVT LTD IS AT PB PAGE 398. TOTAL 95,51,000 THEREFORE, THE CASH CREDIT IN THE NAME OF SHRI GOPAL SAINI IS NOT UNDISCLOSED INCOME OF THE ASSESSEE BUT REPRESENTS TO INTRODUCTION OF D ISCLOSED FUNDS OF THE FAMILY MEMBERS ROUTED THROUGH THE ACCOUNT OF GOPAL SAINI. IT IS RE LEVANT TO MENTION HERE THAT THE FAMILY MEMBERS TOOK THE HOUSING LOAN FROM BANKS ON THE BAS IS OF SOME FABRICATED AGREEMENT TO SALE OF PROPERTIES PREPARED IN THE NAME OF SHRI GOPAL SAINI IN FAVOUR OF THE FAMILY MEMBERS; ON THE BASIS OF THESE DOCUMENTS, THE LOAN FROM BANK WERE TAKEN, THE PAYMENT TO GOPAL SAINI AGAINST THE DISBURSEMENT OF LOAN WAS MADE, SUBSEQUENTLY THE CASH WAS WITHDRAWN AGAINST THE DEPOSIT OF CHEQUES OF LOAN AM OUNT AND THE MONEY WAS RE INTRODUCED IN THE BOOKS OF ASSESSEE. SINCE THE CAS H WAS RECEIVED FROM PARTY THROUGH DISCLOSED SOURCE WHICH EXPLAINED AS ABOVE, THEREFOR E NO ADDITION CAN BE MADE U/S 68 OF INCOME TAX ACT, 1961. COMMENTS:- I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING JOURNAL ENTRIES ON 01.04.2007 OF RS.7.5 LAKHS FROM DILIP KUMAWAT (COPY OF BANK ACCOUNT OF DILIP KUMAWAT AND GOPAL LAL SAINI) FURTHER ON 06.11.07 THERE IS JOURNAL ENTRY OF RS.55 LAKHS BY DEBITING ACCOUNT OF GOVIND KRIPA BUILDMART PVT. LTD., COPY OF BANK ACCOUNT HAS BEEN GIVEN, FURTHER GOPAL SAINI ACCOUNT IN THE BOOKS OF KHANDELWAL HAS BEEN GIVEN I N P.B. 91 FURTHER ON 08.11.2007 AN AMOUNT OF RS.99,000/- IS B Y JOURNAL ENTRY BY DEBITING THE ACCOUNT OF GUMAN FURNITURE AND SERVICES PVT. LTD.(C OPY OF ACCOUNT OF GOPAL SAINI IN BOOKS OF ACCOUNT OF GUMAN FURNITURE AND SERVICES PV T. LTD. GIVEN. ASSESSEE HAS SUBMITTED THAT HAS RECEIVED FROM TIKAM KHANDELWAL ON DIFFERENT DATES AS UNDER: DATE AMOUNT MODE 21.04.07 200000 CASH 27.04.07 200000 CASH 01.05.07 400000 CASH 21.07.07 700000 CASH ASSESSEE HAS SUBMITTED THAT THIS AMOUNT HAS BEEN RE CEIVED FROM SHRI TIKAM KHANDELWAL ON ABOVE DATES COPY OF ACCOUNTS OF PARTY HAS BEEN G IVEN IN THE BOOKS OF TIKAM KHANDELWAL AND CASH BOOK OF GOPAL SAINI SUBMITTED B UT CASH FLOW HAS ALREADY REJECTED IN CASE OF SH. SHANKAR KHANDEL AND FURTHER IN THE C ASE OF SH. TIKAM KHANDELWAL CASH EXTRACT REMAINS UNVERIFIABLE AND SKETCHY WHICH CANN OT BE RELIED UPON AND FURTHER GOPAL SAINI BENAMI OF ASSESSEE SHANKAR KHANDELWAL AS PER THE AFFIDAVIT FILED THE CASH BOOK OF GOPAL LAL SAINI CANNOT BE RELIED. THE ABOVE ENTRIES MAY NOT BE ACCEPTED. SIMILARLY THE ASSESSEE HAS SUBMITTED THAT THE FOLLO WING AMOUNT HAS BEEN RECEIVED ON DIFFERENT DATES UNDER: DATE AMOUNT MODE 21.10.07 300000 CASH 02.11.07 3,34,000 CASH 02.05.11 3,84,000 CASH 02.11.07 3,84,000 CASH ASSESSEE HAS SUBMITTED THAT THIS AMOUNT HAS BEEN RE CEIVED FROM SHRI GUMAN KHANDELWAL ON ABOVE DATES COPY OF ACCOUNTS OF PARTY HAS BEEN G IVEN IN THE BOOKS OF GUMAN KHANDELWAL AND CASH BOOK OF GOPAL SAINI SUBMITTED B UT CASH FLOW HAS ALREADY REJECTED IN CASE OF SH. SHANKAR KHANDEL AND FURTHER IN THE C ASE OF SH. GUMAN KHANDELWAL CASH EXTRACT REMAINS UNVERIFIABLE AND SKETCHY WHICH CANN OT BE RELIED UPON AND FURTHER GOPAL SAINI BENAMI OF ASSESSEE SHANKAR KHANDELWAL AS PER THE AFFIDAVIT FILED THE CASH BOOK OF GOPAL LAL SAINI CANNOT BE RELIED. THE ABOVE ENTRIES MAY NOT BE ACCEPTED. 11 . SHRI GOPALLAL. JAT RS. 50,000/-. ADDITIONAL EVIDENCE IS AT P.B. PAGE NO. 312-313. CONFIRMATION LETTER IS PLACED PB PAGE NO. 312 AND AFFIDAVIT IS PLACED AT PB PAGE NO. 313. DATE AMOUNT . NATURE OF ENTRY EXPLANATION. 29.10.07 50,000 RECEIPT BY CHEQUE. AMOUNT RECEIVED BY CHEQUE NO. 517966 AS ADVANCE FO R PURCHASE OF CAR RJ-14 5439. COPIES OF CONFIRMATION OF ACCOUNT AND SWORN AFFIDAVIT FILED AS ADDITIONAL EVI DENCE U/R 46A AND WITH WRITTEN SUBMISSIONS. IN VIEW OF TH E FACTS NO ADDITION U/S 68 IS ATTRACTED AND DESERVES TO BE DELETED. FURTHER ALL THE INGREDIENTS REQUIRED U/S 68 STANDS SATISFIED. 92 COMMENTS:- I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING DEPOSIT OF RS.50,000/- BY CHEQUE FOR PURCHASE OF CAR RJ- 14 5439. EVIDENCE GIVEN. DURING APPELLATE PROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES O F FUND INSPITE OF NUMBER OF OPPORTUNITY GIVEN. 12. SMT. SUJATA MEENA C/O B.S. MEENA RS. 10,00,000/ - ADDITIONAL EVIDENCE IS PB PAGE NO . 314-315 . CONFIRMATION LETTER IS PLACE AT PB PAGE NO. 314 AND AFFIDAVIT IS PLACED AT PB PAGE NO. 315 . DATE AMOUNT. NATURE OF ENTRY EXPLANATION. 27.10.07 28.10.07 5,00,000 5,00,000 RECEIPT BY CHEQUE. CASH. RECEIVED BY CHEQUE NO. 241073 OF DENA BANK COPY OF BANK ACCOUNTS AT PB PAGE 464/II WITHDRAWAL FROM BANK ON 26.10.07 COPY OF BANK ACCOUNTS AT PB PAGE 464/II IN VIEW OF THE FACTS NO ADDITION U/S 68 IS ATTRACTE D AND DESERVES TO BE DELETED. FURTHER ALL THE INGREDIENTS REQUIRED U/S 68 STANDS SATISFIED. COMMENTS: - I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING RECEIPT OF RS.5,00,000/- BY CHEQUE (COPY OF BANK ACCOUNT GIVEN ). FURTHER RS.5 LAKHS ON 28.10.07 HAS BEEN GIVEN TO THE ASSESSEE FROM WITHDRAWAL FROM BANK ON 26.10.07 (BANK STATEMENT GIVEN). DURING APPELLATE PROCEEDING ASSESSEE HAD FA ILED TO FURNISH SOURCES OF FUND INSPITE OF NUMBER OF OPPORTUNITY GIVEN. 13 . SHRI S.S. GUPTA, MITRA NAGAR PLOT. RS. 8,00,000/-. ADDITIONAL EVIDENCE IS AT PB PAGE NO. 316-317. CONFIRMATION LETTER IS PLACED AT PB PAGE NO. 316 AND AFFIDAVIT IS PLACED AT PB. PAGE NO. 317. DATE AMOUNT. NATURE OF ENTRY EXPLANATION. 31.8..07 8,00,000 RECEIPT BY CHEQUE. AMOUNT OF RS. 8,00,000/- RECEIVED BY CHEQUE NO. 596 78 OF SBBJ. THE SOURCE OF DEPOSIT IS BY CLEARING OF CHEQU E 528082. COPY OF BANK ACCOUNT AND AO CODE IS ENCLOSED AT PB PAGE 465 TO 466A/II. COPIES OF CONFIRMATION LETTER AND SWORN AFFIDAVIT FILED AS ADDITIONAL EVIDENCE U/ R 46A AND WITH WRITTEN SUBMISSIONS. IN VIEW OF THE FACTS NO ADDITION U/S 68 IS ATTRACTED AND DESERVES TO BE DEL ETED. FURTHER ALL THE INGREDIENTS REQUIRED U/S 68 STANDS SATISFIED. COMMENTS: - I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING RECEIPT OF 93 RS.8,00,000/- BY CHEQUE (COPY OF BANK ACCOUNT GIVEN ). DURING APPELLATE PROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSP ITE OF NUMBER OF OPPORTUNITY GIVEN. 14. SMT. SONA JHALANI. RS. 4,00,000 . THE AMOUNT OF RS. 4,00,000/- RECEIVED BY CHEQUE OF HDFC ON 18.5.2007 AND PAID BACK ON 14.3.2008 BY CHEQUE NO. 167359 OF HDFC. COPY OF BANK ACCOUNT AT PB PAGE 467/II -. COMMENTS: - I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING RECEIPT OF RS.4,00,000/- BY CHEQUE (COPY OF BANK ACCOUNT GIVEN ). DURING APPELLATE PROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSP ITE OF NUMBER OF OPPORTUNITY GIVEN. 15. RANJEET YADAV AND MOHD. SHARIF. RS. 56,50,000. ADDITIONAL EVIDENCE IS PLACED AT PB PAGE NO. 360-36 2. CONFIRMATION LETTER IS PLACED AT PB PAGE NO. 360 AND COPY OF RELEVANT PAGE OF THE ST ATEMENT OF ASSESSEE RECORDED BY SEARCH PARTY. THE COPY OF STATEMENT OF MOHD. SHARIF IS AT PB PAGE NO. 508 TO 513 (PLZ REFER Q. NO. 4 & 14 OF STATEMENT) IN THE CASE OF SHRI MOHD. SHARIFF KHAN FOR A.Y. 200 8-09 ASSESSMENT ORDER U/S 143(3) OF I.T. ACT HAS BEEN PASSED ON 29/9/2010 AT INCOME OF RS. 68,53,970/- WHICH INCLUDES ADDITION OF RS. 56,50,000/- ON ACCOUNT OF ADVANCE M ADE IN CASH TO SHRI SHANKAR LAL KHANDELWAL IN GLOBAL CITY PROJECT ON 20.10.2007 WHI CH HAS BEEN CONFIRMED BY SHANKAR LAL KHANDELWAL AND ALSO MOHD. SHARIFF KHAN IN HIS STATEMENT AND OATH AND ALSO CONFIRMED WHICH WAS RETRACTED LATER. THE ADDIT ION OF RS. 56,50,000/- HAS BEEN MADE SUBSTANTIVE BASIS IN THE CASE OF MOND. SHARIF. . THUS NO ADDITION IN THE CASE OF THE ASSESSEE IS CALLED FAR. COMMENTS: - I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS GIVEN CASH OF RS . 56.50 LAKHS INITIALLY DURING THE STATEMENT DURING SEARCH OPERATION U/S.132(4) SH. SH ANKAR KHANDELWAL HAS ADMITTED THAT RS.56.50 HAS BEEN RECEIVED ON ACCOUNT OF ADVANCE FR OM MOHD. SHARIFF KHAN FOR GLOBAL CITY PROJECT ON 20.10.2007 BUT DURING ASSESSMENT PR OCEEDING IN CASE OF MOHD. SHARIFF KHAN, SHANKAR KHANDELWAL HAD DENIED ANY FINANCIAL D EALING WITH MOHD. SHARIFF KHAN BUT AFTER ENQUIRY UNDER 131, HE REITERATED THAT THI S AMOUNT OF RS. 56.50 LAKHS WAS RECEIVED FROM SHANKAR KHANDELWAL. THE ADDITION OF R S56.50 LAKHS HAS BEEN MADE IN CASE OF MOHD. SHARIFF KHAN. DURING APPELLATE PROCEE DING ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSPITE OF NUMBER OF OPPORT UNITY GIVEN. 16 SHRI RAKESH GUPTA PLOT NO. 92, RAGHUNATHPURI RS. 7,00,000 . ADDITIONAL EVIDENCES ARE AT PB PAGE. 318-323. COPY OF LEDGER A CCOUNT OF PLOT NO. 92 RAGHUNATHPURI AND ACCOUNT OF RAKESH GUPTA IN THE BO OKS OF ASSESSEE AND COPY OF ACCOUNT OF RAKESH GUPTA IN THE BOOKS OF GFSPL AND C OPY OF SEIZED AGREEMENT TO SALE 94 IN RESPECT STATED PLOT ARE PLACED AT PB PAGE NO. 31 8-323. THE ASSESSEE WAS MAINTAINING TWO LEDGER ACCOUNT IN THE NAME OF SHRI RAKESH GUPTA FIRST IN THE NAME RAKESH GUPTA (92, RAGHUNATH PURI) AND SECOND IN THE NAME OF GU MAN FURNITURE (RAKESH GUPTA 92 RAGHUNATH PURI). IN FY 2006-07 M/S GUMAN FURNITURE & SERVICES PVT LTD MADE PAYMENT OF RS. 7,00,000/- TO SHRI RAKESH GUPTA (LEDGER PB PAGE 320) ON BEHALF OF ASSESSEE AND DEBITED THE SAME IN THE NAME OF SHRI R AKESH GUPTA AND THE ASSESSEE CREDIT THIS AMOUNT IN A/C NAMING GUMAN FURNITURE (RAKESH GUPTA 92 RAGHUNATH PURI) (LEDGER PB PAGE 320) IN PLACE OF CREDITING THE ACCOUNT OF M/S GUMAN FURN ITURE & SERVICES PVT LTD. DURING THE YEAR THE CREDIT BALANC E IN THIS A/C TRANSFERRED BY CREDITING THE A/C OF M/S GUMAN FURNITURE & SERVICES PVT LTD (LEDGER A/C PB PAGE 468/II) . DURING THE YEAR NO AMOUNT RECEIVED TO ASSESSEE FROM THIS PARTY AND ONLY JOURNAL ENTRIES PASSED IN THE ACCOUNT OF PARTY. COMMENTS: - I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS GIVEN EVIDENCES THAT THIS IS JOURNAL ENTRY AND DURING THE NO AMOUNT RECEIVED TO THE ASSESSEE FROM THIS PA RTY AND ONLY HAVE BEEN PASSED ON ACCOUNT OF PARTY. 17. SHRI RAMNARAIN YADAV RS. 4,00,000/-. ADDITIONAL EVIDENCE IS AT PB PAGE NO. 324-326. COPY OF CONFIRMATION LETTER IS PLACED AT PB PAGE NO. 324 . COPY OF PAN CARD AND AFFIDAVIT ARE PLACED AT PB PAGE NO. 325-326. DATE AMOUNT NATURE OF ENTRY EXPLANATION. 18.5.2007 4,00,000 RECEIPT BY CHEQUE. AMOUNT OF RS 4,00,000/- RECEIVED BY CHEQUE NO. 2943 9 OF BOB. THE SOURCE OF DEPOSIT IS CLEARING OF CHEQUES R ECEIVED AS ADVANCE OF BOOKING OF PLOTS. COPIES OF CONFIRMAT ION LETTER, SWORN AFFIDAVIT AND PAN CARD FILED AS ADDIT IONAL EVIDENCE U/R 46A AND WITH WRITTEN SUBMISSIONS. IN V IEW OF THE FACTS NO ADDITION U/S 68 IS ATTRACTED AND DESER VES TO BE DELETED. FURTHER ALL THE INGREDIENTS REQUIRED U/S 6 8 STANDS SATISFIED. THE COPY OF BANK STATEMENT AND AO CODE IS PLACED AT PB PAGE 469 TO 470A/II. COMMENTS: - I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING RECEIPT OF RS.4,00,000/- BY CHEQUE (COPY OF BANK ACCOUNT GIVEN ). DURING APPELLATE PROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSP ITE OF NUMBER OF OPPORTUNITY GIVEN. 