PRADEEP AGARWAL, Jaipur V. ACIT, Alwar

ITA 395/JPR/2013

• Counselvise Citation: 39523114 RSA 2013
• Duration Of Justice: 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 11-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K KHANDELWAL
• Assessee Lawyers: S L PODDAR
• Keywords: Bogus purchase; Gift; Income from undisclosed sources; Search and seizure; Salary income; Document seized; Peak credit; Additional evidence; Corroborative evidences; Accommodation entries; Block assessment; Retraction; Documents seized
• Section: 143(3); 133A; 153A; 132; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR ( BEFORE SHRI HARI OM MARATHA AND SHRI N.K. SAINI ) ITA NOS. 395/JP/2013 ASSESSMENT YEAR: 2005-06 PAN: AGGPA 0279 A SHRI PRADEEP AGARWAL VS. THE DCIT 5/2, PUNJABI BAGH EXTN CENTRAL CIRCLE CLUB ROAD, DELHI ALWAR (APPELLANT) (RESPONDENT) ITA NO. 590/JP/2013 ASSESSMENT YEARS: 2005-06 PAN: AGGPA 0279 A THE ACIT VS. SHRI PRADEEP AGARWAL CENTRAL CIRCLE 5/2, PUNJABI BAGH EXTN ALWAR CLUB ROAD, DELHI (APPELLANT) (RESPONDENT) ITA NOS. 396/JP/2013 ASSESSMENT YEAR: 2008-09 PAN: AGGPA 0279 A SHRI PRADEEP AGARWAL VS. THE DCIT 5/2, PUNJABI BAGH EXTN CENTRAL CIRCLE CLUB ROAD, DELHI ALWAR (APPELLANT) (RESPONDENT) ITA NO. 98/JP/2013 ASSESSMENT YEARS: 2007-08 PAN: AGGPA 0279 A SHRI PRADEEP AGARWAL VS. THE DCIT 5/2, PUNJABI BAGH EXTN CENTRAL CIRCLE CLUB ROAD, DELHI ALWAR (APPELLANT) (RESPONDENT) 2 ITA NO. 397/JP/2013 ASSESSMENT YEAR: 2009-10 PAN: AGGPA 0279 A SHRI PRADEEP AGARWAL VS. THE DCIT 5/2, PUNJABI BAGH EXTN CENTRAL CIRCLE CLUB ROAD, DELHI ALWAR (APPELLANT) (RESPONDENT) ITA NO. 591/JP/2013 ASSESSMENT YEARS: 2009-10 PAN: AGGPA 0279 A THE ACIT VS. SHRI PRADEEP AGARWAL CENTRAL CIRCLE 5/2, PUNJABI BAGH EXTN ALWAR CLUB ROAD, DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.L. PODDAR DEPARTMENT BY : SHRI A.K. KHANDELWAL DATE OF HEARING : 16.01.2014. DATE OF PRONOUNCEMENT : 05.03.2014 ORDER PER HARI OM MARATHA, J.M. THE ABOVE CAPTIONED APPEALS HAVE BEEN HEARD TOGETH ER AS THESE ARE IN RESPECT OF THE SAME ASSESSEE IN WHOSE CASE SEARCH U/S 132 OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT) WAS CONDUCTED AND CONSEQUENT THEREUPON ASSESSMENT U/S 153A OF THE ACT READ WITH SECTION 143(3) OF THE ACT WERE MADE. THE FACTS OF THESE ASSESSMENT YEARS TO THAT EXTENT ARE COMMON AND, THEREFORE, WE PROCEED TO DECIDE THEM BY THIS COMMON ORDER. 3 ITA NO.395/JP/2013 ASSESSEE & 590/JP/2013 REVEN UE ( A.Y. 2005-06) 2.1 THESE ARE THE CROSS APPEALS FILED AGAINST THE O RDER OF THE LD CIT(A)- CENTRAL, JAIPUR DATED 25-03-2013 FOR THE A.Y. 2005- 06. 2.2 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD. A.O. FOR FRAMING ASSESSMENT ORDER U/S 143(3)/153A OF INCOM E-TAX ACT, 1961 WHICH IS VOID AB-INITIO DESERVES TO BE DELET ED. 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN CONFIRMING ADDITION ON ACCOUN T OF GIFT RECEIVED BY THE ASSESSEE FROM THE FOLLOWING PERSO NS WITHOUT CONSIDERING THE SUBMISSION OF THE ASSESSEE. (I) MUKESH KUMAR RS. 5,51,000/- (II) PAWAN KUMAR RS. 5,51,000/- 2.3 THE REVENUE HAS RAISED THE FOLLOWING GROUND:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD CIT(A), CENTRAL, JAIPUR HAS ERRED IN DELETING ADD ITION ON ACCOUNT OF UNPROVED GIFTS OF RS. 10.00 LACS MADE BY A.O., DESPITE THE FACT THAT THE ASSESSEE HAS NOT ADDUCE D ANY EVIDENCE TO PROVE THE RELATIONSHIP OF THE DONORS WITH THE ASSESSEE, THE OCCASION FOR GIVING THE GIFT, FINANCIAL CAPACITY OF THE DONORS AND THE SOURCE OF GIFT. 2.4 BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CONDUCTED ON 17-0 9-2008. SIMULTANEOUSLY, A SURVEY U/S 133A OF THE ACT WAS CONDUCTED IN RE ME MBERS OF COMMONLY KNOWN AS KAMDHENU GROUP ON 17-09-2008. THE ASSESS EE NAMELY SHRI 4 PRADEEP AGARWAL IS STATED TO BE THE DEFECTO HEAD OF PRADEEP AGARWAL GROUP, WHICH IS AGAIN TREATED AS A SUB-GROUP OF MAIN KAMDH ENU GROUP. CONSEQUENT UPON THE RESULT OF SEARCH, A NOTICE U/S 153A OF THE ACT DATED 15-04-2009 WAS ISSUED AND SERVED ON THE ASSESSEE REQUIRING HIM TO FILE THE TRUE AND CORRECT RETURN OF INCOME [ROI] AS PER RULES OF THE INCOME T AX RULES, 1962 WITHIN A PERIOD OF 30 DAYS FROM THE DATE OF SERVICE OF THI S NOTICE. IN RESPONSE THERETO, THE ASSESSEE FILED THE RETURN OF INCOME DE CLARING INCOME OF RS. 18,51,642/- ON 29-11-2010 WHICH WAS ACTUALLY THE RE TURN OF INCOME ORIGINALLY FILED BY THE ASSESSEE U/S 139 (1) OF THE ACT ON 01-08-2005. THE ASSESSEE