18. SHRI RAJEEV KUMAR DUBEY. RS. 1,00,000/-. ADDITIONAL EVIDENCE IS AT PB PAGE NO. 327-329. COPY OF CONFIRMATION IS PLACE AT PB PAGE NO. 327 . COPY OF PAN CARD AND AFFIDAVIT ARE PLACED PB PAGE NO. 328-329 . DATE AMOUNT. NATURE OF ENTRY EXPLANATION. 15.03.08 1,00,000 RECEIPT AMOUNT OF RS. 1,00,000/- RECEIVED BY CASH AS ADVANCE OF 95 BY CASH. BOOKING OF PLOT. CASH WITHDRAWN BY SHRI RAJEEV KUMA R DUBEY ON 15.3.2008. THE SOURCE OF DEPOSIT OF RS. 1, 00,000 IS CLEARING RECEIVED ON 27.2.2008. THE COPY OF BANK STATEMENT AND AO CODE IS PLACED AT PB PAGE 471 TO 472A/II. COPIES OF CONFIRMATION LETTER, SWORN AFFIDAVIT AND PAN CARD FILED AS ADDITIONAL EVIDENCE U/R 46A AND W ITH WRITTEN SUBMISSIONS. IN VIEW OF THE FACTS NO ADDITI ON U/S 68 IS ATTRACTED AND DESERVES TO BE DELETED. FURTHER ALL T HE INGREDIENTS REQUIRED U/S 68 STANDS SATISFIED. COMMENTS: - I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING RECEIPT OF RS.1,00,000/- BY CASH AND SOURCE OF DEPOSIT OF RS.1 ,00,00/- IS CLEARING RECEIVED ON 27.02.2008 (COPY OF BANK STATEMENT AND WARD DETAIL GIVEN). DURING APPELLATE PROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES O F FUND INSPITE OF NUMBER OF OPPORTUNITY GIVEN. 19 . SHRI PAWAN SHARMA RS. 14,000/-. ADDITIONAL EVIDENCE IS AT PB PAGE NO. 330- 331. COPY OF CONFIRMATION IS PLACED AT PB PAGE NO. 330 AND COPY OF AFFIDAVIT IS PLACED AT PB PAGE NO. 331 . DATE AMOUNT. NATURE OF ENTRY EXPLANATION. 15.09.07 14,000 RECEIPT BY CHEQUE AMOUNT OF RS. 14,000/- RECEIVED BY A/C. PAYEE CHEQU E AS ADVANCE OF BOOKING OF PLOT. COPIES OF CONFIRMATION LETTER, AND SWORN AFFIDAVIT FILED AS ADDITIONAL EVIDENCE U/R 46 A AND WITH WRITTEN SUBMISSIONS. IN VIEW OF THE FACTS NO A DDITION U/S 68 IS ATTRACTED AND DESERVES TO BE DELETED. FURTHER ALL THE INGREDIENTS REQUIRED U/S 68 STANDS SATISFIED. COMMENTS: - I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING RECEIPT OF RS.14,000/- BY CHEQUE (COPY OF BANK ACCOUNT GIVEN). DURING APPELLATE PROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSP ITE OF NUMBER OF OPPORTUNITY GIVEN. 20. SMT. MONIKA SHARMA RS. 11,76,000/-. ADDITIONAL EVIDENCES ARE PLACED AT PB NO. 332 341 . COPY OF LEDGER ACCOUNT OF AND PLOT SALE 334 GANES H NAGAR ACCOUNT IN THE BOOKS OF ASSESSEE AND COPY OF REGISTERED SALE D EED IN RESPECT OF PLOT NO. 334 GANESH NAGAR EXECUTED BY THE ASSESSEE AND SMT. MONI KA SHARMA ARE PLACED AT PB PAGE NO. 332-341. DATE AMOUNT. NATURE OF ENTRY EXPLANATION. 29.12.08 11,76,000 RECEIPT BY CASH AMOUNT OF RS. 5,00,000/- RECEIVED BY CASH FOR SALE CONSIDERATION OF PLOT NO. 334. GANESH NAGAR AND RS. 6,76,000 RECEIVED FOR CONSTRUCTION WORK ON THE SAID PLOT. COPIES OF LEDGER ACCOUNT IN THE BOOKS OF ASSE SSEE AND COPY OF REGISTERED SALE DEED IN RESPECT OF PLOT NO. 334 96 GANESH NAGAR, FILED AS ADDITIONAL EVIDENCE U/R 46A AND WITH WRITTEN SUBMISSIONS. IN VIEW OF THE FACTS NO A DDITION U/S 68 IS ATTRACTED AND DESERVES TO BE DELETED. FUR THER ALL THE INGREDIENTS REQUIRED U/S 68 STANDS SATISFIED. COMMENTS: - I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING RECEIPT OF RS.11,76,000/- BY CASH. ASSESSEE HAS FAILED TO GIVE SOURCE OF FUNDS BY SMT. MONIKA SHARMA WHICH REMAINED UNEXPLAINED AND THE PLEA OF T HE ASSESSEE MAY BE REJECTED. DURING APPELLATE PROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSPITE OF NUMBER OF OPPORTUNITY GIVEN. 21 . SHRI MANOHARLAL CHAUDHARY. RS. 15,70,000/-. ADDITIONAL EVIDENCE IS PLACE AT PB PAGE NO. 342-344 . CONFIRMATION LETTER IS PLACE AT PB PAGE NO. 342 . COPY OF PAN CARD AND AFFIDAVIT PLACED AT PB PAGE NO. 343-344 . DATE AMOUNT. NATURE OF ENTRY EXPLANATION. 01.05.07 29.08.07 20.10.07 03.01.08 20,000 1,00,000 9,50,000 5,00,000 CHEQUE CHEQUE CASH CHEQUE RECEIVED BY CHEQUE NO.54442 S.B.B.J. (COPY OF BANK A/C AT PB PAGE 474/II) RECEIVED BY CHEQUE NO. 319599 OF S.B.B.J. (COPY OF BANK A/C AT PB PAGE 476/II) RECEIVED OUT OF CASH WITHDRAWAL FROM BANK SBBJ ON 19.10.07. (COPY OF BANK A/C AT PB PAGE 478/II) RECEIVED BY CHEUQE NO. 291171 OF SBBJ. (COPY OF BANK A/C AT PB PAGE 480/II) THE COPY OF AO CODE IS AT PB PAGE 481A/II COMMENTS: - I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING RECEIPT OF ABOVE AMOUNTS OF RS.6.20 LAKHS BY CHEQUE AND FURTHER RS. 9.50 LAKHS BY CASH WITHDRAWN FROM THE BANK ACCOUNT (COPY OF BANK ACCOUNT GIVEN). DURING APPELLATE PROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSP ITE OF NUMBER OF OPPORTUNITY GIVEN. 22 . SHRI MANOJ DHANDHIA HUF. RS. 1,74,404/ - ADDITIONAL EVIDENCE IS PLACE AT PB PAGE NO. 345-346 . THE CONFIRMATION LETTER IS PLACE AT PB PAGE NO. 345 AND VOTER CARD ID IS PLACED AT PB PAGE NO. 346 . THE ASSESSEE NOT TOOK ANY LOAN FROM THIS PARTY. THE ASSESSEE GAVE ADVANCE TO THIS PARTY ON VARIOUS DATES AND LATER ON THE SAME TRANSFERRED IN M/S GOVIND KRIPA BUILDMART PVT LTD B Y A JOURNAL ENTRY. COMMENTS: - I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING THAT ABOVE AMOUNTS ARE NOT LOAN BUT ADVANCE ON DIFFERENT DATES AND LAT ER TRANSFERRED TO M/S. GOVIND KRIPA 97 BUILDMART PVT. BY JOURNAL ENTRY. DURING APPELLATE P ROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSPITE OF NUMBER OF OPPORT UNITY GIVEN. 23. SHRI LALLURAM JHALANI. RS. 1,99,000/-. ADDITIONAL EVIDENCE IS PLACED AT PB PAGE NO. 347-348. THE CONFIRMATION LETTER IS PLACED AT PB PAGE NO. 347 . COPY OF AFFIDAVIT IS PLACED AT PB PAGE NO. 348 . DATE AMOUNT. NATURE OF ENTRY EXPLANATION. 23.05.07 1,99,000 RECEIPT BY CASH AMOUNT OF RS. 1,99,000/- RECEIVED BY CASH. THE PART Y WITHDRAWN CASH RS. 2,00,000/- ON 15.05.07 FROM HIS BANK A/C AND OUT OF THIS RS. 1,99,000/- PAID TO ASSESSEE. THE COPY OF BANK STATEMENT AND AO CODE IS AT PB PAGE 482 TO 483A/II. COPIES OF CONFIRMATION LETTER, AND SWORN AFFIDAVIT FILED AS ADDITIONAL EVIDENCE U/R 46A AND WITH WRITT EN SUBMISSIONS. IN VIEW OF THE FACTS NO ADDITION U/S 6 8 IS ATTRACTED AND DESERVES TO BE DELETED. FURTHER ALL T HE INGREDIENTS REQUIRED U/S 68 STANDS SATISFIED. COMMENTS: - I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING RECEIPT OF RS.1,99,000/- BY CASH FROM THE ABOVE ASSESSEE BY WI THDRAWAL OF CASH OF RS.2 LAKHS ON 15.05.07 FROM THE PARTY ACCOUNT (COPY OF BANK ACCOU NT GIVEN). DURING APPELLATE PROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES O F FUND INSPITE OF NUMBER OF OPPORTUNITY GIVEN. 24. SHRI LAXMI KANT SHARMA. RS. 1,30,000/-. ADDITIONAL EVIDENCE IS PLACED AT PB PAGE NO. 349-350. THE CONFIRMATION LETTER IS PLACED AT PB PAGE NO. 349 . THE AFFIDAVIT IS PLACED AT PB PAGE NO. 350 . DATE AMOUNT. NATURE OF ENTRY EXPLANATION. 15.05.07 1,30,000 RECEIPT BY CHEQUE. AMOUNT OF RS. 1,30,000/- RECEIVED BY A/C. PAYEE CHE QUE NO. 038868 OF SBBJ AS ADVANCE FOR BOOKING OF PLOT. SOUR CE OF DEPOSIT IN BANK ACCOUNT OF IS CLEARING OF CHEQUE OF NO. 1,30,000/- ON 23.4.2007. THE COPY OF BANK STATEMENT AND AO CODE IS AT PB PAGE 484 TO 484A/II. COPIES OF CONFIRMATION LETTER, AND SWORN AFFIDAVIT FILED AS A DDITIONAL EVIDENCE U/R 46A AND WITH WRITTEN SUBMISSIONS. IN V IEW OF THE FACTS NO ADDITION U/S 68 IS ATTRACTED AND DESER VES TO BE DELETED. FURTHER ALL THE INGREDIENTS REQUIRED U/S 6 8 STANDS SATISFIED. COMMENTS: - I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING RECEIPT OF RS.1,30,000/- BY CHEQUE (COPY OF BANK ACCOUNT GIVEN ). DURING APPELLATE PROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSP ITE OF NUMBER OF OPPORTUNITY GIVEN. 98 25. SMT. KOSHALAYA SHARMA RS. 1,00,000 . ADDITIONAL EVIDENCE IS PLACED AT PB PAGE NO. 351-354. CONFIRMATION LETTER IS PLACED AT PB PAGE NO. 351 . COPY OF DRIVING LICENSE, RATION CARD AND AFFIDAVIT IS PLACED AT PB PAGE NO. 352-354 . DATE AMOUNT. NATURE OF ENTRY EXPLANATION. 19.01.08 1,00,000 RECEIPT BY CHEQUE AMOUNT OF RS. 1,00,000/- RECEIVED BY A/C. PAYEE CHE QUE NO. 074937 OF SBBJ AS ADVANCE FOR BOOKING OF PLOT. SOURCE OF DEPOSIT IS CLEARING OF CHEQUE OF RS. 1,00 ,000/- ON 19.2.2008. THE COPY OF BANK STATEMENT AND AO CODE IS AT PB PAGE 485 TO 485A/II. COPIES OF CONFIRMATION LETTER, DRIVING LINCESE, RATION CARD AND SWORN AFFIDAVIT FI LED AS ADDITIONAL EVIDENCE U/R 46A AND WITH WRITTEN SUBMIS SIONS. IN VIEW OF THE FACTS NO ADDITION U/S 68 IS ATTRACTE D AND DESERVES TO BE DELETED. FURTHER ALL THE INGREDIENTS REQUIRED U/S 68 STANDS SATISFIED. COMMENTS: - I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING RECEIPT OF RS.1,00,000/- BY CHEQUE (COPY OF BANK ACCOUNT GIVEN ). DURING APPELLATE PROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSP ITE OF NUMBER OF OPPORTUNITY GIVEN. 26. SHRI KAMLESH SHARMA RS. 4,00,000/-. ADDITIONAL EVIDENCE IS PLACED AT PB PAGE NO. 355-357. CONFIRMATION LETTER IS PLACED AT PB PAGE NO. 355 . COPY OF DEMAND DRAFT AND AFFIDAVIT IS PLACED AT PB PAGE NO. 356-357 . DATE AMOUNT. NATURE OF ENTRY EXPLANATION. 01.06.07 4,00,000 RECEIPT BY CHEQUE AMOUNT OF RS. 4,00,000/- RECEIVED BY DEMAND DRAFT N O. 001116 OF STATE BANK OF INDIA DATED 29-5-2007. COPY OF D.D. IS ENCLOSED P.B. PAGE NO. 356. AS ADVANCE FOR BOOKING OF PLOT. COPIES OF CONFIRMATION LETTER, DEMAND DRAF T, AND SWORN AFFIDAVIT FILED AS ADDITIONAL EVIDENCE U/R 46 A AND WITH WRITTEN SUBMISSIONS. IN VIEW OF THE FACTS NO A DDITION U/S 68 IS ATTRACTED AND DESERVES TO BE DELETED. FURTHER ALL THE INGREDIENTS REQUIRED U/S 68 STANDS SATISFIED. COMMENTS: - I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING RECEIPT OF RS.4,00,000/-BY CHEQUE (COPY OF BANK ACCOUNT GIVEN) . DURING APPELLATE PROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSP ITE OF NUMBER OF OPPORTUNITY GIVEN. 27. M/S. KESHAV INDUSTRIES. RS. 2,00,000/-. ADDITIONAL EVIDENCE IS PLACED AT PB PAGE NO. 358-359. CONFIRMATION LETTER IS PLACED AT PB PAGE NO. 358 . COPY OF AFFIDAVIT IS PLACED AT PB PAGE NO. 359 . DATE AMOUNT. NATURE EXPLANATION. 99 OF ENTRY 10.12.07 31.03.08 1,50,000 50,000 RECEIPT BY CHEQUE AMOUNT OF RS. 1,50,000/- RECEIVED BY CHEQUE NO. 169 036 OF SBBJ THE COPY OF BANK STATEMENT AT PB PAGE 486/II. . AMOUNT OF RS. 50,000/- RECEIVED BY CHEQUE OF SBBJ THE COPY OF BANK STATEMENT AT PB PAGE 491/II. COPIES OF CONFIRMATION LETTER, AND SWORN AFFIDAVIT FILED AS A DDITIONAL EVIDENCE U/R 46A AND WITH WRITTEN SUBMISSIONS. IN V IEW OF THE FACTS NO ADDITION U/S 68 IS ATTRACTED AND DESER VES TO BE DELETED. FURTHER ALL THE INGREDIENTS REQUIRED U/S 6 8 STANDS SATISFIED. COMMENTS: - I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSESSEE A/R DURING APPELLATE PROCEEDINGS ASSESSEE HAS NOW GIVEN EVIDEN CE REGARDING RECEIPT OF RS.50,000/- BY CHEQUE (COPY OF BANK ACCOUNT GIVEN). DURING APPE LLATE PROCEEDING ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSPITE OF NUMBER OF OPPORTUNITY GIVEN. 8.6 THE LD. CIT(A) AFTER CONSIDERING THE ADDITIONAL EVIDENCE AND THE REMAND REPORT OF THE AO REDUCED THE ADDITION TO RS. 73.61 LACS AFTER OBSERVING AS UNDER:- 7.4 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 LEGAL POSITION ON THIS ISSUE. 7.4.1 AT THE OUTSET, A.O. REQUESTED TO RECTIFY T HE MISTAKE IN THE REMAND REPORT, WHEREIN THE SENTENCE DURING THE APPELLATE PROCEEDINGS ASSESSEE HAS FAILED TO FURNISH SOURCE OF FUND INSPI TE OF NUMBER OF OPPORTUNITY GIVEN. MAY BE READ AS DURING THE ASSESSMENT PROCEEDINGS ASSESSEE HAS FAILED TO FURNISH SOURCE OF FUND INSPT IE OF NUMBER OF OPPORTUNITIES GIVEN IN ALL THE PLACES. THE MISTAKE BEING INADVERTENT IS CONSIDERED AS RECTIFIED. THE A.O. HAS MENTIONED IN THE REMAND REPORT THAT REPEATED OPPORTUNTITIES WERE GIVEN TO FURNISH CONFI RMATION AND PRODUCE BOOKS OF ACCOUNTS AND VOUCHERS. ON PERUSAL OF THE R ECORD AND THE REPLY OF 100 THE A.R, IT IS SEEN THAT VIDE NOTICE DATED 27.8.09, THE ASSESSEE WAS ASKED TO PRODUCE BOOKS OF ACCOUNTS AND INFORMATION AS PER LE TTER. HOWEVER AS PER A.R., NO SUCH LETTER WAS SERVED ON THE ASSESSEE. ON BEING ASKED, THE A.O. CLARIFIED THAT THE COMMON LETTER WAS ISSUED. HOWEVE R, HE ACCEPTED THAT NO QUERY WAS RAISED FOR FURNISHING CONFIRMATION OF THE CASH CREDITORS. SIMILARLY, THE A.R. HAS POINTED OUT THAT VIDE ANOTH ER NOTICE U/S 142(1) DATED 27.10.09 ALSO, NO REQUIREMENT OF FURNISHING T HE CONFIRMATION OF CASH CREDITORS WAS RAISED. THE A.O. HAS MENTIONED THAT T HE ASSESSEE WAS ASKED TO PRODUCE THE BOOKS OF ACCOUNTS AND SUPPORTING VOU CHERS. SIMILARY VIDE NOTICE DATED 12.11.09, NO QUERY WAS RAISED TO FURNI SH THE CONFIRMATION OF THE CASH CREDITORS. SIMILARY, VIDE NOTICE DATED 4. 12.09 ALSO, APPELLANT WAS NOT ASKED TO FURNISH CONFIRMATION OF THE CASH CREDI TORS. THE QUERY WAS RAISED IN RESPECT OF FURNISHING CASH FLOW STATEMENT . ALL THESE FACTS INDICATE THAT THE OBSERVATION OF A.O. THAT REPEATED OPPORUTN TITIES WAS GIVEN FOR FURNISHING CONFIRMATION IS NOT CORRECT. THIS OBSERV ATION MAY BE CORRECT IN RESPECT OF PRODUCTION OF BOOKS OF ACCOUNTS AND VOUC HERS. HOWEVER, IT IS NOTICED BY THE UNDERSIGNED THAT THE VIDE SHOW CAUSE LETTER DATED 11.12.09, THE A.O. HAD RAISED QUERY FOR FURNISHING CONFIRMATI ON OF THE LOAN CREDITORS AND IN CASE OF FAILURE, ASKING THE ASSESSEE TO SHOW CASUE FOR MAKING ADDITION. HOWEVER, THE A.R HAS RIGHTLY POINTED OUT THAT TIME AVAILABLE AFTER 11.12.09 WAS TOO SHORT PARTICULARLY CONSIDERI NG THE FACT THAT THE ASSESSEE WAS SUFFERING FROM CANCER AND REQUIRED HOS PITALIZATION MANY TIMES AND ALSO THE CONTINUOUS MEDICAL ATTENTION. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES AND THE REASONS AND ALSO TH E DISCUSSIONS AND THE REASONS MENTIONED IN APPEAL ORDER FOR A.Y 2005-06, (REFERRED SUPRA) THE ADDITIONAL EVIDENCES ARE ADMITTED IN THIS YEAR ALSO . 7.4.2 IT IS PERTINENT TO MENTION THAT SOME OF THE ENTRIES WHICH HAS BEEN ADDED BY THE A.O. ARE NOT THE ENTRIES OF THE LOAN C REDITORS BUT ARE JOURNAL ENTRIES, WHEREIN THERE IS NO ACTUAL LOAN TAKEN DURI NG THE YEAR. THE JOURNAL ENTRIES ARE NOT COVERED U/S 68 AND ACCORD INGLY, STRICTLY THERE IS NO 101 REQURIMENT OF SASTISFYING ALL THE THREE INCREDIENTS AS NEEDED IN THE CASE OF LOAN CREDITORS. 7.4.3 THESE JOURNAL ENTRIES ARE AT SR. NO. 1 M/S ARPAN ENTERPRISES LTD (FOR RS. 50,000/-), SR. NO. 2) SH. ASHOK PAREEK- RS 9 LAKHS, SR NO. 3 SH. BHAGIRATH CHOUDHARY- RS. 5 LAKHS (INCO RRECTLY MENTIONED BY A.O. AS RS. 50,000/-), SR. NO. 9 SUSHIL JHALANI- RS . 11, 46,000/-, SR. NO. 10 SH. GOPAL LAL SAINI RS. 63.49 LAKHS OUT OF RS. 95 .51 LAKHS, SR. NO. 16 SH. RAKSH GUPTA- RS. 7 LAKHS, SR. NO. 22 SH. MANOJ DHA NDHIA HUF- RS. 1,74,404/-. IN ANY CASE, NOW THE A.R OF THE APPELLA NT HAS FURNISHED SUPPORTING DETAIL EVEN IN RESPECT OF THESE JOURNAL ENTRIES AND HAS ALSO FURNISHED CONFIRMATION FROM THE PERSON ALONGWITH PA N NO. THE A.R HAS FURTHER FURNISHED THE DETAILS AS WELL AS COPY OF BA NK STATEMENT OF THE RELEVANT PERSON IF THE AMOUNT HAS BEEN ACTUALLY GIV EN BY THE PERSON TO OTHER MEMBER OF THE GROUP AND THEREAFTER THE JOURNAL ENTR Y HAS BEEN PASSED IN THE CASE OF APPELLANT WITH COUNTER ENTRY IN THE OTHER M EMBER OF THE GROUP. NEEDLESS TO MENTION, THE A.O. HAS EXAMINED THESE DE TAILS AND HAS FURNISHED HIS COMMENTS MENTIONED BELOW EACH OF THESE ENTRIES. NO ADVERSE COMMENTS HAVE BEEN MADE BY THE A.O. ACCORDINGLY, ADDITIONS T O THE AFORESAID EXTENT WHICH HAVE BEEN INADVERTENTLY MADE BY THE A.O. IN R ESPECT OF THESE JOURNAL ENTRIES ARE STRAIGHT AWAY DELETED. 7.4.4 THE ENTRY AT SR. NO. 5 NAMELY DHARAM RAJ SI NGH, IT WAS SEEN THAT THERE IS ACTUALLY NO LOAN TAKEN FROM HIM BUT RS. 2. 5 LAKHS WAS EARLIER ADVANCED BY THE APPELLANT TO HIM,WHICH HAS BEEN REPAID BY HI M DURING THE YEAR UNDER CONSIDERATION. THUS, SAME BEING NOT A LOAN CREDITOR , ADDITION U/S 68 OF I.T. ACT IS NORMALLY NOT WARRANTED. IN ANY CASE, THE APPELLA NT HAS NOW FURNISHED CONFIRMATION PLUS PAN NO. PLUS RESIDENTIAL PROOF PL US AFFIDAVIT AND HAS EVEN FURTHER FURNISHED BANK STATEMENT EVIDENCING REPAYME NT OF ADVANCE EARLIER TAKEN. A.O. HAS ALSO NOT GIVEN ANY ADVERSE COMMENTS ON MER ITS OF THE ADDTIONAL 102 EVIDENCES SO FILED. ACCORDINGLY, ADDITION OF RS. 2. 5 LAKHS, BEING UNWARRANTED, DESERVES TO BE DELETED. IT MAY BE REITERATED THAT IN RESPECT OF AFORESAID ADDITIONS WHICH ARE NOT COMING IN THE PURVIEW OF SECTION 68, THE APPELLANT WAS NOT REQUIRED TO FURNISH CONFIRMATION AS NEEDED IN THE CASE OF CASH CREDITOR S. HENCE, THE ADDITIONAL EVIDENCE BY WAY OF CONFIRMATION, PAN NO, ARE STRICT LY SPEAKING NOT NEEDED IN THE AFORESAID CASES OF JOURNAL ENTRY AND ADVANCE RE PAID. 7.4.5 NOW COMING TO THE REMAINING ENTRIES, FROM P ERUSAL OF THE COMMENTS GIVEN BY THE A.O. AFTER CHECKING AND VERIF YING THE DETAILS, IN HIS REMAND REPORT, IT IS SEEN THAT A.O. HAS NOT GIVEN A NY ADVERSE COMMENTS REGARDING SR. NO. 1- M/S ARAPAN ENTERPRISE- RS. 1 L AKH (PLUSRS. 50,000/- JOURNAL ENTRY), SR. NO. 4 -MOHINI DEVI KHANDELWAL- RS. 1, 2 5,000/-, SR. NO. 7- YADAV TRADERS- RS. 7 LAKHS, SR. NO. 8- SH. TARUN AGARWAL- RS. 9.5 LAKHS, SR. NO. 11- SH. GOPAL LAL JAT- RS. 50,000/-, SR. NO. 12- SMT. SUJAT A MEENA- RS. 10 LAKHS, SR. NO. 13- S. S. GUPTA- RS. 8 LAKHS, SR. NO. 14- SMT. SONA JHALANI- RS. 4 LAKHS, SR. NO. 15- SH. RANJEET SINGH YADAV AND SH. MOHD. SHARIFF - RS. 56.50 LAKHS, SR. NO. 16- SH. RAM NARAYAN YADAV- RS. 4 LAKHS, SR. NO. 18 - RAJIV DUBEY- RS. 1 LAKH, SR. NO. 19- SH.PAWAN SHARMA- RS. 14,000/-, SR. NO. 21- SH. MANOHAR LAL CHOUDHARY- RS. 15.70 LAKHS, SR.NO. 23- LALU RAM JHA LANI- RS. 1,99,000/-, SR. NO. 24- SH. LAXMI KANT SHARMA- RS. 1,30,000/-, SR. NO. 25- SMT. KAUSHALIYA SHARMA- RS. 1 LAKH, SR NO. 26- SH. KAMLESH SHARMA - RS. 4 LAKHS, SR. NO. 27- M/S KESHAV INDUSTRIES- RS. 2 LAKHS. 7.4.6 IN VIEW OF AFORESAID FACTS AND CIRCUSMTNACE S AND CONSIDERING THE REMAND REPORT OF THE A.O. THE ADDITIONS SO MADE IN RESPECT OF AFORESAID ENTRIES ARE HEREBY DELETED. 7.4.7 THUS IN BRIEF, ADDITIONS IN RESPECT OF ALL T HE ENTRIES EXCEPT SR NO.6, 10 & 20, HAVE BEEN DELETED AS ABOVE. 7.4.8 NOW COMING TO ENTRY AT SR. NO. 6, NAMELY SH . DILIP KUMAWAT, IT IS SEEN BY THE UNDERSIGNED THAT A.O. HAS NOT OBJECT ED TO VARIOUS ENTRIES SHOWN IN THE NAME OF SH. DILIP KUMAWAT EXCEPT THE FOLLOWING ENTRIES:- 103 3.5.2007 RS. 1,00,000/- CASH 4.5.2007 RS. 5,00,000/- CASH 17.12.2007 RS. 4,50,000/- CHEQUE 20.12.2007 RS. 6,00,000/- CHEQUE 24.12.2007 RS. 9,50,000/- -DO- 1.3.2008 -DO- -DO- 13.3.2008 RS. 3, 00,000/- -DO- 17.3.2008 -DO- -DO- IT IS SEEN BY THE UNDERSIGNED THAT A.O. HAS RIGHTL Y OBJECTED TO THE EXPLANATION OF SOURCE OF CASH OF RS. 1 LAKH AND RS. 5 LAKH DEPOSIT ED ON 3.5.2007 AND 4.5.2007 RESPECTIVELY, WHICH HAS BEEN STATED TO BE RECEIVED FROM SH. RAKESH GUPTA, WHO HAS IN TURN RECEIVED THE CHEQUE OF RS. 6 LAKHS ON 2.3.0 7 AND WITHDRAWAN THE AMOUNT FROM THE BANK ON THE SAME DATE, IN VIEW OF THE FACT THAT THERE IS GAP OF TWO MONTHS IN THE CASH WITHDRAWAL FROM BANK BY SH. RAKESH GUPT A AND CONTEDED GIVING OF CASH BY HIM TO SH. DILIP KUMAWAT. AS REGARDS ABOVE REMAI NING SIX ENTRIES TOTALING TO RS. 35.50 LAKHS ARE CONCERNED, IT IS SEEN THAT A.O. HAS RIGHTLY NOT ACCEPTED THE EXPLANATION OF SOURCE OF DEPOSIT IN THE BANK ACCOU NT OF SH. DILIP KUMAWAT FROM WHERE CHEQUES HAVE BEEN ISSUED TO APPELLANT. IT IS ADMITTED FACT THAT SH. DILIP KUMAWAT IS BENAMI OF THE APPELLANT. THE SOURCE OF B ANK DEPOSIT IN HIS BANK ACCOUNT TO ENABLE THESE CHEQUES TO BE CLEARED, WAS SHOWN TO BE OUT OF OPENING CASH BALANCE OF SH. DILIP KUMAWAT. HOWEVER, THERE IS NO RECORDED CASH BALANCE OF SH. DILIP KUMAWAT. MOREOVER, IF AT ALL THERE WAS ANY CA SH AVAILABLE WITH HIM, THAT BELONGED TO THE APPELLANT AND SAME REPRESENT THE UN DISCLOSED MONEY OF THE APPELLANT. ACCORDINGLY, I AGREE WITH THE FINDING OF A.O. IN THE REMAND REPORT THAT THE ABOVE AMOUNT OF RS. 35.50 LAKHS HAVE BEEN DEPOS ITED IN CASH ON DIFFERENT DATES BEING THE UNACCOUNTED MONEY OF THE APPELLANT AND LO ANS HAVE BEEN SHOWN THROUGH CHEQUE TO THE APPELLANT. CONSIDERING THESE FACTS AN D CIRCUMSTANCES, THE ADDITION OF RS. 41.50 LAKHS SHOWN AS CASH CREDITS IN THE NAME O F SH. DILIP KUMAWAT IS 104 SUSTAINED AND AS A.O. HAS NOT OBJECTED TO/NOT GIVEN ADVERSE COMMENTS ABOUT THE BALANCE AMOUNT, AFTER VERIFICATION, SAME IS HELD TO BE NOT UNEXPLAINED. 7.4.9 IN THE CASE OF SH. GOPAL LAL SAINI, THE A.O. HAS NOT COMMENTED ADVERSELY ABOUT THE THREE JOURNAL ENTRIES TOTALING TO RS. 63, 49,000/-, AS ALREADY MENTIONED ELSEWHERE IN THE PRECEEDING PARA AND ACCORDINGLY SA ME IS DELETED. REGARDING, OTHER AMOUNT GIVEN IN CASH, THE A.O. HAS OBJECTED ABOUT T HE SAME AS PER HIS COMMENTS MENTIONED IN THE REMAND REPORT AND REPRODUCED ABOVE . I AGREE WITH THE COMMENTS OF A.O. THAT SORUCE OF THESE CASH LOANS ARE NOT EXP LAINED. ACCORDINGLY, ADDITION TO THE EXTENT OF RS. 32, 01,000/- IS SUSTAINED. 