DERIVES MAINLY ITS INCOME FROM SALARY, CAP ITAL GAIN AND OTHER SOURCES. FOR THIS A.Y., THE ASSESSMENT WAS COMPETED ON 30-06-2011 AT A TOTAL INCOME OF RS. 39,53,640/-.THE A.O. HAS MADE A DDITION OF RS. 21.02 LACS ON ACCOUNT OF DISALLOWANCE OF CLAIM OF THE GIF T ALLEGEDLY RECEIVED BY HIM DURING THE YEAR FROM FOLLOWING FIVE PERSONS. S.N. NAME OF THE DONOR AMOUNT OF GIFT DATE OF GIFT 1. SHRI GOPAL 3,00,000 17-05-2004 2. SHRI GOPAL 3,00,000 22-05-2004 3. SHREE GOPAL (HUF) 4,00,000 17-05-2004 4. SHRI MUKESH KUMAR 5,51,000 07-07-2004 5. SHRI PAWAN KUMAR 5,51,000 07-07-2004 TO PROVE THE ABOVE GIFTS, THE ASSESSEE ALSO FILED T HE GIFT DEEDS/ AFFIDAVITS TO PROVE THE GENUINITY OF THE GIFTS. THE ASSESSEE ALSO FILED THE COPIES OF RETURN OF INCOME FOR THE A.Y. 2003-04 IN CASE OF SHRI PAW AN KUMAR AND SHRI 5 MUKESH KUMAR BUT DID NOT FILE SUCH RETURNS IN CASE OF SHRI GOPAL AND SHRI GOPAL (HUF) ONLY BECAUSE THE ASSESSEE DID NOT MAINT AIN HIS RELATIONSHIP WITH THE DONOR AND DID NOT FILE THE BANK STATEMENT OF THE DONORS. THE A.O. HAS TREATED ALL THESE GIFTS AS BOGUS AND HAS PRE-PL ANNED STRATEGY OF THE ASSESSEE FOR RECEIVING SUCH GIFTS. THE A.O. ALLEGED THAT THE ASSESSEE OWN MONEY HAS BEEN ROUTED BACK TO HIM IN THE SHAPE OF G IFTS. ACCORDINGLY, HE HAS NOT TREATED THESE GIFTS AS GENUINE AND HAS ALSO THE DECISIONS OF VARIOUS COURTS AND THE TRIBUNAL INCLUDING HON'BLE HIGH COUR TS AND HON'BLE JURISDICTIONAL HIGH COURT ON SOME REASON OR OTHERS. 2.5 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL AND THE LD CIT(A) HAS CONFIRMED THE ACTION OF THE A.O. IN RESPECT OF ALL EGED GIFTS RECEIVED FROM SHRI MUKESH KUMAR OF RS. 5.51 LACS AND FROM SHRI PA WAN KUMAR OF RS. 5.51 LACS. HOWEVER, THE REMAINING GIFTS TO THE EXTE NT OF RS. 10.00 LACS HAVE BEEN DELETED. RESULTANTLY, BOTH THE ASSESSEE AND TH E REVENUE ARE AGGRIEVED AND THEY HAVE FILED THEIR RESPECTIVE APPEALS. 2.6 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CA REFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. AFTER CONSIDERING THE FA CTS AND CIRCUMSTANCES OF THE CASE, EVIDENCE AND THE PAPER BOOK FILED BY THE PARTIES BESIDES WRITTEN SUBMISSIONS FILED BEFORE US, WE ARE OF THE CONSIDER ED OPINION THAT WE ARE READY TO ACCEPT ALL THE FIVE GIFTS AS GENUINE BECAU SE THE ASSESSEE HAS 6 PRODUCED ENOUGH EVIDENCE TO PROVE THE IDENTITY OF T HE DONORS AND THEIR CREDITWORTHINESS. THE GENUINITY OF ALL THE GIFTS ST AND PROVED ON RECORD. SINCE THESE GIFTS WERE RECEIVED BY THE ASSESSEE MUCH PRIO R TO THE DATE OF SEARCH CONDUCTED ON 17-09-2008. THESE GIFTS CANNOT BE TRE ATED AS AN AFTERTHOUGHT AS PLOY OF THE ASSESSEE TO CREATE CAPITAL ETC. OR T O EXPLAIN HIS UNDISCLOSED INCOME. BEFORE THE LD CIT(A), THE ASSESSEE HAS FILE D THE ADDITIONAL EVIDENCE AS PER RULES 46 OF THE INCOME TAX RULES AND AFTER C ALLING FOR THE REMAND REPORT FROM THE A.O. ON THESE ADDITIONAL EVIDENCE, THE LD CIT(A) HAS ACCEPTED THEM. THE PIECES OF EVIDENCE TO PROVE ALL THESE GIFTS CAN BE WELL UNDERSTOOD FROM THE FOLLOWING TABLE. S.N. PARTY NAME PAN AMOUNT REMARKS 1. GOPAL APHG 1051 G 300000 1. GIFT DEED HAS BEEN FILED. 2. COPY OF AFFIDAVIT. 3.BANK STATEMENT. 4.GIFT HAS BEEN RECEIVED BY WAY OF CHEQUE . 5. DONOR IS IT ASSESSEE . 6. DONOR PRODUCED BEFORE THE LD. A.O. 2. GOPAL APHG 1051 G 300000 1. GIFT DEED HAS BEEN FILED. 2. COPY OF AFFIDAVIT. 3.BANK STATEMENT. 4.GIFT HAS BEEN RECEIVED BY WAY OF CHEQUE . 5. DONOR IS IT ASSESSEE . 6. DONOR PRODUCED BEFORE THE LD. A.O. 3. SHREE GOPAL AAAHS 400000 1. GIFT DEED HAS BEEN 7 (HUF) 8434 C FILED. 2. COPY OF AFFIDAVIT. 3. COPY OF BANK STATEMENT. 4.GIFT HAS BEEN RECEIVED BY WAY OF CHEQUE . 5. DONOR IS IT ASSESSEE . 6. COPY OF AFFIDAVIT FILED 7. DONOR PRODUCED BEFORE THE LD. A.O. 4. MUKESH KUMAR AHHPK 0804A 551000 1.COPY OF ACKNOWLEDGEMENT OF RETURN FILED FOR A.Y. 2003- 04.ALONGWITH BALANCE SHEET 2. COPY OF RATIO CARD. 3. COPY OF BANK STATEMENT 4. COPY OF AFFIDAVIT. 5.MEMORANDUM OF GIFT 6. DONOR COULD NOT BE PRODUCED BEFORE THE LD. A.O. DUE TO SHIFTED TO NAGPUR FOR BUSINESS 5 PAWAN KUMAR AFNPK 0970 P 551000 1.COPY OF ACKNOWLEDGEMENT OF RETURN FILED FOR A.Y. 2003- 04 ALONGWITH BALANCE SHEET 2. COPY OF PAN CARD. 3. COPY OF BANK STATEMENT 4. COPY OF RATION CARD 6. COPY OF AFFIDAVIT. 