7.4.10 AS REGARDS ENTRY IN THE NAME OF SMT. MONIK A SHARMA IS CONCERNED, FROM PERUSAL OF LEDGER ACCOUNT OF MONIKA SHARMA, (AVAIAL BE AT P.B. PAGE 332), IT IS SEEN THAT SAME IS JOURNAL ENTRY PASSED ON 16.5.07, WHERE IN ACCOUNT OF M/S KHANDELWAL BUILDCON PVT. LTD WAS DEBITED AND ACCOUNT OF MONIKA SHARMA WAS CREDITED. LATERON IN F.Y 2008-09 RELELVANT TO A.Y 2009-10, TH E APPELLANT SOLD PLOT NO. 334, GANESH NAGAR BY REGISTERED SALE DEED AND RECEIVED R S. 5 LAKHS CASH AS SALE PROCEEDS ON 29.12.08 AS ALSO MENTIONED IN THE REGIS TERED SALE DEED FURNISHED ON P.B PAGE 334 TO 341. FURTHER THE APPELLANT RECEIVED RS. 6,76,000/- FOR CONSTRUCTION WORK. IN VIEW OF THESE FACTS, I AGREE WITH THE ARGU MENT OF A.R, THAT IT IS NOT THE LOAN CREDITOR AND MOREOVER, DURING THE YEAR UNDER CONSID ERATION, THERE IS NO RECEIPT OF ACTUAL MONEY BUT THERE IS ONLY JOURNAL ENTRY. HENCE , THE PROVSIONS OF SECTION 68 ARE NOT ATTRACTED. IN ANY CASE, THE MONEY HAS BEEN RECE IVED IN F.Y 2008-09 AS SALE PROCEEDS OF THE PLOT NO. 334, GANESH NAGAR AND CONS TRUCTION OVER IT. HENCE, ADDITION OF RS. 11,76,000/- DOES NOT DESERVE TO BE UPHELD IN A.Y 2008-09 AND IS ACCORDINGLY DELETED. 7.5 IN BRIEF, THE ADDITIONS ON ACCOUNT OF CASH CRED IT TO THE EXTENT OF RS 73,61,000/- IS SUSTAINED AND BALANCE ADDITION OF RS 3,13,39,404/- SO MADE BY THE A.O. IS HEREBY DELETED. 8.7 BEFORE US, THE LD. AR HAS FILED THE FOLLOWING S UBMISSIONS 105 THE AO HAD DISCUSSED THIS ADDITION AT PAGES NO.10 & 11 OF THE ASSESSMENT ORDER. IN FACT SUCH ADDITIONS WERE MADE WHILE PASSING ASSESSMENT ORDER U/S 144 OF THE ACT HOLDING THEREIN THAT THE APPELLANT HAD FAILED TO FURNISH ANY SATISFACTORY EXPLANATION IN R ESPECT OF 27 CREDITORS. IN FACT, DURING THE COURSE OF ASSESSMENT PROCEEDINGS T HE APPELLANT WAS PREVENTED BY REASONABLE CAUSE FROM FILING THE REQUI RED DETAILS IN RESPECT OF THESE CREDITORS. BUT IN APPEAL PROCEEDINGS, HE COUL D PROCURE THE REQUIRED DOCUMENTARY EVIDENCES IN RESPECT OF ALL THESE CASH CREDITORS AND SUBMITTED BEFORE THE CIT (A) WITH A REQUEST TO CONSIDER THESE DETAILS AND EVIDENCES UNDER RULE 46A OF THE I.T. RULES, 1962. AFTER AFFOR DING DUE OPPORTUNITY TO THE AO, THE LEARNED CIT (A) HAD ADMITTED THESE ADD ITIONAL EVIDENCES AND ACCEPTED CREDITS IN RESPECT OF 25 CREDITORS FOR RS. 3,13,39,404/-. IN REMAINING TWO CASES OF SVS. DILIP KUMAWAT & GOPAL L AL SAINI, THE LD. CIT (A) HAD ACCEPTED THE DEPOSITS IN PART TO THE EX TENT OF THE FUNDS AS RECEIVED THROUGH A/C PAYEE CHEQUES BUT THE DEPOSITS WORTH RS. 73,61,000/- SHOWN IN CASH WERE TREATED AS UN-EXPLAINED WITHIN THE MEANING OF SECTION 68 OF THE ACT AND ADDITION TO TH IS EXTENT WAS CONFIRMED. WHILE CONFIRMING SUCH ADDITION, THE LEAR NED CIT (A) HAD OVER- LOOKED THE BASIC FACT THAT THE ALLEDGED DEPOSITS UNDER CONSIDE RATION WERE IN THE NAMES OF SVS. DILIP KUMAWAT, AND GOPAL LAL SAINI, WHO HAD ALREADY BEEN ADMITTED BY THE APPELLANT TO BE HIS BENAMIDARS AND ALL THE TRANSACTIONS (INCLUDING THESE DEPOSITS ETC) APPEARING IN THEIR NAMES WERE OWNED BY HIM. IN THE CIRCUMSTANCES , THERE WAS NO VALID REASON FOR THE LEARNED CIT (A) TO MAKE OR CON FIRM FURTHER ADDITION ON ACCOUNT OF ANY DEPOSIT OR TRANSACTION A S NOTED IN THEIR NAMES IN THE BOOKS OF THE APPELLANT. HOWEVER, THE LEARNED CIT (A) DID NOT TAKE NOTE OF THIS VITAL FACT AND PROCEEDED TO CONFIRM THE ADDITION IN PART ON THE PLEA THAT SUCH DEPOSITS WER E APPEARING IN CASH, IMMEDIATE SOURCES OF WHICH WERE NOT EXPLAINED PROPERLY. WHILE ARRIVING AT SUCH CONCLUSION THE LEARNED CIT (A) HAD ALSO IGNORED NUMBER OF VARIOUS OTHER VITAL FACTS RELATING TO THE SE DEPOSITS AS DISCUSSED HEREUNDER: (A) ADDITION OF RS. 41,50,000/- CONFIRMED BY THE CI T(A) OUT OF TOTAL ADDITION OF RS.1,18,15,000/- MADE BY THE AO O N ACCOUNT OF UN- EXPLAINED CASH CREDIT APPEARING IN THE NAME OF SHRI DILIP KUMAWAT (BENAMI OF THE APPELLANT): AS MENTIONED ABOVE, SHRI DILIP KUMAWAT HAD BEEN ADM ITTED TO BE BENAMI OF THE APPELLANT AND ALL THE TRANSACTIONS IN CLUDING CASH DEPOSITS ETC WERE OWNED BY THE APPELLANT. THUS ALL THE FUNDS AS SHOWN IN HIS NAME STOOD ALREADY OWNED BY THE APPELLANT IN THE CASH FL OW STATEMENTS AND WERE TREATED AS THE FUNDS OF THE APPELLANT ONLY. IN THE CIRCUMSTANCES, THE DEPOSITS APPEARING IN NAME OF SHRI DILIP KUMAWAT WO ULD NOT COME IN THE AMBIT OF THE MEANING OF CASH CREDITOR AS SHRI DILIP KUMAWAT IS NOT THE CREDITOR AS TREATED BY THE LEARNED CIT (A) WHILE CONFIRMIN G SUCH 106 ADDITION. AGAIN IT IS INCORRECT TO SAY THAT NO IMM EDIATE SOURCES OF THE CASH DEPOSITS OF RS.41,50,000/- COULD BE EXPLAINED PROPERLY. IN FACT, THE APPELLANT HAD SUBMITTED CASH FLOW STATEMENT IN RESP ECT OF ALL THE BENAMIDARS AS LYING PLACED IN THE PB AT PAGE NO. 206 . ON CAREFUL STUDY OF SUCH CASH FLOW STATEMENTS, IT WOULD BE NOTED THAT A LL THESE FUNDS WERE ROUTED THROUGH SUCH CASH FLOW STATEMENTS ONLY AS PER DETAILED EXPLANATION DISCUSSED BY THE CIT AT PAGES NO. 34 TO 37 OF THE APPEAL ORDER. WHILE TURNING DOWN THE EXPLANATION OF THE APPELLAN T ON THE POINT, THE CIT (A) HAD RELIED UPON THE REMAND REPORT OF TH E AO (DISCUSSED AT PAGE NO. 37 OF THE APPEAL ORDER) WHEREIN THE LD. A O HAD OPINED THAT THE FUNDS OF RS.6 LAC AS CLAIMED TO HAD BEEN RECEIVED B Y THE ALLEGED CREDITOR SHRI DILIP KUMAWAT FROM ANOTHER BENAMIDAR SHRI RAKE SH GUPTA, DID NOT APPEAR TO BE IN ORDER AS SUCH FUNDS WERE RECEIVED B Y SHRI RAKESH GUPTA IN THE MONTH OF MARCH,2007 WHEREAS THESE WERE SHOWN DEPOSITED BY THE CREDITOR WITH THE APPELLANT IN THE MONTH OF MAY,2007 I.E. AFTER THE GAP OF TWO MONTHS . ACCORDINGLY THE LD. AO OPINED THAT DUE TO GAP OF TWO MONTHS , THE FUNDS AS WITHDRAWN BY SHRI RAKESH GUPTA COULD NOT BE RELATED TO THE DEPOSIT AS SHOWN IN THE BOOKS OF THE APPELLANT AND THEREFORE SUCH EXPLANATION COULD NOT BE REGARDED AS SATISFAC TORY. THE LEARNED CIT (A) NODDED SUCH FINDINGS OF THE AO. OBVIOUSLY SUCH FINDINGS ARE UN- REALISTIC AND DEVOID OF MERITS. IN THE GIVEN SET OF CIRCUMSTANCES AND AS PER PRINCIPLES OF THE EVIDENCE ACT, THE INEVITABLE CONCLUSION SHOULD THAT SUCH FUNDS CONTINUED TO BE AVAILABLE WITH THE CONCE RNED PERSON UNTIL AND UNLESS PROVED OTHERWISE WITH DOCUMENTARY EVIDENCE. IN THE PRESENT CASE NO INVESTMENT OR EXPENDITURE WHATSOEVER COULD BE NO TICED BY THE DEPARTMENT IN THE CASE OF SHRI RAKESH GUPTA. THIS F ACT LED TO THE IRRESISTIBLE CONCLUSION THAT THESE FUNDS CONTINUED TO LIE WITH SHRI RAKESH GUPTA, OR IN OTHER WORDS SUCH FUNDS ARE AVAILABLE I N THE HANDS OF THE APPELLANT AS BOTH THE PERSONS DILIP KUMAWAT AND RAK ESH GUPTA ARE BENAMIDAR OF THE APPELLANT. THE DEPARTMENT HAD NO R EASON OR MATERIAL TO QUESTION THE AVAILABILITY OF SUCH FUNDS WITH SHRI R AKESH GUPTA. THUS THE FINDINGS AS ARRIVED AT BY THE LD. CIT (A) ARE ILLOG ICAL. REGARDING BALANCE 6 ENTRIES OF CASH DEPOSITS OF RS. 35,50,000/- THE LEARNED CIT (A) HAD MENTIONED AT PAGE NO. 39 OF TH E APPEAL ORDER ASSESSEE HAS SUBMITTED THAT AMOUNT OF RS.35,50,000 /- HAS BEEN GIVEN OUT OF OPENING CASH BALANCE OF SHRI DILIP KUMAWAT. ASSESSEE HAS NOT SUBMITTED ANY CASH FLOW STATEMENT OF DILIP KUMAWAT WHO IS BENAMI FURTHER IT IS UNVERIFIABLE THE AUTHORITEIS BELOW HAVE INCORRECTLY MENTIONED THAT NO CASH FLOW STATEMENT OF SH. DILIP KUMAWAT WAS SUBMITTED. ON PERUSAL OF THE PAPER BOOK AS SUBMITTE D BEFORE THE CIT (A) YOUR HONORS WOULD NOTE THAT SUCH CASH FLOW STATEMEN T WAS DULY FILED AND SUBMITTED BEFORE THE AUTHORITIES BELOW. THE AUTHORI TIES BELOW HOWEVER FAILED TO LOOK INTO SUCH CASH FLOW STATEMENT AND AR RIVED AT SUCH ILLOGICAL CONCLUSIONS. THE COPY OF SAID CASH FLOW STATEMENT I S ONCE AGAIN SUBMITTED BEFORE YOUR HONORS FOR YOUR KIND PERUSAL AND READY REFERENCE AT PB PAGE 107 NO. 206 . AS PER SUCH CASH FLOW STATEMENT, IT WOULD BE NOTE D THAT SHRI DILIP KUMAWAT HAD OPENING BALANCE OF RS..51,85,561/- OUT OF WHICH THESE DEPOSITS WERE SHOWN BY THE APPELLANT. ON THE FACE O F SUCH DETAILS AND CASH FLOW STATEMENT, THE FINDINGS OF THE AUTHORITIES BEL OW ARE INCORRECT AND DESERVE TO BE QUASHED. (B) ADDTION OF RS.32,01,000/- CONFIRMED BY CIT(A) OUT OF TOTAL ADDITION OF RS.95,51,000/- MADE BY THE AO ON ACCOUN T OF UNEXPLAINED CASH CREDIT APPEARING IN THE NAME OF SHRI GOPAL LAL SAINI (BENAMI OF THE APPELLANT):- THE LD AO HAD MADE ADDITION OF THE ENTIRE CREDIT BA LANCE RS. 95,51,000/- (COPY LYING IN PB AT PAGE NO. 207) AS A PPEARING IN THE NAME OF SHRI GOPAL LAL SAINI (BENAMI OF THE APPELLANT) IN A BSENCE OF THE DETAILS AS DISCUSSED ABOVE. HOWEVER, BEFORE THE LD. CIT (A) T HE APPELLANT COULD PROCURE THE REQUIRED DETAILS AND RELEVANT DOCUMENTS IN SUPPORT OF SUCH DEPOSITS WITH THE REQUEST TO ADMIT THESE UNDER RULE 46A OF I.T. RULES, 1962. AFTER FOLLOWING THE PROPER COURSE AS LAID DOW N IN THE RULES, THE LD. CIT (A) HAD ACCEPTED THESE DETAILS AND EVIDENCES A ND NOTED THAT BULK OF THE CREDIT AMOUNTS WERE INTRODUCED THROUGH ADJUST MENT ENTRIES BARRING CASH DEPOSITS OF RS.32,01,000/-.ACCORDINGLY HE HAD ACCEPTED SUCH ADJUSTMENT ENTRIES. HOWEVER, THE SOURCES OF THE CA SH DEPOSITS WERE TAKEN AS UNSATISFACTORY ON THE BASIS OF THE REMAND REPOR T AS RECEIVED BY THE CIT (A) FROM THE AO STATING THEREIN THAT IN SUPPORT OF THESE DEPOSITS THE ASSESSEE HAD PRODUCED COPIES OF ACCOUNTS AS APPEARI NG IN THE BOOKS OF SHRI TIKAM KHANDELWAL AND SMT GUMAN KHANELWAL AND G OPAL LAL SAINI RESPECTIVELY. AS THESE BOOKS STOOD ALREADY R EJECTED IN THE CASE OF THE APPELLANT, AND ALSO IN THE CASES OF TIKAM KHAND ELWAL & SMT. GUMAN KHANDELWAL, SO THE COPIES OF ACCOUNTS OF T HE PARTY AS APPEARING IN THE BOOKS OF SVS. TIKAM KHANELWAL, & SMT. GUMAN KHANELWAL, AS PRODUCED BY THE APPELLANT IN SUPPORT OF SUCH DEPOSITS WERE UN-VERIFIABLE AND SKETCHY WHICH CANNOT BE RELI ED UPON AND FURTHER GOPAL SAINI BENAMI OF ASSESSEE SHANKAR KHAN DELWAL AS PER THE AFFIDAVIT FILED THE CASH BOOK OF GOPAL LAL SAIN I CANNOT BE RELIED. THE ABOVE ENTRIES MAY NOT BE ACCEPTED. OBVIOUSLY SUCH FINDINGS OF THE AUTHORITIES BELOW AR E FACTUALLY AND LEGALLY INCORRECT FOR THE FOLLOWING REASONS: (I) THE LD. AO & CIT (A) DID NOT SPELL OUT THE REASONS FOR WHICH THE BOOKS WERE REJECTED IN THE CASES OF SHANKARLAL KHAN DELWAL, TIKAM KHANDELWAL AND SMT. GUMAN KHANDELWAL. ON PERUSAL OF THESE BOOKS, IT WOULD BE NOTED THAT SUCH BOOKS WERE PREPA RED ON THE BASIS OF BANK STATEMENTS AND THE SALE AND PURCHASE INSTRUMENTS AND OTHER PAPERS AND DOCUMENTS ETC. THE BOOKS SO PREPAR ED WERE DULY AUDITED BY THE APPROVED CHARTERED ACCOUNTANT. THUS THESE WERE 108 FULLY VERIFIABLE AND SUPPORTED BY THE DOCUMENTS, SO IT IS INCORRECT TO SAY THAT THESE BOOKS WERE NOT WELL SUPPORTED AND VERIFIABLE. WHILE ARRIVING AT SUCH FINDINGS, THE LD. AUTHORITIE S BELOW DID NOT MENTION A SINGLE ITEM OF ENTRY WHICH WAS NOT PROPER LY VERIFIABLE. IN ABSENCE OF ANY SPECIFIC DISCREPANCY OR DEFICIENC Y, THE BOOKS COULD NOT BE REJECTED ON THE GENERAL PLEA THAT THES E WERE NOT PROPERLY VERIFIABLE AND RELIABLE. (II) ON PERUSAL OF THE CASH BOOKS AND THE COPIES OF THE CONCERNED PARTIES, IT WOULD BE NOTED THAT ON THE PARTICULAR D ATES OF DEPOSITS, THE FUNDS WERE VERY MUCH AVAILABLE WITH THE RESPECT IVE PARTIES AND THE IMMEDIATE SOURCES OF SUCH CASH FUNDS WERE ALSO PROP ERLY EXPLAINABLE. EITHER THESE FUNDS WERE WITHDRAWN FROM THE BANKS, OR WERE RECEIVED THROUGH THE INSTRUMENTS ETC . THUS THE IMMEDIATE SOURCES OF SUCH CASH FUNDS COULD NOT BE QUESTIONED BY ANY OF THE AUTHORITIES BELOW . IN ABSENCE OF SUCH AN EXERCISE, THE BOOKS COULD NOT BE REJECTED BY GENERAL OBSERVAT IONS. IN VIEW OF ABOVE DISCUSSIONS, THE ADDITIONS AS MADE AND CONFIRMED BY THE AUTHORITIES BELOW ARE BAD IN LAW AND DESERVE TO BE DELETED. 8.8 THE LD. DR REFERRED TO GROUND NO. 4 AND 5 RAISE D BY THE REVENUE IN THEIR APPEAL. THE DETAILS FILED BY THE ASSESSEE BEF ORE THE LD. CIT(A) WERE NOT SUBJECT TO COMPLETE VERIFICATION, THERE WAS NO REAS ONABLE CAUSE WITH THE ASSESSEE FOR NOT PRODUCING THE EVIDENCE BEFORE THE AO. THE LD. CIT(A) WAS NOT JUSTIFIED IN ADMITTING THE ADDITIONAL EVIDENCES UNDER RULE 46A. BEFORE THE LD. CIT(A), THE ASSESSEE RAISED A PLEA THAT HE COULD NOT FILE THE EVIDENCES BEFORE THE AO ON ACCOUNT OF HIS ILLNESS WHILE NO SU CH PLEA WAS RAISED BEFORE THE AO THAT HE WAS ILL AND NOT ABLE TO PRODUCE THE EVIDENCES. THE ASSESSEE HAS CARRIED ON SUBSTANTIAL BUSINESS DURING THE FINA NCIAL YEAR 2008-09 AND 2009-10. ONCE THE ASSESSEE WAS ABLE TO DO BUSINESS THEN THERE WAS NO REASON OF NOT FILING THE DESIRED EVIDENCES BEFORE THE AO. THE REASON OF HIS ILLNESS IS 109 JUST ALIBI. THE LD. CIT(A) WAS THEREFORE, REQUESTED TO CONFIRM THE ADDITION ON ACCOUNT OF CASH CREDITS OR ALTERNATIVELY THE MA TTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO. 8.9 WE HAVE HEARD BOTH THE PARTIES. THE ASSESSEE BE FORE THE LD. CIT(A) HAS SUBMITTED THAT THE AO NEVER DIRECTED THE ASSESS EE TO FILE THE CONFIRMATION LETTER AS PER NOTICE ISSUED U/S 142(1) / 143(2) DATED 27-08-09, 27-10-09, 12-11-09 AND 4-12-09. WE HAVE PERUSED TH E ORDER SHEET ENTRY IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 20 08-09. THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 17 TH MARCH, 2009 THOUGH THE RETURN WAS DUE ON OR BEFORE OCT 2008. IN RESPONSE TO NOTICES ISSUED I N AUG. 2009 AND SEPT. 09, IT IS NOTICED FROM THE ORDER SHEET THAT NONE ATTEND ED THE PROCEEDINGS THE AO VIDE NOTICE DATED 27 TH OCT. 09 REQUIRED THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNTS ALONGWITH SUPPORTING VOUCHERS. HOWEVER, NO NE ATTENDED THE PROCEEDINGS IN RESPONSE TO THAT NOTICE. FRESH NOTIC E WAS ISSUED AND THE AO REQUIRED THE ASSESSEE TO FURNISH THE FOLLOWING INFO RMATIONS. 1. TO EXPLAIN THE SOURCE OF FUNDS AND INVESTMENT IN PR OPERTY. 2. DETAILS OF CONSTRUCTIONS MADE AND TO GIVE THE SOURC E OF FUNDS WITH SUPPORTING VOUCHERS. 3. THE ASSESSEE WAS REQUIRED TO GIVE CASH FLOW STATEME NT 4. BOOKS OF ACCOUNTS ALONGWITH SUPPORTING VOUCHERS. 110 ON 18 TH NOV. 2009, THE ASSESSEE WAS REQUIRED TO PRODUCE TH E SUPPORTING VOUCHERS IN SUPPORT OF THE CONSTRUCTIONS / SOURCES OF FUNDS. THE AO ISSUED NOTICE ON 7 TH DEC.. 09 AND THE ASSESSEE WAS REQUIRED TO MAKE COM PLIANCE BY THE 10 TH DEC. 2009. ON 22 ND DEC. 2009, IT IS MENTIONED IN THE ORDER SHEET THAT THE ASSESSEE HAS FAILED TO FILE THE CONFIRMATI ONS IN RESPECT OF THE LOANS TAKEN. HENCE, FROM THE RECORDS, IT IS CLEAR THAT TH E ASSESSEE WAS NOT PROVIDED ADEQUATE OPPORTUNITY OF FILING THE CONFIRMATIONS. T HE LD. CIT(A) AFTER CONSIDERING THE FACTUAL POSITION RECORDED THE FINDI NGS THAT ADDITIONAL EVIDENCES CAN BE ADMITTED. THE LD. CIT(A) NOTICED T HAT IN ORDER TO ASCERTAIN THE CORRECT TAX PAYABLE BY THE ASSESSEE, IT WILL BE USEFUL TO CONSIDER THE ADDITIONAL EVIDENCES. THE JUSTICE SHOULD PREVAIL OV ER THE TECHNICALITIES OF THE RULES. WE THEREFORE, FEEL THAT THE LD. CIT(A) WAS J USTIFIED IN ADMITTING THE ADDITIONAL EVIDENCES. THE ONLY GRIEVANCE OF THE AO BEFORE THE LD. CIT(A) WAS THAT THE ASSESSEE FAILED TO FURNISH THE SOURCES OF FUNDS IN SPITE OF NUMBER OF OPPORTUNITIES GIVEN. IT IS NOT THE CASE OF THE REVENUE THAT ADDITIONAL EVIDENCES FILED BY THE ASSESSEE ARE NOT SUFFICIENT TO HOLD THAT NO ADDITION U/S 68 CAN BE MADE. ONCE THE OPPORTUNITY HAS BEEN GIVEN BY THE LD. CIT(A) TO THE AO IN RESPECT OF ADDITIONAL EVIDENCES THEN THE RE IS NO CASE OF SENDING THE MATTER BACK TO THE AO. 111 8.10 THE LD. CIT(A) HAS CONFIRMED THE ADDITION OF R S. 73.61 LACS U/S 68 OF THE I.T. ACT. THE ADDITIONS OF RS. 41.50 HAS BEEN C ONFIRMED IN THE NAME OF SHRI DILIP KUMAWAT AND RS. 32.01 LACS IN THE NAME O F SHRI GOPAL SAINI. THE ASSESSEE IN HIS STATEMENT RECORDED AT THE TIME OF S EARCH ADMITTED VIDE Q.NO. 24 THAT HE HAS PURCHASED THE PROPERTIES IN BENAMI N AME OF SHRI DILIP KUMAWAT AND SHRI RAKESH GUPTA. THE ASSESSEE FILED T HE CASH FLOW STATEMENT IN THE NAME OF SHRI DILIP KUMAWAT AND SHRI GOPAL LA L SAINI. WHEN THE ADJUSTMENT ENTRIES IN THE NAME OF SHRI DILIP KUMAWA T AND SHRI GOPAL LAL SAINI ARE BEING ACCEPTED AS BELONGING TO THE ASSESS EE THEN THE CASH AVAILABLE IN THE CASH FLOW STATEMENT FOR BOTH THE PERSONS WAS AVAILABLE FOR USE BY THE ASSESSEE AND TO BE CREDITED IN HIS BOOKS OF ACCOUNT S. THE SOURCE OF CASH MENTIONED IN CASH FLOW STATEMENT OF BOTH THE PERSON S HAVE NOT BEEN HELD AS NON-GENUINE OR FALSE. CONSIDERING THE CASH FLOW STA TEMENT IN THE CASE OF BOTH THE PERSONS, WE FEEL THAT THE LD. CIT(A) WAS NOT J USTIFIED IN CONFIRMING THE ADDITION TO RS. 73.61 LACS. THUS GROUND NO. 7 OF THE ASSESSEE IS ALLOWED AND GROUND NO. 4 AND 5 OF THE REVENUE ARE DISMISSED . 9.1 GROUND NO. 8 OF THE ASSESSEE IS IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAD LEGALLY AND FACTUALLY ERRED IN C ONFIRMING ADDITION OF RS.2,10,00,000/- ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN THE GLOBAL CITY PROJECT W ITHOUT APPRECIATING THE FACTS OF THE CASE IN RIGHT PERSPEC TIVE AND HEAVILY RELYING ON THE INVALID CONFESSIONAL STATEME NT. 112 THUS THE ADDITION SO CONFIRMED IS BAD IN LAW AND DESERVES TO BE DELETED. 9.2 THE AO HAS REFERRED TO THE STATEMENT OF THE ASSESSE E RECORDED U/S 132(4) OF THE ACT. IN THE STATEMENT, THE ASSESSEE A DMITTED THAT THEY HAVE PAID RS. 2.10 CORES AS CASH IN RESPECT OF LAND PURCHASE D FOR GLOBAL CITY PROJECT. THE AMOUNT PAID SO PAID WAS SURRENDERED AS UNDISCLO SED INCOME. 9.3 BEFORE THE AO, IT WAS SUBMITTED THAT M/S. GOVIN D KRIPAL BUILDMART LTD. PAID A SUM OF RS. 3,81,22,887/- IN CASH ON ACC OUNT OF INVESTMENT IN AGRICULTURAL LAND WORTH RS. 5,66,22,867/-. THE ASSE SSEE PAID A SUM OF RS. 149.58 LACS AS LAND ADVANCE AGAINST ALLOTMENT OF PL OTS OF LAND TO THE COMPANY AND SUCH PAYMENT WAS MADE TO THE COMPANY ON VARIOUS DATES. THE AMOUNT SO ADVANCED IS DISCLOSED IN CASH FLOW STATEM ENT. ACCORDING TO THE AO, THE ASSESSEE HAS FAILED TO ESTABLISH THE SOURCE OF FUNDS AND ACCORDINGLY ADDED A SUM OF RS. 2.10 CRORES IN THE HANDS OF THE ASSESSEE. 9.4 BEFORE THE LD. CIT(A), THE ASSESSEE MADE THE FO LLOWING SUBMISSIONS:- A) THE SCHEME NAMING GLOBAL CITY DOES NOT PERTAIN TO THE ASSESSEE. THIS SCHEME IS OF M/S GOVIND KRIPA BUILDMART PVT LTD I.E. A COM PANY IN WHICH THE ASSESSEE IS ALSO SHAREHOLDER. B) IN THE STATEMENT RECORDED THE ASSESSEE ADMITTED THA T THE CASH OF RS. 1.75 CAROR WAS PAID TO FARMERS AND RS. 35 LACS PAID TO SHRI HANUMA N YADAV FOR MAKING THE PAYMENT TO FARMERS BUT NO WHERE THE ASSESSEE ADMITTED THAT THE SAME MONEY WAS PAID OUT OF HIS OWN UNDISCLOSED INCOME OF THE ASSESSEE. C) THE LAND FOR THE PROJECT NAMING GLOBAL CITY WAS P URCHASED IN THE COMPANY NAMING M/S GOVIND KRIPA BUILDMART PVT LTD THE PROMO TERS OF THE COMPANY WERE 113 SHRI SHANKAR KHANDELWAL, RIDDHI SDDHI INFRA PROJECT S PVT LTD AND SHRI BANWARI LAL YADAV. THIS COMPANY PURCHASED A AGRICULTURE LAND OF RS. 5,72,92,887/- AGAINST WHICH RS. 3,81,22,887/- WAS PAID IN CASH AND THE SAME IS DULY RECORDED IN THE BOOKS OF ACCOUNTS OF THIS COMPANY AND THE SAME ACCEPTED BY A O DURING THE ASSESSMENT PROCEEDING OF THIS COMPANY. FOR MAKING PAYMENT OF R S. 3,81,22,887/- THE FUNDS WAS RECEIVED TO COMPANY FROM FOLLOWING SOURCE: - A) SHRI SHANKAR LAL KHANDELWAL (PLOT BOOKING ADVAN CE) RS. 149.58 LACS B) SHRI BANWARI LAL YADAV RS. 65.00 LACS C) SHRI MADAN SINGH SHEKHAWAT RS. 60.25 LACS D) SHRI SURAJ RAM YADAV RS. 36.00 LACS E) SHRI RAMPAL YADAV RS. 19.00 LACS F) SHRI SHANKHAR KHANDELWAL (SHARE APPLICATION) RS. 18.45 LACS G) SHRI MOHAN LAL KHANDELWAL (SHARE APPLICATION) RS . 13.00 LACS H) KHANDELWAL BUILDING MATERIAL SUPPLIERS RS. 06 .00 LACS I) BOOKING ADVANCE (LIST GIVEN AT THE TIME OF ASSES SMENT) RS. 18.15 LACS TOTAL RS. 385.45 LACS THE CONFIRMATION LETTERS/AFFIDAVITS OF THE ABOVE SA ID PERSONS HAVING COMPLETE ADDRESS, IT PA NO. AND EXPLAINING THE SOURCE OF INVESTMENT S UBMITTED TO AO VIDE LETTER OF AR ENCLOSED AT PB PAGE 65 TO 77 . PLZ REFER THE PARA 1 OF PAGE 74 OF PAPER BOOK IN THIS REGARD. THE ABOVE SOURCE ACCEPTED BY AO WHILE ASSES SMENT PROCEEDINGS OF THIS COMPANY. D) THUS FOR MAKING OF CASH PAYMENT FOR PURCHASES OF LA ND IN THIS COMPANY THE ASSESSEE GAVE RS. 149.58 LACS TO THIS COMPANY AS PL OT BOOKING ADVANCE IN CASH (COPY OF LEDGER AT PB PAGE 408) AND THE SAME IS ALSO DULY RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND THE SAID DEPOSITS ACCE PTED BY AO IN ASSESSMENT PROCEEDING OF THIS COMPANY. E) THE ASSESSING OFFICER TOOK INTERPRETATION OF STATEM ENT OF ASSESSEE AS HIS OWN. IN THE REPLY OF QUESTION THE ASSESSEE NEVER SAID THAT THE ENTIRE PAYMENT OF RS. 2.10 LACS CASH WAS MADE BY THE ASSESSEE HIMSELF. IN THIS CONN ECTION IT IS TO MENTION HERE THAT SEARCH U/S 132 OF THE I. TAX ACT WAS CARRIED OUT AL SO AT THE RESIDENCE PREMISES OF SHRI BANWARI LAL YADAV WHO WAS ALSO ASSESSED WITH THE SA ME AO AND AS PER THE INFORMATION AVAILABLE WITH ASSESSEE SHRI YADAV HAS SURRENDERED ABOVE RS. 65 LACS AS HIS INCOME ON ACCOUNT OF SUM PAID TO THIS COMPANY. F) THE CASH PAYMENT OF RS.149.58 LACS MADE BY THE ASSE SSEE WAS DULY ENTERED IN CASH BOOK OF ASSESSEE WHICH WAS PRODUCED BEFORE AO DURIN G ASSESSMENT PROCEEDINGS. THE LD. AO MENTIONED THAT THE ASSESSEE FAILED TO PRODUC E CAPITAL A/C, DRAWING A/C TO PROVE THE SOURCE OF FUNDS WHILE THE COMPLETE BOOKS OF ACC OUNTS WERE SUBMITTED TO AO AND THE SOURCE OF FUNDS WAS AVAILABLE IN BOOKS OF ACCOU NTS SO PRODUCED. G) NO DEFECT POINTED OUT IN BOOKS OF ACCOUNTS PRODUCED DURING ASSESSMENT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE CAS H BOOK WAS SUBMITTED BEFORE THE A.O. TO VERIFY THE ADVANCE GIVEN TO THIS COMPANY IN CASH. WHILE RECASTING THE BOOKS OF ACCOUNTS, THE ASSESSEE HAS RECORDED THE CORRECT PAYMENTS/AND RECEIPTS IN CHRONOLOGICAL ORDER. THE LEARNED AO HAS MADE SEPARA TE ADDITION FOR THE RECEIPTS WHICH HE FOUND NON-GENUINE (CASH CREDITS), AND SEPA RATE ADDITION FOR THE PAYMENTS WHICH HE FOUND UNDER RECORDED (UNEXPLAINED INVESTME NT IN PLOTS/PROPERTIES- THOUGH 114 RECORDED BUT HE MADE THE ADDITION). THE CASH BOOK I S NOTHING BUT RECORDING OF THE RECEIPTS AND PAYMENTS TRANSACTION IN CHRONOLOGICAL ORDER. THE LEARNED AO REJECTED THE CASH BOOK WITHOUT POINTING OUT SPECIFIC DEFECT IN T HE RECORDING OF RECEIPT OR PAYMENTS IN CASH BOOK. H) THE CASE OF THE ASSESSEE IS COVERED BY THE DECI SION OF THE HONBLE ITAT JAIPUR BENCH IN THE CASE OF SHRI RAJENDRA KR. KEDIA VS. DCIT, 22 TAX WORLD, 506 . WHEREIN HONBLE ITAT JAIPUR BENCH HAVE OBSERVED THA T WHERE THE BOOKS OF ACCOUNT ARE NOT PROPERLY MAINTAINED, THE SAME COULD BE SUBS EQUENTLY PREPARED AND RE-CASTED ON THE BASIS OF HIS BANK STATEMENT, VOUCHERS AND OT HER RELATED DOCUMENTS OF SALES AND PURCHASE WHICH COULD BE RELIED UPON FOR THE PURPOSE OF MAKING THE INCOME TAX ASSESSMENTS. . I) STATEMENTS OF THE ASSESSEE U/S 132(4) OF INCOME TAX ACT THE LD. A.O. HAS MENTIONED THAT THE ASSESSEE HAS SU RRENDERED THIS AMOUNT AS UNEXPLAINED INCOME IN HIS STATEMENT RECORDED U/S 13 2(4) OF INCOME TAX ACT. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E ASSESSEE HAS SUBMITTED BEFORE THE LD AO (PB PAGE 69) THAT THE STATEMENTS BEFORE THE SEARCH WERE MADE UN DER HEAVY MENTAL PRESSURE AND THE SAME WERE RETRACTED IMMEDIA TELY. THE SUBMISSION OF THE ASSESSEE BEFORE THE LD AO WAS AS UNDER:- THE QUERIES RAISED ARE REGARDING ADDITION TO BE MA DE ON THE BASIS OF THE STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF SEARCH. IN THIS CONNECTION BEFORE SUBMITTING THE HEAD/ITEM WISE REPLY REGARDING ALLEG ED 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 FUNCT ION OF HIS NEPHEW ON 15.11. 2007, WHICH LASTED UP TO LATE NIGHT. 3. THE SEARCH WAS STARTED IN THE EARLY MORNING OF 16.11.2007 AND WENT TO CONTINUE CONTINUOUSLY TILL17.11.2007. IN VIEW OF THE ABOVE FACTS IT IS APPARENT THAT THE ASSESSEE NEITHER PHYSICALLY NOR MENTALLY FIT TO UNDERSTAND AND REPLY THE VARIOUS QU ESTIONS ASKED BY THE SEARCH PARTY UNDER DURESS, MENTAL PRESSURE AND TENSE ATMOSPHERE. THUS IT WOULD BE WRONG AND BAD IN LAW TO RELY UPON THE SAID STATEMENT OF THE ASSES SEE RECORDED U/S 132(4) OF THE I.T. ACT, DURING THE COURSE OF SEARCH. IN THIS CONNECTIO N THE ASSESSEE ALSO SUBMITS THAT BECAME TO KNOW ABOUT TOTAL UNDISCLOSED INCOME FROM THE DAILY NEWSPAPERS AND AFTER GOING THROUGH THE NEWS IMMEDIATELY CONTACTED TO THE CONCERNED OFFICERS OF THE INVESTIGATION WING TO SUBMIT AND CLARIFY THAT NO SU CH HUGE AMOUNT OF DISCLOSURE WAS MADE BY ME. BUT NO FRUITFUL RESULTS WERE CAME OUT A ND ACCORDINGLY THE ASSESSEE SENT A WRITTEN REQUEST THAT THE ABOVE SAID ALLEGED HUGE AM OUNT OF UNDISCLOSED INCOME NOT SURRENDERED BY HIM. THEREAFTER REMINDER ON 20.11.20 07 AND 21.11.2007 WAS ALSO SENT. PHOTOCOPY OF THE UPC ACKNOWLEDGMENT AND COPY OF LETTER IS ENCLOSED HEREWITH. FURTHER INCOME HAS BEEN GOT SURRENDERED WITHOUT CON SIDERING THE BORROWINGS FROM 115 VARIOUS BANKS AMOUNTING TO RS.1,586.91 LACS BY THE ASSESSEE, HIS BUSINESS CONCERNS AND HIS FAMILY MEMBERS. THE CASH FLOW CHART HAS BEE N PREPARED AFTER TAKING INTO ACCOUNT SAID PROCEEDINGS. THE SUBMISSIONS ARE VERIF IABLE FROM THE CASH FLOW CHART AND DOCUMENTARY EVIDENCE FILED. IN VIEW OF THE ABOV E FACTS AND SUBMISSION MADE THE ASSESSEE AGAIN SUBMITS THAT THE ALLEGED DISCLOSURE MADE IN THE STATEMENT RECORDED U/S 132(4) OF I.T. ACT IS NOT A RELIABLE ONE IN THE EYE S OF LAW AND NO ADVERSE INFERENCE DESERVES TO BE DRAWN ON THE BASIS OF SAID STATEMENT . RELIANCE IS PLACED ON THE FOLLOWING DECISIONS:- (I) HONBLE APPEX COURT IN PULLANGODE RUBBER PRODU CE CO LTD VS STATE OF KERALA [1973] 91 ITR 18 HAS HELD THAT AN ADMISSION IS AN EXTREMELY IMPORTAN T PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLU SIVE. IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. (II) GARGIDIN JWALA PRASAD VS CIT (1974) 96 ITR 97 (ALL) HELD THAT THE ADDITION MERELY BASED ON STATEMENT O F WITNESSES CANNOT BE MADE. III) CIT VS G.KRISHNAN (1994) 210 ITR 707 MAD. HELD THAT ADDITION CANNOT BE MADE MERELY ON THE BAS IS OF STATEMENTS. IV) ACIT VS ASHOK KUMAR JAIN 32 TW 115 (ITAT JAIPUR ) IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. IN VIEW OF ABOVE SUBMISSION THIS IS TO REQUESTED T HAT THE ADDITION SO MADE BY AO WAS ONLY ON THE BASIS OF STATEMENT RECORDED DURING SEARCH AND THERE IS NOTING ON RECORD TO SHOW THAT THIS AMOUNT IS UNDISCLOSED INCO ME OF THE ASSESSEE, THEREFORE THE HUMBLE APPELLANT PRAY YOUR HONOUR TO DELETE THIS AD DITION OF RS. 2,10,00,000/-. 9.5 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S CONFIRMED THE ADDITION AFTER OBSERVING AS UNDER:- 8.3 I HAVE CONSIDERED THE SUBMISSION OF THE LD. A.R AND HAVE PERUSED THE MATERIAL ON RECORD. IN THE ASSESSMENT ORDER AS WELL AS THE REMAND REPORT. THE BROAD CONTENT OF THE REMAND REPORT OF T HE A.O. IS AS BELOW:- ASSESSEE, AS PER LEDGER ACCOUNT WHICH IS ENCLOSED AS PER ANNEXURE -1, HAS GIVEN CASH OF RS. 1,49,58,000/- TO SHRI GOVIND KRIPA BUILDMART FROM 21 ST OCT., 2007 TO 14 TH NOV., 2007 ON DIFFERENT DATES FROM HIS CASH BOOK. IT HAS BEEN ALREADY SUBMITTED IN THEIR ASSESSMENT ORDER THAT CA SH FLOW FILED BY THE ASSESSEE IS UNVERIFIABLE AND UNRELIABLE AS NO SUPPORTING EVI DENCE IN RESPECT OF 116 ENTRIES/CASH WITHDRAWN WAS SUBMITTED. ASSESSEE HAS FAILED TO PRODUCE CAPITAL ACCOUNT/DRAWING ACCOUNT. ASSESSEE IS THE SHARE HOLD ER AND DIRECTOR IN M/S. GOVIND KRIPA BUILDMART PVT. LTD.. ASSESSEE HAS GIVE N STATEMENT U/S.132(4) STATING THAT FOR GLOBAL CITY PROJECTS FOR PURCHASE OF LAND 220 BIGHAS FOR WHICH CASH PAYMENT OF RS. 1,75,00,000/- MADE TO LANDOWNER S AND FURTHER RS. 35,00,000/- GIVEN TO SHRI HANUMAN YADAV FOR PAYMENT TO FARMERS/LAND OWNERS. THEREFORE A.O. HAS MADE AN ADDITION OF RS. 2,10,00 ,000/ -AS INCOME OF THE ASSESSEE FROM THE UN-DISCLOSED SOURCES FOR WHICH AS SESSEE HAS FAILED TO FILE ANY SATISFACTORY EVIDENCES. THUS ASSESSEE HAS FAILED TO GIVE EVIDENCES OF SOURCE OF CASH PAYMENTS TO THE FARMER. FURTHER IN LEDGER ACCO UNT OF SHRI BHANWARI LAL SEIZED AS PER ANNEXURE A-1 PAGE 11, THERE IS ACCOUN T OF SH. GOVIND KRIPA BUILDMART LTD. (LEDGER ACCOUNT ENCLOSED AS PER ANNE XURE-2) WHICH SHOWS THAT RS.1,65,89,000/- HAS BEEN RECEIVED BY SH. SHABKAR K HANDELWAL ON DATES 01.10.2007 TO 20.10.2007. THE SIGNATURE OF SHANMKAR KHANDWAL HAVE BEEN APPENDED ON THE LEDGER ACCOUNT SHOWING THE RECEIPT OF CASH RS.1,65,89,000/-, THUS THE ARGUMENT OF THE ASSESSEE HAS NO GROUND. 8.4 I HAVE ALSO CONSIDERED THE WRITTEN SUBMISSION OF THE A.R. THE UNDISPUTED FACT ARE THAT THE APPELLANT HAS NOT BEEN MAINTAINING REGULAR BOOKS OF ACCOUNTS. THE BOOKS OF ACCOUNTS OF M/S GOVINDKRIPA BUILDMART PVT. LTD WERE ALSO NOT MAINTAINED REGULARLY. INFACT DURING THE CO URSE OF SEARCH, NO ANY BILLS/VOUCHERS OF THE APPELLANT OF THE COMPANY WERE FOUND. IT IS ADMITTED FACT THAT THE MEMORANDUM OF BOOKS OF ACCOUNTS HAS BEEN P REPARED AFTER THE SEARCH AND SEIZURE OPERATION. ACCORDINGLY, DECISION IN THE CASE OF SH. RAJENDRA KUMAR KEDIA VS. DCIT REFERRED BY THE A.R IS NOT FULLY APP LICABLE IN THE INSTANT CASE, AS IN THE INSTANT CASE NO ANY BOOKS OF ACCOUNTS WERE M AINTAINED. EVEN OTHERWISE, THE MEMORANDUM OF BOOKS OF ACCOUNT SO PREPARED CAN NOT BE RELIED UPON. MORE PARTICULARLY THE CASH FLOW STATEMENT SO FURNISHED I NDICATING INCOMING AND OUTGOING OF THE CASH CAN NOT BE RELIED UPON IN ABSE NCE OF DIRECT INDEPENDENT EVIDENCE OF CASH BEING RECEIVED OR PAID OR IN ABSEN CE OF DIRECT EVIENCE BY WAY OF WITHDRAWALS FROM THE BANK ON THE SAME DATE. IT I S SEEN THAT APPELLANT, DURING THE COURSE OF STATEMENT RECORDED U/S 132(4), HAS AV ERRED THAT FOR ENTERING INTO TRASNSACTION OF PURCHASE OF 220 BIGHA OF LAND FOR GLOBAL CITY PROJECT, RS. 1.75 CRORE WAS PAID IN CASH TO THE AGRICULTURIS T AND FURTHER RS. 35 LAKHS WAS PAID TO SH. HANUMAN YADAV FOR MAKING PAYMENT TO VARIOUS FARMERS. THUS CASH PAYMENT OF RS. 2,10,00,000/- HAS BEEN MAD E AGAINST PURCHASE OF THIS LAND WHICH IS NOT RECORDED IN THE BOOKS OF ACC OUNTS . DURING THE ASSESSMENT PROCEEDINGS ALSO IT HAS BEEN ADMITTED TH AT THE APPELLANT HAS PAID RS. 149.58 LAKHS AS PLOT BOOKING ADVANCE IN THE GLOBAL CITY. THE SOURCE OF THIS AMOUNT HAS BEEN SHOWN TO BE OUT OF CASH BALANCE SHO WN IN MEMORANDUM CASH BOOK, WHICH HAS BEEN NOT ONLY PREPARED AFTER THE SE ARCH AND SEIZURE OPERATION BUT THE ENTRIES IN THAT ARE UNVERIFIABLE AND UNSUPP ORTED BY EVIDENCE AND ACCORDINGLY THE SOURCE OF MONEY SO SHOWN REMAINS TO TALLY UNEXPLAINED. FURTHER THE APPELLANT HAS ALSO SHOWN TO HAVE PAID RS. 18.45 LAKHS AND RS. 13 LAKHS IN HIS NAME AND IN THE NAME OF SH. MOHAN KHANDELWAL, ( FATHER) TO THE COMPANY AS SHARE APPLICATION MONEY, THE SOURCE OF WHICH ALSO R EMAINS UNEXPLAINED, THUS 117 MAKING THE TOTAL UNDISCLOSED INVESTMENT BY WAY OF M ONEY GIVEN BY THE APPELLANT TO THE COMPANY ( WHICH HAS BEEN INVESTED IN PURCHASE OF LAND) COMES TO RS. 181.03 LAKHS, THE ADDITION TO THAT EXTENT DE SERVES TO BE UPHELD. MOREOVER, CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES, WH EREIN THE APPELLANT HAS HIMSELF ADMITTED UNDISCLOSED INVESTMENT MADE IN THE PURCHASE OF LAND OF GLOBAL CITY AMOUNTING TO RS. 2,10,00,000/- AND SURRENDERED THE SAME U/S 132(4) OF I. T. ACT, WHICH IS ALSO SUPPORTED BY THE FACTS AND FIGUR ES MENTIONED HEREINABOVE, I SEE NO REASON TO NOT TO UPHELD THE BALANCE ADDITION ALSO , THEREBY UPHOLDING THE ENTRIRE ADDITION OF RS. 2,10,00,000/- . THE ARGUMENT OF THE A.R THAT THE STATEMENT WAS GIVEN UNDER MENTAL PRESSURE IS LACKIN G ANY MERIT. MOREOVER, THE CONTENDED RETRACTION LETTER SENT UNDER UPC ACKNOWLE DGEMENT IS ALSO NOT EVIDENCED TO BE RECEIVED BY THE INVESTIGATION WING. ACCORDINGLY THIS ARGUMENT OF THE A.R OF THE APPELLANT IS REJECTED. 