6.MEMORANDUM OF GIFT 6. DONOR COULD NOT BE PRODUCED BEFORE THE LD. A.O. DUE TO SHIFTED TO USA FOR BUSINESS TOTAL 2102000 8 IT IS NOTICED FROM THE ABOVE THAT THE DONORS SHRI G OPAL AND SHRI GOPAL (HUF) WERE PRODUCED EVEN BEFORE THE A.O. AND THEY H AVE ACCEPTED THE FACTUM OF GIVING GIFT TO THE ASSESSEE. SHRI MUKESH KUMAR COULD NOT BE PRODUCED BEFORE THE A.O. ON THE REASONING THAT HE H AD SHIFTED TO NAGPUR IN CONNECTION WITH HIS BUSINESS BUT IN RESPECT OF THA T GIFT, THE COPY OF BANK STATEMENT, COPY OF AFFIDAVIT AND MEMORANDUM OF GIFT BESIDES COPY OF RATION CARD AND ACKNOWLEDGEMENT OF RETURN FILED BY HIM ARE AVAILABLE ON RECORD. IN OUR CONSIDERED OPINION, THIS IS ENOUGH PROOF TO EST ABLISH THE GENUINITY OF THE GIFT. IT IS NOT ALWAYS NECESSARY THAT THERE SHOULD BE ONLY BLOOD RELATION TO GIVE OR RECEIVE GIFTS. IN THIS REGARD, THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS PADAM SINGH CHOUHAN,215 CTR 303 (RAJ.) AND HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS R.S. SIBAL, 269 ITR 429 (DEL.) ARE IMPORTANT, APART FROM THE DECISIONS RELI ED ON BY THE ASSESSEE IN THE WRITTEN SUBMISSION. WE ARE CONVINCED THAT THERE IS NO EVIDENCE ON RECORD WHICH THE A.O. HAS BROUGHT TO PROVE OR TO ESTABLISH THAT THE ASSESSEE HAS PASSED OWN MONEY FOR OBTAINING THESE GIFTS. STRANGE LY, THE A.O. HAS NOT MADE SUCH ENQUIRIES IN CASE HE HAD ENTERTAINED SUCH A DOUBT. THE AVAILABLE EVIDENCE EVEN ESTABLISHES THAT THE DONORS HAVE THEI R CAPACITY TO MAKE THESE GIFTS. ALL THE GIFTS HAVE BEEN RECEIVED THROUGH BAN KING CHANNEL. IN OUR CONSIDERED OPINION, IN CASE THE ASSESSEE IS REQUIRE D TO PROVE THESE GIFTS, 9 SOME CONTRARY EVIDENCE SHOULD BE BROUGHT ON RECORD BY THE A.O. ACCORDINGLY, WE HOLD ALL THESE GIFTS AS GENUINE AND CONSEQUENTLY, ORDER TO DELETE THE ENTRE ADDITION FROM THE HANDS OF THE ASS ESSEE. AS A RESULT, WE ALLOW GROUND NO. 2 OF THE ASSESSEE'S APPEAL AND DIS MISS GROUND NO. 1 OF REVENUES APPEAL . 3.1 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE HAS NOT PRESSED THE GROUND NO.1. HENCE, THE SAME IS DISMISS ED BEING NOT PRESSED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED AND THAT OF THE REVENUE IS DISMISSED. ITA NO396/JP/2013 ASSESSEE (A.Y. 2008-09) 4.1 THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD CIT(A), CENTRAL, JAIPUR DATED 19-03-2013 FOR THE A. Y. 2008-09 WHEREIN FOLLOWING GROUNDS HAVE BEEN RAISED. 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD. A.O. FOR FRAMING ASSESSMENT ORDER U/S 143(3)/153A OF INCOM E-TAX ACT, 1961 WHICH IS VOID AB-INITIO DESERVES TO BE DELET ED. 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS. 1, 36,00,655/- ON ACCOUNT OF PEAK CREDIT BALANCE WHICH IS IN FACT O UT OF LC WITHDRAWALS AND THE SOURCE OF WHICH IS DULY EXPLA INED. 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS10,0 7,858/- ON ACCOUNT OF UNDISCLOSED PAYMENT OF COMMISSION WHER EAS THIS 10 ACCOUNT REPRESENTS THE PAYMENT OF EXPENSES AS PER SEIZED DOCUMENTS. 4. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS. 20 ,49,345/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IN CASH WHICH I S ACTUAL ROTATION OF ACCOUNTED MONEY THROUGH M/S. R.V. MER CANTILE. 5. THE ASSESSEE CRAVES YOUR INDULGENCE TO ADD AME ND OR ALTER ALL OR ANY GROUNDS OF APPEAL BEFORE OR AT T HE TIME OF HEARING. 4.2 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE HAS NOT PRESSED THE GROUND NO.1. HENCE, THE SAME IS DISMISS ED BEING NOT PRESSED. 4.3 THE GROUND NO. 5 IS GENERAL IN NATURE WHICH NEE DS NO ADJUDICATION. 4.4 THE FACTS APROPOS OF THIS CASE ARE THAT IN THE CASE OF THE ASSESSEE SEARCH WAS CONDUCTED O 17-09-2008. A NOTICE U/S 153 A OF THE ACT WAS ISSUED ON 15-04-2009. IN RESPONSE, THE RETURN WAS F ILED ON 29-11-2010 DECLARING TOTAL INCOME AT RS. 21,02,128/-. THE ASSE SSMENT WAS COMPLETED U/S 153A READ WITH SECTION 143(3) OF THE ACT ON 30-06-2 011 DETERMINING TOTAL INCOME AT RS. 1,87,58,990/-. THE A.O. MADE THE FOLL OWING ADDITIONS. 1. ADDITION OF RS. 1,36,00,655/- ON ACCOUNT OF UN EXPLAINED CASH ENTRIES. 2. ADDITION OF RS. 10,07,858/- ON ACCOUNT OF UNDI SCLOSED RECEIPT OF COMMISSION. 