9.6 BEFORE US, THE LD. AR HAS FILED THE FOLLOWING S UBMISSIONS. IN APPEAL THE ADDITION SO MADE WAS CONTENDED ON T HE FOLLOWING GROUNDS:- (I) FOR THE REASONS AS EXPLAINED HEREINABOVE THE CONFES SIONAL STATEMENT AS RECORDED UNDER ABNORMAL CIRCUMSTANCES WAS NOT LEGAL LY MAINTAINABLE AND CARRIED NO EVIDENTIARY VALUE AS PER NUMEROUS JUDICI AL CITATION RELIED UPON IN THE WRITTEN SUBMISSIONS (LYING IN THE PB 51). IN THE CIRCUMSTANCES, ADDITION MADE ON THE BASIS OF SUCH INVALID CONFESSI ONAL STATEMENT WAS BAD IN LAW AND WAS TO BE DELETED SUMMARILY. (II) THE CONTENTS OF THE SAID STATEMENT WERE NOT APPRECI ATED IN ITS ENTIRETY. ON CAREFUL STUDY OF THIS STATEMENT, IT WOULD BE NOTED THAT THE APPELLANT HAD BEEN EXPLAINING THE NATURE AND SOURCE OF THE INVEST MENT IN THE SAID PROJECT ON BEHALF OF THE CO. M/S GOVIND KRIPA BUILDMART PVT . LTD. JAIPUR ONLY. BUT IN THE CONCLUDING PART OF THE STATEMENT, HE HAD INCLUDED SUCH INVESTMENT IN HIS OWN CASE AND CONFESSED SUCH INVES TMENT FOR NO REASON. THUS THE STATEMENT OF THE APPELLANT ON THE POINT IS SELF-CONTRADICTORY AS REVEALED FROM THE FOLLOWING EXTRACTS OF HIS STATEME NTS: ABSTRACT OF STATEMENT OF SHRI SHANKAR LAL KHANDELWA L TAKEN BY SHRI RAJESH GUPTA ITO ON DATED 16.11.2007 IKZU 10 %& D`IK;K CRK;S FD VKIUS XKWO PDOKY PEIKIQJK ESA FDRUH TEHU [KJHNH GS RFKK ;G TEHU FDRUH JSV ESA [KJHNH XBZZ GS RFKK BLDS FY, VHKH RD FDRUS ISLS FN;S X;S GS A (PAGE NO. 63 OF PB) MRRJ %& GEUS XKWO PDOKY PEIKIQJK ESA 220 CH/KK TEHU D H [KJHN DK LKSNK FD;K GS A ;G TEHU ESLLZ XKSFOUN D`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`IK FCYM EKVZ IZK0 FY0 O JH CUOKJH YKY ;K NO DS CHP DK LK>SNKJH I= GS D`I;K CRK;S FD JH CUOKJH YKY ;KNO }KJK FDRUK ISLK RS; GQVK GS A (PAGE NO. 72 OF PB) MRRJ %& JH CUOKJH YKY ;KNO TEHU DS HKQXRKU DH ,D FR GKBZ JKFK NSXSA FTLESA LS OG ,D DJKSM :0 UDN NS PQDK GS A ABSTRACT OF STATEMENT OF SHRI SHANKAR LAL KHANDELWA L TAKEN BY SHRI RAVINDRA SANDHU ADI (INVT.) II UDAIPUR ON DATED 16.11.2007 IZU 10 ESS VKIDKS ANNEX A 08 FN[KK JGK GWA D`I;K CRK;S BLESA FDL RJG DS FOOJ.K N TZ GS A (PAGE NO. 80 OF PB) MRRJ %& , 08 DKS LACA/K GEKJH XYKSCY FLVH DS FY, [K JHNH TKUS OKYH TEHU LS LACAF/KR DKXTKR DS FY, GS A BL TEHU DS IZKSTSDV DS FY, 220 CH/KK TEHU DK LKS NK FD;K X;K FKK A FTLDS FY, GEUS ,D DJKSM IPGRRJ YK[K :0 UDN FDLKUKSA DKS FN;K RFKK : ISRHL YK [K GUQEKU ;KNO DKS FN;K A FTLUS ;G ISLK FDLKUKSA DKS FN;K A BL IZDKJ GEUS BL TEHU DS ISVS N KS DJKSM NL YK[K :0 DK HKQXRKU FD;K FTLDK BUNZKT GEKJH YS[KK IQFLRDKVKSA ESA UGHA FD;K X;K GS A ;G GEKJH V/KKSF'KR VK; LS FD;K X;K FUOSK GS A IZU 14 %& EASA VKIDKS ANNEX A 19 CRK JGK GWWA D`IK;K BLDS CKJS ESA TKUDKJH FNFT, A (PAGE NO. 81 OF PB) MRRJ %& BLESA GEKJH XYKSCY FLVH LS LACAF/KR FOFHKUU NLRKOST GS A BL FLVH DS FY, BU NLRKOSTKSA ESA FOFH KUU ,XZHESUV BR;KFN 'KKFEY GSA IST LA[;K 35 LS 43 ESA E KS0 'KJHQ] J.KTHR ;KNO] O ESJS CHP LK>SNKJH I= GS A OLRQR% BL LK>SNKJH I= DS VUQLKJ UOECJ 2007 RD CKDH NKS LK>SNKJ BL ;KSTUK ESA :0 NL DJKSM DK FUOSK DJUS OKYS FKS A MUGKSUS 22-10-2007 RD EQ>S : ,D DJKSM IPKL YK[K NS HKH FN;K FKKA FTLESA LS 50 YK[K : DK PSD RFKK :0 ,D DJKSM CASH ESA IZKIR GQVK IJURQ CKN ESA LK>SNKJH [KRE GKSUS DS DKJ.K MDR :IK;K MS< DJKSM :IK;K OKIL DJ FN;K X;K A ORZEKU ESA JH XQIRK TH MN;IQJ OKYS] 'KS[KKOR TH LHDJ OKYS RFKK CUOKJH ;KNO BL IZKSTSDV ESA GEKJS IKVZUJ GSA J H CUOKJH ;KNO US ,D DJKSM :0 UDN] O JH 'KS[KKOR TH US VLLH YK[K :0 UDN FN;S GS A ESA ;GKA IJ ;G HKH DGUK PKGRK GWA ESA ;GKA IJ ;G DGUK PKGRK GWA FD FDLKUKSA DKS OKLRO ESA GEUS :0 2-25 DJKSM DK UDN HK QXRKU FD;K GS A FTLESA LS ,D DJKSM NL YK[K :0 ,XZHESUV DS FNU UDN FN;K X;K A FROM THE READING OF THE ABOVE EXTRACTS, IT WOULD BE APPRECIATED THAT THE APPELLANT HIMSELF WAS NOT CLEAR ABOUT HIS DEPOSITIO N AND WAS NOT AWARE OF THE PROS AND CONS OF THE DEPOSITION AS MADE BY HIM IN THE SAID STATEMENT. AT TIMES HE WAS TALKING ON BEHALF OF THE CO. AND SO ME TIME HE WAS REFERRING TO HIS OWN INVESTMENT. AT ONE POINT, HE A DMITTED HIS INVESTMENT FOR RS. 2.10 CRORE AND OTHER PLACE HE SAID THAT S UCH FUNDS WERE PAID BY THIRD PARTIES I.E. BY SHRI SHEKHAWAT JI RS. 80 LAC AND BANWARI YADAV RS. 1 CRORE ETC. FROM THE READING OF SUCH SELF-CONTRADICTORY STATE MENT IT IS ABUNDANTLY CLEAR THAT THE APPELLANT WAS NOT IN P ROPER FRAME OF MIND AT THE GIVEN POINT OF TIME. MORE-OVER, FACTS AS EXPLAI NED IN THE STATEMENT BEING SELF- CONTRADICTORY IT WAS DIFFICULT TO DEDUC E WHICH PART OF THE STATEMENT WAS CORRECT AND WHICH WAS INCORRECT. (III) AS PER SEIZED MATERIAL AND DOCUMENTS, IT IS SEEN TH AT THE SAID PROJECT WAS LAUNCHED BY THE CO. ONLY AND THE APPELLANT WAS ONE OF THE SHARE-HOLDER 119 ONLY. THUS THE INVESTMENT IN THE SAID PROJECT HAS B EEN CONSIDERED AND ASSESSED IN THE CASE OF CO. ONLY. IN THE CIRCUMSTAN CES, THERE WAS NO APPARENT REASON FOR THE APPELLANT TO CONFESS ANY AD DITIONAL INCOME ON ACCOUNT OF ANY INVESTMENT IN THE SAID PROJECT WHICH WAS BEING CONSIDERED AND ASSESSED SEPARATELY IN THE CASE OF THE COMPANY. OBVIOUSLY CONFESSION MADE ON THIS POINT WAS INCORRECT AND BAD IN LAW. (IV) DURING THE COURSE OF SEARCH OPERATIONS, THERE WERE FOUND AND SEIZED CERTAIN DOCUMENTS VIDE EX. NO.19 IN RESPECT OF WHIC H THE APPELLANT WAS ALSO INTERROGATED AT THE GIVEN POINT OF TIME (THESE DOCUMENTS ARE STILL LYING SEIZED WITH THE DEPARTMENT). AS PER THESE DOCUMENTS , RS. 1,65,89,000/- WERE FINANCED AND ACKNOWLEDGED BY SHRI BANWARI LAL YADAV PER PAGE NO. 11 OF SEIZED ANNEXUREA-1(RECOVERED FROM SH RI BANWARI LAL YADAV). ON THE FACE OF SUCH DOCUMENTARY EVIDENCES, THERE AP PEARED NO REASON FOR MAKING & CONFIRMING ADDITION OF INCOME I N THE HANDS OF APPELLANT, AS THE SAID FUNDS WAS GIVEN BY SHRI BANW ARI LAL YADAV TO THE APPELLANT FOR MAKING PAYMENT TO THE LAND OWNERS. (V) SHRI BANWARI LAL YADAV WAS ALSO SEARCHED U/S 132 OF THE ACT AND HE HAD ALSO MADE CONFESSION OF ADDITIONAL INCOME IN RESPEC T OF THE SAME INVESTMENT. THUS THE INVESTMENT UNDER CONSIDERATION HAD BEEN CONSIDERED IN THE CASE OF SHRI BANWARILAL YADAV. THE RELEVANT EXTRACT FROM THE STATEMENT OF SHRI BANWARILAL YADAV IS RE-PRODUCED H ERE-UNDER FOR READY REFERENCE: IZ'U & 16 ESA VKIDKS VKIDS BUSINESS PREMISES LS IZKIR O TIR ANN A-1 FN[KK JGK GWA TKS FD ,D MK;JH GS A D`I;K CRKBZ;S BLESA FDL IZ DKJ DS FOOJ.K NTZ GS A (PAGE NO. 89 OF PB) MRRJ & MRRJ & MRRJ & MRRJ & BL MK;JH ESA GEKJS FOFHKUU IZKSIVHZT ------------- IST 11 IJ JH XKSFOUN D`IK IST 11 IJ JH XKSFOUN D`IK IST 11 IJ JH XKSFOUN D`IK IST 11 IJ JH XKSFOUN D`IK FCYM EKVZ IZK0 FY0 DK FGLKC GSA ESUS BL DEIUH DH FCYM EKVZ IZK0 FY0 DK FGLKC GSA ESUS BL DEIUH DH FCYM EKVZ IZK0 FY0 DK FGLKC GSA ESUS BL DEIUH DH FCYM EKVZ IZK0 FY0 DK FGLKC GSA ESUS BL DEIUH DH GLOBAL SCHEME DS FY, DS FY, DS FY, DS FY, RS. 1 11 1- -- -65 65 65 65 DJKSM :IK;S JH 'KADJ [K.MSYOKY DKS FN;S F DJKSM :IK;S JH 'KADJ [K.MSYOKY DKS FN;S F DJKSM :IK;S JH 'KADJ [K.MSYOKY DKS FN;S F DJKSM :IK;S JH 'KADJ [K.MSYOKY DKS FN;S FKS FTLDK F GLKC IST & 11 IJ FY[KK GQVK GS A KS FTLDK FGLKC IST & 11 IJ FY[KK GQVK GS A KS FTLDK FGLKC IST & 11 IJ FY[KK GQVK GS A KS FTLDK FGLKC IST & 11 IJ FY[KK GQVK GS A (VI) THE CASH BOOK / THE SO CALLED CASH FLOW STATEMENT H AD BEEN RUBBISHED WITHOUT POINTING OUT ANY DEFECT OR DEFICIENCY WITH GENERAL OBSERVATIONS THAT THESE WERE NOT PROPERLY VERIFIABLE AND RELIABL E. (VII) LASTY, THE AO HAD INCORRECTLY MENTIONED THAT NO CAP ITAL A/C AND DRAWING ACCOUNT OF THE APPELLANT WAS SUBMITTED. SUCH CAPITA L A/C AND DRAWING ACCOUNT WERE DULY SUBMITTED BEFORE HIM AND AGAIN SU BMITTED WITH CIT (A) ALSO. 9.7 ON THE OTHER HAND, THE LD. DR HAS SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. IT WAS SUBMITTED THAT THE ASSESS EE AT THE TIME OF SEARCH 120 ADMITTED THAT CASH PAYMENT REPRESENTED AS UNDISCLOS ED INCOME. IT WAS THEREFORE, SUBMITTED THAT THE LD. CIT(A) WAS JUSTIF IED IN CONFIRMING THE ADDITION OF RS. 2.10 CRORES. 9.8 WE HAVE HEARD BOTH THE PARTIES. M/S. GLOBAL CIT Y PROJECT WAS A JOINT VENTURE PROJECT BETWEEN COMPANY NAMELY M/S. GOVIND KRIPA BUILDMART (P) LTD. AND SHRI BANWARI LAL YADAV. SUBSEQUENT THERE W AS AN AGREEMENT BETWEEN THE COMPANY AND MOHD. SHARRIF , RANJEEV YA DAV AND THE ASSESSEE. SHRI MOHD. SHARIF AND SHRI RANJEEV YADAV BACKED OUT FROM THE PROJECT. IT WAS POINTED OUT THAT THE PROJECT WAS IN JOINT VENTU RE INCLUDING THE COMPANY, GUPTA JI OF UDAIPUR, SHEKHAWAT JI OF SIKAR AND BANW ARI YADAV. SHRI BANWARI LAL YADAV GAVE CASH OF RS. 1.00 CRORE AND S HRI SHEKHAWAT GAVE CASH OF RS. 80.00 LACS. THE SEARCH OPERATION WAS AL SO CARRIED OUT AT THE PREMISES OF THE SHRI BANWARI LAL YADAV AND DURING T HE COURSE OF SEARCH, THE DIARY WAS FOUND IN WHICH IT WAS MENTIONED THAT A SU M OF RS. 1.65 CRORE HAS BEEN HAS PAID BY SHRI BANWARI LAL YADAV TO M/S. GOV IND KRIPA BUILDMART (P) LTD. IT IS CLEAR THAT THE PROJECT BELONGED TO THE COMPANY AND NOT TO THE ASSESSEE. THE ASSESSEE PURCHASED CERTAIN PLOTS FROM THE COMPANY. THE PAYMENTS, IF ANY, HAVE BEEN MADE BY THE COMPANY AND IN CASE THERE ARE PAYMENTS OUTSIDE THE BOOKS OF ACCOUNTS THEN ADDITIO N IS REQUIRED TO BE MADE IN THE CASE OF THE COMPANY AND NOT IN THE HANDS OF THE ASSESSEE. WE 121 THEREFORE, FEEL THAT THE LD. CIT(A) WAS NOT JUSTIFI ED IN CONFIRMING THE ADDITION OF RS. 2.10 CRORES. 10.1 GROUND NO.9 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.10,61,000/- ON ACCOUNT OF ALLEGED UNEXPLAINED CASH DEPOSITS IN THE BANK ACCOUNT OF SHRI DILIP KUMAWAT, SHRI GOPAL SAINI AND SHRI RAKESH GUPTA OUT OF TOTAL ADDITION O F RS.83,91,000 AS MADE BY THE AO UNDER THIS HEAD WITHOUT APPRECIATING THE FACTS OF THE CASE IN RIGHT PERSPECTIVE. AS THE ADDITION SO CONFIRMED IS BAD IN LAW SO THE SAME DESERVES TO BE DELETED. 10.2 THE REVENUE IN GROUND NO. 6 IS AGGRIEVED IN RE DUCING THE ADDITION OF RS. 10.61 LACS AS AGAINST RS. 83.91 LACS MADE BY TH E AO. 10.3 THE AO DURING THE COURSE OF ASSESSMENT ORDER N OTICED THAT THE ASSESSEE HAS BEEN MAKING PURCHASES AND SALE CONSIDE RATION IN THE NAME OF SIX PERSONS. THERE ARE BANK ACCOUNTS IN THE NAME OF SIX PERSONS. THE PERUSAL OF THE BANK STATEMENT OF BENAMI PERSONS SHOWED THE CASH DEPOSIT OF RS. 83.91 LACS. THE ASSESSEE HAS NOT GIVEN ANY SATISFAC TORY EXPLANATION AND THEREFORE, THE AO ADDED A SUM OF RS. 83.91 LACS. 1-.4 BEFORE THE LD. CIT(A) THE ASSESSEE HAS MADE TH E FOLLOWING SUBMISSIONS A) THE A.O. HAS MADE THE ADDITION IN THE FOLLOWING NAMES FOR THE TRANSACTIONS MADE OF BANKS IN F.Y. 2007-08 RELEVANT FOR THE ASSESSMEN T YEAR 2008-09:- 122 NAME OF THE PERSONS BANK & A/C NO. CASH DEPOSITED AS PER AO ACTUAL CASH DEPOSITED DILIP KUMWAT BANK OF BARODA 20,50,000 6,00,000 (CHEQUE OF RS. 9,50,000+5,00,000) RECEIVED FROM GUMAN KHANDELWAL ALSO ADDED TREATING THE SAME AS CASH DEPOSITED DILIP KUMAWAT SBBJ 01190012467 51014106649 29,97,500 29,97,500 DILIP KUMAWAT UCO BANK 9,70,000 9,90,000 GOPAL SAINI BANK OF BARODA 73,500 73,500 RAKESH GUPTA UCO BANK 23,00,000 18,00,000 (CHEQUE OF RS. 5,00,000/- RECEIVED FROM SUNIL FURNITURE ALSO ADDED TREATING THE SAME AS CASH DEPOSITED) B) THE SOURCE OF CASH DEPOSITED IN BANK ACCOUNT OF ABOVE NAMED PERSONS IS AS UNDER: - NAME OF PERSON BANK A/C DATE OF DEPOSIT AMOUNT SOURCE DILIP KUMAWAT (COPY OF CASH BOOK AT PB PAGE 416/II) BANK OF BARODA 13.03.08 6,00,000 OUT OF OPENING CASH BALANCE (CASH BOOK PAGE NO. 416/II AND PREVIOUS YEAR CASH BOOK PAGE NO. 419 TO 420/II) RS. 6,00,000/- DEPOSITED IN CASH BY SHRI KUMAWAT IN BOB. FURTHER THIS AMOUNT WAS UTILIZED FOR GIVING ADVANCE TO SHRI SHANKAR KAHNDELWAL AND THE SAME ADVANCE HAS BEEN ADDED AS INCOME OF THE ASSESSEE TREATING THE SAME UNEXPLAINED. TOTAL 6,00,000 DILIP KUMAWAT (COPY OF CASH BOOK AT PB PAGE 416/II) SBBJ 29.06.07 15,000 OUT OF OPENING CASH BALANCE (CASH BOOK PAGE NO. 416/II AND PREVIOUS YEAR CASH BOOK PAGE NO. 419 TO 420/II) 04.07.07 10,000 -DO- 31.07.07 17,000 -DO- 06.08.07 1,500 -DO- 10.07.07 2,200 -DO- 30.08.07 15,000 -DO- 01.09.07 1,500 -DO- 10.09.07 2,300 -DO- 01.10.07 20,000 -DO- 05.11.07 1,000 -DO- 123 12.11.07 5,000 -DO- 10.12.07 3,000 -DO- 17.12.07 4,00,000 OUT OF OPENING CASH BALANCE (CASH BOOK PAGE NO. 416/II AND PREVIOUS YEAR CASH BOOK PAGE NO. 419 TO 420/II). FURTHER THIS AMOUNT WAS UTILIZED FOR GIVING ADVANCE TO SHRI SHANKAR KAHNDELWAL AND THE SAME ADVANCE HAS BEEN ADDED AS INCOME OF THE ASSESSEE TREATING THE SAME UNEXPLAINED. 