3. ADDITION OF RS. 20,49,345/- ON ACCOUNT OF UNEX PLAINED CASH ENTRIES., INTER ALIA 11 4.5 THE ABOVE AMOUNTS HAVE BEEN CONFIRMED BY THE LD CIT(A) THAT IS WHY THE ASSESSEE IS IN APPEAL BEFORE US. 4.6 THE FACTS APROPOS TO GROUND NO 2 ARE THAT DURIN G ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED THAT DURING SEA RCH NO INCRIMINATING EVIDENCE WAS FOUND WHICH COULD INDICATE UNRECORDED PURCHASES OR SALES THE EXISTENCE OF UNEXPLAINED CASH WAS ALSO NOT FOUND DU RING SEARCH. THE ASSESSEE GROUP HAS BEEN IN DIRE NEED OF MONEY FOR E XPANSION OF BUSINESS AND FOR THAT PURPOSE THEY WOULD SEEK THE CASH CREDIT LI MIT FROM THE BANK. DURING SEARCH VARIOUS DOCUMENTS CONTAINING TRANSACT IONS MADE IN CASH WERE ALSO FOUND. THESE DOCUMENTS WERE IN THE NATURE OF L EDGER ACCOUNTS AND AGAIN ASHWANI C.A. A/C IN THE BOOKS OF P.K. & CO-II; KAMD HENU IN THE BOOKS OF SHREE KRISHNA RELATED TO RAGHUVEER METAL; KAMDHENU CO. IN THE BOOKS OF SHREE KRISHNA; KAMDHENU IN THE BOOKS OF SHREE KRISH NA; NEW CO. IN THE BOOKS OF P.K. & CO. II ; P.K. GADDI ETC. THESE TRAN SACTIONS PERTAIN TO DIFFERENT PERIODS OF TIME FALLING IN DIFFERENT FINA NCIAL YEARS. THE STATEMENT OF SHRI VIJAY KARNWAL, ONE OF THE EMPLOYEE OF THE ASSE SSEE GROUP, WAS RECORDED DURING SEARCH. HE STATED THAT P.K. GADDI I S CODE WORD FOR PK-1. SIMILARLY, SHRI ASHISH AGARWAL, ANOTHER EMPLOYEE OF THE ASSESSEE GROUP, STATED IN HIS STATEMENT WHILE REPLY TO QUESTION NO. 19 RECORDED ON OATH ON 19- 11-2008 STATED IN THE CONTEXT OF ANNEXURE A-5 ANDA- 7 SEIZED FROM HIS 12 RESIDENCE SITUATED AT C-8, ROHINI, NEW DELHI THAT S AID DOCUMENTS CONTAINED TRANSACTIONS RELATING TO SHRI PRADEEP AGARWAL AND H IS COMPANIES ETC WHICH INCLUDED BOTH ACCOUNTED AND UNACCOUNTED TRANSACTION S. THE STATEMENT OF SHRI PRADEEP AGARWAL, THIS ASSESSEE WAS ALSO RECORD ED ON 20-01-2009 AND WHILE REPLYING TO QUESTION NO. 59 AND 60, HE STATED THAT THESE DOCUMENTS FOUND FROM THE RESIDENCE OF SHRI ASHISH AGARWAL BEL ONGED TO HIM. SIMILARLY, THE DOCUMENTS FOUND FROM THE RESIDENCE O F SHRI VIJESH KARNWAL WERE ALSO OWNED BY HIM. THE ASSESSEE ALSO FURNISHED A LETTER OWNING ALL THESE TRANSACTIONS SPECIFICALLY PERTAINING TO THE N AME OF P.K. &CO.-II ETC. ACCORDINGLY, ALL THESE TRANSACTIONS WERE CONSIDERED IN THE HANDS OF THIS ASSESSEE. ALL THESE ACCOUNTS WERE ACTUALLY IN THE B OOKS OF THE ASSESSEE HIMSELF. THEREFORE, THE CONSOLIDATED CASH BOOK CONT AINING ALL THE TRANSACTIONS WAS PREPARED. FROM THE CASH BOOK, IT W AS NOTICED THAT MAXIMUM CREDIT BALANCE ENTRY OF RS. 1,360,00,655/- APPEARED ON 10-07-2007. SINCE THE CASH BOOK CANNOT HAVE A CREDIT BALANCE I.E. NEG ATIVE CASH AS IT CAN EITHER HAVE A ZERO BALANCE OR HAVE A POSITIVE BALANCE, THE A.O. PROPOSED TO TREAT MAXIMUM CREDIT BALANCE OF RS. 1,36,00,655/- AS ASSE SSEE'S UNDISCLOSED INCOME. THE A.O. ALSO ADVISED THE ASSESSEE TO OFFE R HIS COMMENTS ON THE CASH BOOK FURNISHED TO HIM. IN RESPONSE TO THE ABOV E SHOW-CAUSED, THE ASSESSEE FURNISHED HIS REPLY WHOSE RELEVANT PORTION IS AS UNDER:- 13 CALCULATION OF PEAK AMOUNT IN ROTATION IN VARIO US TRANSACTIONS DONE BY THE GROUP FOR OBTAINING ACCOMMODATION ENT RIES AND BUILDING UP OF STOCK. THAT ON THE BASS OF DOCUMEN TS FOUND AND SEIZED FROM THE RESIDENCE OF SHRI ASHISH AGARWAL THE MODUS- OPERANDI OF THE ASSESSEE GROUP IS CLEAR AND FIRST OF ALL THEY OBTAINED PURCHASES BILL AND MADE PAYMENT BY MAKIN G LC LIMITS AND ON RECEIVING OF CASH AMOUNT EITHER THEY PAID IT FOR CHEQUE RECEIVED AGAINST BOGUS SALES OR FOR OBTAINING ACC OMMODATION CREDIT ENTRY. IN THIS WHOLE PROCESS THE CASH MONE Y UTILIZED WAS OUTCOME OF LC LIMIT AND THE ORIGINATE POINT IS RE CEIVING OF CASH FROM THE DEALER FROM WHERE WE HAVE OBTAINED BOGUS PURCHASE BILL. THE ACCOUNTED MONEY WAS CONVERTED IN UNACCO UNTED MONEY THROUGH THIS PROCESS. BUT TO PURCHASE PIECE OF MIND AND AVOID FURTHER LITIGATION AND REDUCE THE COMPLICAT ION, WE HAVE CALCULATED THE PEAK AMOUNT OF ROTATION IN ALL SUC H TRANSACTION ON THE BASIS OF FOLLOWING SEIZED DOCUMENTS. (A) ASHWANI CA A/C IN THE BOOKS OF P.K. & CO.II F OR THE PERIOD OF 01-04-2007 TO 07-03-2008. (B) KAMDHENU IN THE BOOKS OF SHREE KRISHNA IS REL ATED TO RAGHUVEER METAL AND IT DOES NOT RELATE TO THE ASS ESSEE GROUP.. ONLY AMOUNT OF RS. 39,50,000/- IS RELATED TO US W HICH WE HAVE INCLUDED IN OUR SUMMARY. THESE AMOUNT ARE RS. 40 0,000/- ON 05-07-06, RS. 500,000/- ON 25-07-2006, RS. 25,00, 000/- ON 26- 07-2006 AND RS. 5,50,000/- ON 27-07-2006. KAMDHENU CO. IN THE BOOKS OF SHREE KRISHNA PERI OD 01- 04-2007 TO 17-10-2007. (D) KAMDHENU IN THE BOOKS OF SHREE KRISHNA PERIOD 01-04- 2007 TO 17-10-2007. (E) NEW CO. IN THE BOOKS OF P.K. & CO.-II PERIOD 01-04- 2007 TO 19-10-2007. WE HAVE PUT ALL THE ABOVE LEDGER ACCOUNT IN SINGL E TALLY DATA AND ON THE BASIS OF THAT CALCULATED THE PEAK AMOUN T FOR EACH FINANCIAL YEAR WHICH ARE AS UNDER:- 14 F.Y MAXIMUM DR.ENTRY MAXIMUM CR ENTRY MAXIMUM DR BALANCE MAXIMUM CR BALANCE 2006-07 3500000 2500000 22943576 3950000 2007-08 6050877 4800000 30812685 13600655 2008-09 5250000 3200000 109861707 0 SUMMARY 6050877 4800000 109861707 13600655 SO ON THE BASIS OF ABOVE WORKING, WE FURTHER OFFE R FOLLOWING INCOMES FOR TAXATION YEARWISE IN THE HANDS OF SHRI PRADEEP KUMAR AGARWAL AS UNDER:- F.Y. A.Y. INCOME OFFERED 2006-07 2007-08 3500000 2007-08 2008-09 2550000 2008-09 2009-10 0 TOTAL 6050000 THIS SURRENDER AMOUNT WILL COVER THE ALL ANNEXURE MENTIONED ABOVE AND ALL ACCOMMODATION ENTRIES IN THE BOOKS O F VARIOUS CONCERNS, COMPANIES AND INDIVIDUALS, HUF AND OTHER S. WE WILL PAY THE TAXES ON ABOVE SURRENDERED INCOME IN THE HANDS OF SHRI PRADEEP KUMAR AGARWAL SUBJECT TO THE CONDITION THAT NO PEN ALTY PROCEEDING WILL BE INITIATED BECAUSE THE ABOVE ROTATION IS ON LY OUT OF ACCOUNTED CASH WITHDRAWAL FROM LC ACCOUNT. AFTER CONSIDERING THE ABOVE REPLY, THE A.O. FOUND T HAT THE ASSESSEE HAS NOT DISPUTED THE METHODOLOGY ADOPTED BY THE A.O. IN EST IMATING THE PEAK AMOUNT OF CASH INVOLVED AS UNDISCLOSED CASH TRANSAC TION. FOR THIS YEAR, THE ASSESSEE SURRENDERED AN AMOUNT OF RS. 25.50 LACS WH ICH IS THE APPROXIMATE DIFFERENCE BETWEEN THE MAXIMUM DEBIT ENTRY OF RS. 6 0,50,877/- PERTAINING TO A.Y. 2008-09 AND MAXIMUM DEBIT ENTRY OF RS. 35.00 L ACS PERTAINING TO A.Y. 15 2007-08 THEREBY GIVING HIMSELF THE BENEFIT OF SET O FF. BUT THE METHODOLOGY ADOPTED BY THE ASSESSEE IN MAKING THIS SURRENDER WA S REJECTED BY THE A.O. ACCORDING TO THE A.O., NEGATIVE CASH IN THE CASH BO OK OCCURRED ON 10-07- 2007 OF RS. 1,36,50,000/- BEING THE MAXIMUM CREDIT BALANCE IN THE CASH BOOK AND THIS AMOUNT SHOULD HAVE BEEN SURRENDERED B Y THE ASSESSEE AS PER ESTABLISHED PRINCIPLES. AS A RESULT, THIS AMOUNT HA S BEEN ADDED BACK TO THE ASSESSEE'S INCOME ON ACCOUNT OF UNDISCLOSED PAYMENT MADE IN CASH. THE LD CIT(A) HAS CONFIRMED THIS ADDITION ON MORE OR LESS SAME REASONS. 4.7 WE HAVE HEARD THE RIVAL SUBMISSIONS. BOTH THE P ARTIES HAVE REITERATED THE SAME ARGUMENTS AND REASONS WHICH WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE ENTIRE MATERIAL ON R ECORD GIVEN BEFORE THE AUTHORITIES BELOW. THE SUBMISSIONS GIVEN IN WRITING CAN BE SUMMARIZED ON THE FOLLOWING POINTS. 1. AS PER LD. AR, THE A.O. HAS ANNEXED TWO SHEETS OF PAPERS AS ANNEXURE B (B-1 AND B-2) WITH THE ASSESSMENT ORD ER. THE COPIES OF WHICH ARE AVAILABLE AT PAGE 67 OF THE ASSESSEE'S PA PER BOOK. THE OBSERVATIONS OF THE A.O. ARE MEANINGLESS AS HE HAS NEITHER REFERRED TO IT IN THE ASSESSMENT ORDER AS TO WHERE THE CASH TRANSACTI ONS HAVE BEEN CONSOLIDATED NOR HE HAS MENTIONED ABOUT SUCH ANNEXU RES AND ITS PAGES IN ANNEXED SHEETS THE CASH BOOK PREPARED BY THE A.O. HAS BEEN TREATED AS SUBJECTIVE EXERCISE OF THE A.O. WHOSE BASIS WERE NE VER PROVIDED TO THE A.O. AND ASSESSEE'S REPLY WAS NEVER INVITED WITH REGARD TO PREPARING OF CASH BOOK. (2) AS PER LD. AR ANNEXURE A-5 SEIZED FROM THE RE SIDENCE OF SHRI ASHISH AGARWAL HAS BEEN CONSIDERED BUT NO REFE RENCE TO ITS PAGE NO.19- 23 HAS BEEN REFERRED TO. THE A.O. HAS BEEN SELECTIV E IN TAKING ENTRIES OF CASH ONLY AND IGNORING ENTRIES OF CHEQUES CORRESPONDING TO THE ENTRIES OF THE CASH. 16 ACCORDING TO THE LD. AR , THE CASH AND CHEQUE ENTRI ES PERFECTLY MATCH WITH EACH OTHER AND THEREAFTER NO UNEXPLAINED CASH ENTRY REMAINS. HE HAS RELIED ON CHART PREPARED IN WHICH AMOUNT RECEIVED THROUGH CHEQUE MATCHES WITH THE AMOUNT OF CASH ENTRY. (3) THE ASSESSEE HAS TAKEN OVER THE COMPANY BY TH E NAME OF M/S. R.V. MERCANTILE (P) LTD. AND AT THAT TIME THIS COMPANY HAD NUMEROUS DEBTORS. THESE DEBTORS WERE FOUND TO BE PAPER DEB TORS AND NOT GENUINE ONE. THE ASSESSEE DID NOT HAVE ANY RELATION WITH THESE D EBTORS WHO WERE REQUIRED TO BE CLEARED. THIS AMOUNT BY WAY OF CHEQUE WAS OBT AINED FROM THOSE DEBTORS BY THE COMPANY. THIS FACT IS FOUND SUPPORTE D BY THE PAPERS ANNEXED AND QUOTED BY THE LD. AR. THE AMOUNT OF REALIZATIO N BY WAY OF CHEQUE FROM THESE BOGUS DEBTORS WERE TRANSFERRED BY THE ASSESSE E COMPANY TO ANOTHER COMPANY OF THE GROUP NAMELY M/S. RAGHUVEER METALS ( P) LTD. THE AMOUNT SO RECEIVED IN RETURN FROM M/S. RAGHUVEER METALS (P ) LTD. WAS UTILIZED IN PAYING TO DEBTORS OF R.V. METALS (P) LTD. FROM WHOM THE AMOUNT HAD BEEN RECEIVED THROUGH CHEQUE. IN THIS WAY, AS PER LD. AR , ENTIRE CIRCLE IS COMPLETED. TO SUBSTANTIATE THE ABOVE SUBMISSIONS, THE COPIES OF THE BALANCE SHEET AND AUDITED ACCOUNTS OF R.V. MERCANTILE (P) L TD. FOR THE PERIOD ENDING 31-3-2008 ARE ENCLOSED IN THE PAPER BOOK PAGES 28 T O 42. AS PER THE LD. AR FROM SCHEDULE-7, THE DEBTORS WHICH WERE OF RS. 6,27 ,74,299/- AS ON 31-03- 2007 REDUCED TO RS. 4,79,15,951/-. IN THIS WAY, THE RE WAS REALIZATION OF DEBTORS OF THE AMOUNT OF RS. 1,48,58,348/-. AS PER THE LD. AR, THE PAPERS SEIZED ARE IN THE SHAPE OF MEMORANDUM AND THAT IS W HY THEY ARE NOT FULLY NARRATED. A CHART HAS BEEN PREPARED INDICATING THE FOLLOWING ASPECTS. (A) AMOUNT RECEIVED BY CHEUQE FROM THE DEBTORS OF R.V. MERCANTILE PVT. LTD. (B) CHEQUE PAID BY R.V. MERCANTILE TO RAGHUVEER METALS INDUSTRIES LTD. (C) CASH RECEIVED FROM RAGHUVEER METAL INDUSTRIES LIMITED. (D) CASH PAID TO THE DEBTORS OF R.V. MERCANTILE PVT. LTD. 17 (E) THE AFORESAID TRANSACTIONS APPEAR ON THE SAME DAY . THE CASH TRANSACTIONS ARE FULLY COVERED BY THE AMOUNT OF CHEQUE RECEIVED. (F) RELEVANT PAGE NUMBER OF THE LOOSE SHEET HAS BEE N QUOTED FOR THE SAKE OF CONVENIENCE THE COPY OF THIS CHART IS AVAILABLE ON PAPER BOOK PAGE NO. 9. (4) THE ASSESSEE HAS ALSO ENCLOSED THE COPY OF A CCOUNT OF M/S. RAGHUVEER METAL INDUSTRIES LTD. IN THE BOOKS OF M/S. R.V. MERCANTILE (P)LTD. PERTAINING TO A.Y. 2007-08 AND, THE COPY O F BANK ACCOUNT OF DENA BANK, COPY OF ACCOUNT OF M/S. R.V. METALS (P) LTD. IN THE BOOKS OF M/S. RAGHUVEER METAL INDUSTRIES LTD.. ACCORDING TO LD. A R, THE CASH ACCOUNT DRAWN BY THE ASSESSEE MATCHING THE PAYMENTS IN CASH WITH THE CORRESPONDING AMOUNT RECEIVED AGAINST CHEQUE. THE TRANSACTION NUM BER HAS BEEN NOTED BOTH ON THE CASH ACCOUNT AS WELL AS ON THE PAGES SE IZED. THESE ARE FROM SERIAL NUMBER 1 TO 9 WHICH PERFECTLY MATCH LEAVING NO CASH UNEXPLAINED. COPIES OF THESE PAPERS ARE AVAILABLE AT PAGES 10 TO 27 OF THE PAPER BOOK. (5) REGARDING SURRENDER BY THE ASSESSEE, IT IS ST ATED THAT SURRENDER IS NOT SUPPORTED OR BASED ON ANY EVIDENCE . THE SURRENDER HAS BEEN RETRACTED. TO SUPPORT THE RETRACTION OF THE SURREND ER, RELIANCE HAS BEEN PLACED ON THE FOLLOWING DECISIONS. (A) PULLANGUEGODE RUBBER & PRODUCE CO. LTD. VS. STA TE OF KERALA 91 ITR 18 (SUPREME COURT) AN ADMISSION IS EXTREMELY AN IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. (B) JAIN TRADING CO. V/S ITO (2007) 17 SOT 574 (MUM ) ADDITION ON THE BASIS OF ADMISSION MADE DURING SURVEY RETRACTED DURING ASSESSMENT. AN ASSESSEE 18 OFFERING ADDITIONAL INCOME DURING THE COURSE OF SURVEY IS NOT BOUND BY THE SAID OFFER FOR ALL TIMES T O COME ---- DURING SURVEY ASSESSES OFFERED AN ADDITIONAL INCOME OF RS/- 25 LAC ON BEING POINTED BY THE SURVEY PARTY THAT THERE WAS UNDER STATEMENT OF STOCK. ASSESSES DID NOT DECLARE SUCH INCOME IN THE IT RETURN A.O. MADE ADDITION OF RS. 25 LAC. NOT JUSTIFIE D. (C) KAILASH BEN MOHANLAL CHOKSI V/S CIT (2008) 14 DTR (GUJ) 257 IT IS TOO MUCH TO GIVE CREDIT TO A STATEMENT RECORDE D AT MIDNIGHT WHERE A PERSON MAY NOT BE IN A POSITION TO MAKE ANY CORRECT AND CONSCIOUS DISCLOSES DISCLOSURE STATEMENT RECORDED AT ODD HOURS CANNOT BE CONSIDERED TO BE A VOLUNTARY STATEMENT. . (D) CONTECH TRANSPORT SERVICE (P) LTD ORS V/S ACIT ( 2009) 19 DTR 191 (MUMBAI) 28-11-08 NO ADDITION CAN BE MADE ONLY ON THE BASIS OF ADMISSION IN STATEMENT V/S 132 (4) (E) CHITRA DEVI V/S ACIT (JODHPUR BRANCH) (2002) 77 T TJ (JD) 640 STATEMENT RECORDED DURING SEARCH ARE NOT EVIDENCES FOUND DURING SEARCH. ADDITION CANNOT BE MADE ON THE BASIS OF STATEMENT ALONE. (F) AJIT CHINTAMAN KARVE V/S I.T.O. (2009) 311 ITR (A T) 66 (PUNA) ITAT BRANCH . THAT MERELY BECAUSE AN OFFER WAS MADE HAVING NO COG ENT BASIS OR APPROVAL OF LAW THAT SHOULD NOT STOP A TAX PAYER FROM CORRECTING HIS MISTAKE. IT WAS THE DULY OF THE A.O. TO TAX ONLY THE LEGITIMATE AMOUNT FROM A TAXPAYER . 19 IN VIEW OF THE AFORESAID FACTS THE LEARNED ASSESSIN G OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION WITH REFERENCE TO THE SURRENDER MADE BY THE ASSESSEE WITHOUT HAVING ANY SUBSTANTIAT ING MATERIAL. IN THE CASE OF THE ASSESSEE THE LEARNED ASSESSING O FFICER HAS FAILED TO LINK THE SEIZED PAPERS WITH THE AFFAIRS OF THE A SSESSEE. NO ENQUIRES WORTH THE NAME HAVE BEEN CONDUCTED ON THE CONTENTS OF THE SEIZED PAPERS WHICH CONTAIN A LOT MANY NAMES. IN TH E CIRCUMSTANCES THE ADDITION MADE IS PURELY AN ADDITI ON ON THE BASIS OF DUMP PAPERS. THE SAME DESERVES TO BE DELETED. 4.8 ON THE OTHER HAND, THE LD DR HAS PLACED HEAVY R ELIANCE ON THE ORDERS F THE AUTHORITIES BELOW. 