20.12.07 6,00,000 -DO- 24.12.07 9,50,000 -DO- 12.02.08 4,000 OUT OF OPENING CASH BALANCE (CASH BOOK PAGE NO. 416/II AND PREVIOUS YEAR CASH BOOK PAGE NO. 419 TO 420/II) 01.03.08 9,50,000 OUT OF OPENING CASH BALANCE (CASH BOOK PAGE NO. 416/II AND PREVIOUS YEAR CASH BOOK PAGE NO. 419 TO 420/II). FURTHER THIS AMOUNT WAS UTILIZED FOR GIVING ADVANCE TO SHRI SHANKAR KAHNDELWAL AND THE SAME ADVANCE HAS BEEN ADDED AS INCOME OF THE ASSESSEE TREATING THE SAME UNEXPLAINED. TOTAL 29,97,500 DILIP KUMAWAT (COPY OF CASH BOOK AT PB PAGE 416/II) UCO BANK 24.10.07 9,50,000 THE PERSON WITHDRAWN RS. 9,50,000/- FROM HIS BANK ACCOUNT ON 23.10.07 WHICH WAS RECEIVED TO HIS FROM GOVIND KRIPA BUILDMART AND THE SAME DEPOSITED BACK IN BANK AC/ ON 24.10.07. COPY OF BANK STATEMENT AT PB PAGE 438/II. 05.03.08 40,000 OUT OF OPENING CASH BALANCE (CASH BOOK PAGE NO. 416/II AND PREVIOUS YEAR CASH BOOK PAGE NO. 419 TO 420/II). TOTAL 9,90,000 GOPAL SAINI (COPY OF CASH BOOK AT PB PAGE 459 TO 460/II) BANK OF BARODA ON VARIOUS DATES 73,500 OUT OF OPENING CASH BALANCE OF RS. 3,96,100/-. COPY OF CASH BOOK ENCLOSED AT PB PAGE 459 TO 460/II) TOTAL 73,500 RAKESH GUPTA UCO BANK 24.10.07 9,50,000 THE PERSON WITHDRAWN CASH RS. 9,50,000/- FROM BANK ACCOUNT ON 23.10.07 AND THE SAME DEPOSITED BACK IN BANK ON 24.10.07. THE COPY OF BANK 124 STATEMENT AT PB PAGE 446/II. 27.10.07 8,50,000 TOTAL 18,00,000 FROM THE ABOVE IT IS CLEAR THAT THE CASH WAS DEPOSI TED FROM EXPLAINED SOURCES, THEREFORE THE ADDITIONA MAD BY AO IS UNJUSTIFIABLE AND DESERV E TO BE DELETED. 10.5 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE REDUCED THE ADDITION TO RS. 10.61 LACS AFTER OBSERV ING AS UNDER:- 9.2 I HAVE CONSIDERED THE SUBMISSION OF THE LD. A.R, REMAND REPORT OF THE A.O AND THE MATERIAL AVAILABLE ON RECORD. THE DETAILS FURNISHED WERE SEEN AND CHECKED BY THE A.O. AND ALS O BY THE UNDERSIGNED. THE FACTS MENTIONED BY THE A.R AT TABLE (A) WERE FO UND CORRECT THAT ACTUAL CASH DEPOSIT IN THE BANK OF BARODA ACCOUNT OF SH. D ILIP KUMAWAT IS ONLY RS. 6 LAKH, AS AGAINST RS. 20,50,000/- TAKEN BY THE A.O. (CHEQUE OF RS. 9.5 LAKH + RS. 5 LAKH RECEIVED FROM SH. GUMAN KHANDELWA L WAS MISTAKENLY CONSIDERED BY A.O AS CASH DEPOSIT.) SIMILARY, ACTUA L CASH DEPOSIT IN UCO BANK ACCOUNT OF SH. RAKESH GUPTA IS RS. 18 LAKHS AS AGAINST RS. 23 LAKHS TAKEN BY A.O. 9.2.1 NOW COMING TO THE SOURCE OF CASH DEPOSIT IN THE VARIOUS AFORESAID BANK ACCOUNT OF THESE BENAMI PERSONS, IT IS SEEN THAT FROM THESE BANK ACCOUNTS, THE ENTRY OF CASH CREDIT HAS BEEN GI VEN EITHER BY GIVING CHEQUE TO THE APPELLANT OR BY GIVING CASH (AFTER WI THDRAWING IT FROM BANK) IN AS FAR AS BIGGER AMOUNTS ARE CONCERNED, WHICH IS AL READY BEEN ADDED BY THE A.O. AS PART OF UNEXPLAINED CASH CREDIT IN THESE NA MES. THE UNDERSIGNED HAS ALSO CONFIRMED THE ADDITION UNDER THE HEAD UNEXPLAI NED CASH CREDIT IN RESPECT OF FOLLOWING AMOUNT:- SH. DILIP KUMAWAT BANK OF BARODA 13.3.08 RS. 6 LAKH S -DO- SBBJ 17.12.07 RS. 4 LAKHS (RS. 4.5 LAKHS SHOWN AS CREDIT ALREADY UPHE LD) -DO- -DO- 20.12.07 RS. 6 LAKH -DO- -DO- 24.12.07 RS.9, 50,000/- 125 -DO- -DO- 1.3.08 RS. 9,50,000/- OBVISOUSLY, THE SOURCE OF CASH DEPSOIIT SO SHOWN TO BE OUT OF OPENING CASH BALANCE IS REJECTED AND IT IS HELD THA T THESE CASH DEPOSITS IN THE BANK ARE UNEXPLAINED AND REQUIRES TO BE ADDED. HOWE VER, AS SIMILAR AMOUNTS HAVE ALREADY BEEN ADDED AS UNEXPLAINED CASH CREDIT IN THE NAME OF SH. DILIP KUMAWAT AND WHICH HAVE ALREADY BEEN UPHELD BY ME, T HESE ARE DIRECTED TO BE NOT SEPARATELY AND DOUBLY ADDED. 9.2.2 SUBMISSION OF A.R REGARDING CASH DEPOSIT I N THE UCO BANK ACCOUNT OF SH. DILIP KUMAWAT OF RS. 9.5 LAKHS ON 24 .10.07 AND SIMILAR CASH DEPOSIT OF RS. 9.5 LAKHS ON 24.10.07 IN UCO BANK OF SH. RAKESH GUPTA WAS FOUND CORRECT BY THE A.O. AND BY THE UNDERSIGNED. A CCORDINGLY, ADDITION TO THE EXTENT OF RS. 19 LAKHS IS HEREBY DELETED. 9.2.3 THE EXPLANATION OF OTHER CASH DEPOSIT GIVEN BY THE APPELLANT, BEING OUT OF OPENING CASH BALANCE, IS NOT ACCEPTABL E IN VIEW OF THE FACT THAT NO REGULAR CASH BOOK OF THESE PERSONS AS WELL AS TH E APPELLANT HIMSELF ARE MAINTAINED AND THE MEMORANDUM OF CASH BOOK OF THE A PPELLANT SO PREPARED AFTER THE DATE OF SEARCH HAS ALREADY BEEN HELD TO B E UNRELIABLE. TOTAL OF SUCH CASH DEPSITS IN THE BANK ACCOUNT OF AFORESAID PERSO NS AS PER THE CHART ABOVE COMES TO RS. 2,11,500/- AND THE ADDITION TO THIS EX TENT IS UPHELD. FURTHER, RS. 8,50,000/- DEPOSITED ON 27.10.07 IN UCO BANK ACCOU NT OF SH. RAKESH GUPTA IS ALSO HELD AS UNEXPLAINED IN VIEW OF NO SPE CIFIC SUBMSISION AND ADDITION IS CONFIRMED. 9.3 IN BRIEF, TOTAL ADDITION OF RS. 10,61,000/- ARE SUSTAINED AND BALANCE ADDITION OF RS. 73, 30,000/- IS DELETED. 10.6 DURING THE COURSE OF PROCEEDING BEFORE US, THE LD. AR HAS FILED THE FOLLOWING SUBMISSIONS. IN APPEAL, HAVING CONSIDERED THE DETAILED WRITTE N SUBMISSION (AS LYING IN THE PB) THE CIT (A) HAD GIVEN CREDIT OF THE CASH WI THDRAWALS APPEARING IN THESE 126 BANK ACCOUNTS AND ALSO THE DEPOSITS SHOWN THROUGH C HEQUES OR BY TRANSFER ETC. NO CREDIT WAS HOWEVER GIVEN FOR CASH DEPOSITS ON THE P LEA THAT THE CASH BOOKS AS PRODUCED IN SUPPORT OF SUCH CASH DEPOSITS WERE REJE CTED BEING UN-VERIFIABLE AND UN-RELIABLE . ACCORDINGLY CONFIRMED THE FOLLOWING ADDITIONS ON THIS PLEA: 1. SHRI DILIP KUMAWAT RS. 1,38,000/- 2. SHRI GOPAL LAL SAINI RS. 73,500/- 3. SHRI RAKESH GUPTA RS. 8,50,000/- FROM THE ABOVE DISCUSSIONS, IT WOULD BE NOTED THAT THE AUTHORITIES BELOW HAVE TURNED DOWN THE CLAIM OF THE APPELLANT ON THE LONE PLEA THAT THE BOOKS BEING UNVERIFIABLE AND UNRELIABLE COULD NOT BE CONSIDERED IN SUPPORT OF SUCH EXPLANATION. APPARENTLY SUCH FINDINGS ARE DEVOID OF MERITS AND WITHOUT ANY MATERIAL ON RECORD SHOWING AS TO HOW 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 AND INSTRUMENTS OF SALE AND PUR CHASE OF THE PROPERTIES. ON THE FACE OF SUCH DOCUMENTARY EVIDENCES, TREATING SUCH B OOKS AS UNVERIFIABLE AND UN- RELIABLE WOULD SOUND TO BE RIDICULOUS; PARTICULARLY WHEN NO SPECIFIC INSTANCE OF ANY UNVERIFIABLE AND UNRELIABLE ENTRIES IS FORTH-CO MING. APPARENTLY SUCH FINDINGS ARE FACTUALLY AND INCORRECT AND DESERVE TO BE QUASH ED AND THE ADDITION SO CONFIRMED BY THE LD. CIT (A) NEED TO BE DELETED. 10.7 ON THE OTHER HAND, THE LD. DR SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW. 10.8 WE HAVE HEARD BOTH THE PARTIES. THE ASSESSEE H AS BEEN PURCHASING AND SELLING THE PROPERTY IN THE NAME OF BENAMI PERSONS. THE ASSESSEE FILED THE CASH FLOW STATEMENT OF THESE PERSONS. THE RECEIPT O F CASH IN THE CASH FLOW STATEMENT IS FROM THE WITHDRAWAL FROM THE BANKS OR FROM THE SALE OF PROPERTY. IN CASE THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNTS THEN THE ASSESSEE CAN PREPARE CASH FLOW STATEMENT OR MEMORAN DUM OF BOOKS OF ACCOUNTS IN ORDER TO EXPLAIN THE AVAILABILITY OF FU NDS. ONCE THE DETAILS ARE PREPARED AND PRODUCED BEFORE THE REVENUE AUTHORITIE S THEN THE REVENUE 127 AUTHORITIES MAY ASK THE ASSESSEE TO EXPLAIN. IN CAS E CERTAIN ENTRIES CANNOT BE EXPLAINED THEN THE ADDITION CAN BE MADE. SUCH MEMOR ANDUM OF BOOKS OF ACCOUNTS HAS BEEN HELD AS UNRELIABLE BECAUSE THE SA ME HAVE BEEN PREPARED AFTER THE DATE OF SEARCH. IF THE BOOKS OF ACCOUNTS WERE NOT EARLIER MAINTAINED THEN THE ONLY RECOURSE IS LEFT WITH THE ASSESSEE TO PREPARE THE MEMORANDUM OF BOOKS OF ACCOUNTS AND SUCH EXERCISE CANNOT BE FA ULTED. IT IS TRUE THAT REVENUE HAS EVERY RIGHT TO ASK THE ASSESSEE TO EXPL AIN EACH AND EVERY ENTRIES APPEARING IN SUCH MEMORANDUM OF BOOKS OF ACCOUNTS. ONCE THE ASSESSEE HAS BEEN ABLE TO EXPLAIN THE CASH FLOW STATEMENT IN RES PECT OF THE PERSONS IN WHOSE NAME, HE HAS OPENED THE BANK ACCOUNTS AND MAD E THE TRANSACTIONS THEN THE DEPOSITS IN THE BANK FROM CASH FLOW STATEM ENT ARE TO BE TREATED AS EXPLAINED. THUS THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 10.61 LACS . HENCE, GROUND NO. 9 OF THE ASSE SSEE IS ALLOWED WHILE GROUND NO. 6 OF THE REVENUE IS DISMISSED. 11.1 GROUND NO. 10 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 128 TAKING CARE OF TELESCOPING THEORY, OR FOLLOWING A UNIFORM METHOD OF WORKING OF THE INCOME OF THE APPELLANT. IN APPEAL PROCEEDINGS, THE LEARNED CIT (A) HAD DEALT WITH THIS GROUND OF APPEAL HALF- HEARTEDLY VIDE PARA NO.11.2 WITHOUT GIVING ANY SPECIFIC FINDING ON THE POINT. IN THE CIRCUMSTANCES , THE LD AO COULD NOT GIVE ANY APPEAL EFFECT ON THIS GROUND. AS THE FINDINGS OF THE 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 JUDICIAL CITATIONS. IN TH E INTEREST OF EQUITY AND NATURAL JUSTICE, WE PRAY THE HONORABLE MEMBERS TO COMPUTE OUR 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. 11.2 THIS IS A GENERAL GROUND OF APPEAL. IN THE WRI TTEN SUBMISSION OF THE LD. AR , HAS SUBMITTED THAT BENEFIT OF TELESCOPING THEO RY SHOULD BE GIVEN IN ALL THE APPEALS PERTAINING TO THIS GROUP. THERE IS NO S PECIFIC GROUND OF APPEAL IN RESPECT OF TELESCOPING IN THE INSTANT APPEAL. HEN CE, THE GROUND OF APPEAL NO. 10 OF THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. 12.1 THE 7 TH GROUND OF APPEAL FILED BY THE REVENUE IS GENERAL A S THERE IS NO SPECIFIC ISSUE OF ALLOWING SET OFF OF SUPPRESSED SA LE CONSIDERATION AS AGAINST AVAILABILITY OF UNACCOUNTED MONEY. 12.2 BEFORE PARTING THIS APPEAL, IT IS MENTIONED TH AT THE ASSESSEE IN ASSESSEE IN HIS WRITTEN SUBMISSION HAS STATED THAT NO ADDITI ON CAN BE MADE BECAUSE 129 THERE HAS BEE NO INCRIMINATING DOCUMENTS FOUND DURI NG THE COURSE OF SEARCH. THIS ISSUE IS ACADEMIC BECAUSE THE ASSESSMENT FOR ASSESSMENT YEAR 2008-09 IS A REGULAR ASSESSMENT AFTER THE SEARCH AS SEARCH TOOK PLACE IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATIO N. HENCE, IT IS A CASE OF REGULAR ASSESSMENT MADE U/S 153A AND IT IS NOT CASE OF RE-ASSESSMENT. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. 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 SHAKAR LAL 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.392/JP /11) A.R, ITAT, JAIPUR