4.9 AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE HAV E FOUND THAT NO DIRECT EVIDENCE WAS FOUND TO SUPPORT THEM FULLY. THE A.O. DID NOT MAKE ANY ENQUIRY FROM THE EMPLOYEES FROM WHOSE RESIDENCE THE SE PAPERS WERE FOUND. THE A.O. DID NOT MAKE ANY ENQUIRY FROM THE PERSONS MENTIONED AT PAGES 1 TO 5 OF THE SEIZED PAPERS. THE COPIES OF THE CASH A CCOUNT PREPARED WERE NOT CONFRONTED TO THE ASSESSEE. THE ASSESSEE HAS NOT ME NTIONED THE METHOD OF MAKING OUT THE WORKING IN HIS ORDER AT PAGE 5 IN PA RA 9. THERE IS SOME SUBSTANCE IN THE LD DR THAT STATEMENT OF SHRI VIJE SH KARNWAL AND SHRI ASHISH AGARWAL, EMPLOYEES OF THE ASSESSEE, WERE REC ORDED AND THEY HAD ACCEPTED THAT THESE PAPERS BELONGED TO THE ASSESSEE . THE ASSESSEE ALSO ACCEPTED THE OWNING OF THESE PAPERS BUT THE STATEME NT WAS RETRACTED AND NO METHODOLOGICAL BASE FOR MAKING THE WORKING OF THE I MPUGNED AMOUNT IS FOUND TO BE CONVINCING. IN OUR CONSIDERED OPINION, WITHOUT EXAMINING THE 20 SUBMISSION OF THE ASSESSEE AND THE RELEVANT SEIZED PAPERS, THE A.O. HAS MADE THIS ADDITION AND THE LD CIT(A) HAS CONFIRMED THE S AME. THE SUBMISSIONS MADE BEFORE THE A.O. WERE DISREGARDED ON THE GROUND THAT THE SAME WAS NOT SUBMITTED. HOWEVER, IT IS FOUND THAT THE ASSESSEE H AD FURNISHED SIMILAR REPLIES TO ALL THE QUERIES MADE BY THE A.O.. IT WAS NOT THE CASE OF THE A.O. THAT THE ASSESSEE DID NOT COOPERATE. ANYTHING DONE AT THE BACK OF THE ASSESSEE COULD NOT BE REPLIED BY THE ASSESSEE AND T HE SAME COULD ONLY BE EXPLAINED BEFORE THE LD CIT(A). THE ASSESSEE HAS IN FACT SUPPORTED HIS CASE WITH EVIDENCE. THE EXPLANATION REGARDING ANNEXURE B -1 AND B-2 RELATING TO PEAK CREDIT WAS AVAILABLE BEFORE THE A.O. THE ASSES SEE HAS SUBMITTED THE EXPLANATION OF EACH ENTRIES SEIZED AT PAPER A-5 AND A-7. IN THIS REGARD PAGE 9 OF THE PAPER BOOK IS RELEVANT. IN OUR CONSIDERED OPINION, THIS IMPUGNED ADDITION IS BASED ON GUESS WORK, CONJECTURES AND SU RMISES. NO LINK HAS BEEN ESTABLISHED BY THE A.O. BETWEEN THESE PAPERS OF THE ASSESSEE. WE FIND THAT THE ASSESSEE HAS EXPLAINED THESE PAPERS WITH REFERE NCE TO THE COMPANIES TO WHOM THESE PAPERS RELATED TO. ACCORDINGLY, WE REVER SE THE FINDINGS OF THE LD CIT(A) AND ORDER TO DELETE THE ENTIRE BASELESS ADDI TION AND ALLOW GROUND NO 2 OF THE ASSESSEE'S APPEAL. 5.1 THE FACTS APROPOS TO GROUND NO. 3 ARE THAT THE A.O. HAS MADE ADDITION ON THE BASIS OF PAGE NO. 5 OF ANNEXURE A-5 SEIZED F ROM THE RESIDENCE OF SHRI 21 ASHISH AGARWAL. THE COPY OF THIS PAGE IS AVAILABLE AT PAGE 43 OF THE PAPER BOOK. AS PER THE A.O., A PAYMENT OF RS. 10,07,858/- WAS MADE AS PER PAGE 5 OF ANNEXURE A-5 AND THE SAME REMAINED UNEXPLAINED. ON THIS PAGE, ENTRY OF RS. 5,63,400/- IS AVAILABLE AS ON 30-06-2007. THIS PAGE HAS ENTRIES STARTING FROM 01-04-2007 TO 25-07-2007 ONLY. THE ENTRY OF RS . 2,73,400/- ON 22-02- 2008 AND RS. 1,71,058/- ON 29-02-2008 ARE NOT FOUND ON THIS PAGE. THE ASSESSEE HAS STATED THAT THESE LOOSE SHEETS ARE RO UGH PAPERS HAVING ONLY MEMORANDUM NOTINGS. THESE ENTRIES SHOW THAT THERE W ERE LOAN ENTRY IN THE NAME OF FOLLOWING PERSONS. (A) P.K. HUF 29.50 (B) GEETA AGARWAL 24.00 P.K. 60.00 (D) K. IND.43.00 AS PER THE A.O., ON THESE LOAN ENTRIES INTEREST OF RS. 5,63,400/- HAS BEEN PAID BY THE ASSESSEE TO THE AFORESAID PERSONS. AS P ER THE ASSESSEE, THE A.O. HAS NOT ANALYZED THE ENTRY PROPERLY. AS PER THE ASS ESSEE, THESE ARE NOT REAL LOAN AMOUNT BUT ONLY MEMORANDUM OF UNSECURE LOAN EN TRIES. IT WAS STATED THAT AS TO HOW THE ASSESSEE CAN PAY INTEREST TO HIM SELF BECAUSE THE NAME OF P.K. 60.00 SHOWS THAT THE AMOUNT BELONGED TO THE AS SESSEE . THUS AS PER ASSESSEE, THE IMPUGNED ADDITION IS BASELESS. 22 5.2 BEFORE US, BOTH THE PARTIES HAVE REITERATED THE IR ARGUMENTS. WE HAVE ALSO GONE THROUGH THEM AND WE HAVE FOUND THAT THE S TATEMENTS OF THE ASSESSEE ARE CORRECT. THE ENTRIES OF RS. 2,73,400/- AND OF RS. 1,71,058/- ARE NOT RELEVANT AS PER PAGE 5 OF ANNEXURE A-5 AS THESE ARE NOT AVAILABLE ON THIS PAGE. THE ADDITION OF THESE TWO AMOUNTS IS FOUND TO BE BASELESS. THE ASSESSEE HAS GOT NOTHING TO DO WITH THESE ENTRIES. REGARDING ADDITION OF RS. 5,63,400/- ALSO, WE ARE CONVINCED THAT THIS ADDITIO N IS MADE WITHOUT FULLY EXPLAINING THE CONTENTS OF THIS DOCUMENTS. THE ASS ESSEE WAS NEVER EXAMINED OF THESE ENTRIES. NO ENQUIRY HAS BEEN MADE FROM ANY OF THESE PERSONS NAMED ON THIS PAGE. THIS PAPER WAS NOT FOUN D FROM THE POSSESSION OF THE ASSESSEE. THE WRITER OF THESE PAPERS WAS NOT EXAMINED BY THE A.O.. THE A.O. HAS IGNORED THE SUBMISSION OF THE ASSESSE E THAT THESE ARE ROUGH NOTINGS. ACCORDINGLY, WE ARE OF THE CONSIDERED OPIN ION THAT ADDITION OF RS. 5,63,400/- CANNOT BE SUSTAINED ON THE BASIS OF EVID ENCE AVAILABLE ON RECORD. AS A RESULT, WE ORDER TO DELETE THE ADDITION OF RS. 10,07,858/- MADE ON ACCOUNT OF UNDISCLOSED PAYMENT OF COMMISSION. 5.3 THE CONFIRMATION OF ADDITION OF RS. 20,49,345/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN CASH HAS BEEN CHALLENGED VIDE GROUND NO. 4 OF THIS APPEAL. AS PER THE LD. AR, THIS AMOUNT IS ACTUAL R OTATION OF ACCOUNTED MONEY 23 THROUGH M/S. R.V. MERCANTILE AND THIS AMOUNT STANDS COVERED IN THE ADDITION OF RS. 1,36,00,655/- WHICH IS A SUBJECT MATTER OF G ROUND NO. 2. 5.4 BEFORE US, BOTH THE PARTIES HAVE REITERATED THE IR EARLIER STAND. IT WAS ARGUED BY THE LD. AR THAT THE LD CIT(A) HAS UTTERLY FAILED IN HIS WISDOM TO APPRECIATE THE FACTS IN PROPER PERSPECTIVE. THE A.O . HAS NOT EXAMINED THE SEIZED PAPERS AT ALL AND THE ADDITION HAS BEEN MADE MECHANICALLY AND IN A CASUAL MANNER WITH REFERENCE TO THE ENTRIES FOUND O N PAGE 5 OF ANNEXURE A- 5 INCORPORATED IN EARLIER PART OF THIS ORDER. IT WA S STATED THAT NARRATION IN THE ENTRY IS BEING AMOUNT. OF INTT. ON UNSECURED LOAN ENTRY UPTO 01-04006 TO 31-03-07 (P.K. HUF 29.50, GEETA AGG. 24.00, PK 60.0 0. K. IND. 43.00). AS PER LD. AR, THE EXPLANATION OF THESE ENTRIES IS AS UNDER:- (I) THE AMOUNT OF RS. 156.50 LACS IS AVAILABLE EARL IER TO 01.04.06 AS SUCH THE SAME CANNOT BE CONSIDERED IN T HE ASSESSMENT YEAR 2008-09. THIS IS SO BECAUSE IN THIS ENTRY INTE REST HAS BEEN PAID FOR THE PERIOD 01.04.06 ONWARDS TO 31.03.2007. HENC E ONE CAN SAFELY ASSUME THAT AMOUNT WAS AVAILABLE EARLIER TO 01.04.06. THUS ADDITION HAS BEEN WRONGLY MADE IN ASSESSMENT YEAR 2 008-09. (II) WHEN SPECIFIC NAMES ARE AVAILABLE WITH AMOUNT S NOTED IN RESPECT OF EACH SUCH NAME AS MENTIONED BELOW (A) P.K. HUF 29.50 (B) GEETA AGARWAL 24.00 (C) P.K. 60.00 (D) K. IND. 43.00 24 TOTAL 156.50 THERE WAS ABSOLUTELY NO JUSTIFICATION FOR CONSIDERI NG THE ENTIRE AMOUNT IN THE HANDS OF THE ASSESSEE. (III) ON THE ONE HAND THE INTEREST PAYMENT OF RS. 5 ,63,400/- SHOWN AGAINST THIS VERY ENTRY HAS BEEN CONSIDERED IN THE PRECEDING GROUND NO. 3 IN THE HANDS OF THE ASSESSEE AND ADDIT ION HAS BEEN MADE ON THIS ACCOUNT. THUS ON THE ONE HAND THE ASSE SSING OFFICER IS TREATING THAT THE INTEREST HAS BEEN PAID BY THE ASS ESSEE ON THE AFORESAID AMOUNT OF RS. 156.50 LACS AND SUCH INTERE ST HAS BEEN ADDED IN THE HANDS OF THE ASSESSEE AND ON THE OTHER HAND THIS VERY AMOUNT IS BEING TREATED OF THE ASSESSEE. HOW CAN IN TEREST BE PAID ON HIS OWN AMOUNT. THUS THE ACTION OF THE LEARNED A SSESSING OFFICER SHOWS UTTER CONFUSION. THE ASSESSEE HAS BEEN REITER ATING THAT ASSESSMENT ORDER HAS BEEN PASSED WITHOUT PROPERLY U NDERSTANDING THE FACTS OF THE CASE AND THE SUBMISSION OF THE ASS ESSEE. IN VIEW OF THIS IT IS SUBMITTED THAT THE ADDITION MADE DESERVE S TO BE ALLOWED ON THE AFORESAID ACCOUNTS. THE RELEVANT PAGE NO. 5 OF ANNEXURE A-5 IS AVAILAB LE ON PAPER BOOK PAGE NO. 43. 5.5 THE LD DR HAS RELIED ON THE ORDERS OF THE AUTHO RITIES BELOW. 5.6 AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE CONVINCED THAT THE SUBMISSIONS OF THE LD. AR ARE CORRECT. THE ALLEGED INTEREST PAYMENT OF RS. 5,63,400/- SHOWN AGAINST THIS VERY ENTRY HAS BEEN C ONSIDERED IN GROUND NO.3 IN THE HANDS OF THE ASSESSEE AND ADDITION HAS BEEN MADE ON THIS ACCOUNT. WHEN THE A.O. IS TREATING THIS AMOUNT AS INTEREST P AID ON THE AMOUNT OF RS. 156.50 LACS AND INTEREST HAS BEEN ADDED IN THE HAND S OF THE ASSESSEE BUT AT THE SAME TIME THIS VERY AMOUNT IS BEING TREATED BEL ONGING TO THE ASSESSEE. 25 THIS SHOWS THAT THE A.O. HAS NOT MADE HIS HOME WORK PROPERLY. IN THE BACK GROUND OF THESE FACTS AND CIRCUMSTANCES OF THE CASE , WE FOUND ASSERTION OF THE ASSESSEE THAT THE ADDITION IS NOT BASED ON PROP ER ENQUIRY. ACCORDINGLY, WE ARE IN AGREEMENT WITH THE SUBMISSIONS OF THE ASS ESSEE AND CANNOT SUSTAIN IMPUGNED ADDITION OF RS. 20,49,345/-. THUS, WE ORD ER TO DELETE THIS ADDITION AND ALLOW GROUND NO. 4 OF THIS APPEAL. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ITA NO 98/JP/2013 ASSESSEE (A.Y. 2007-08) 6.1 THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF THE LD CIT(A), CENTRAL, JAIPUR DATED 17-12-2012 FOR THE A. Y. 2007-08 WHEREIN FOLLOWING GROUNDS HAVE BEEN RAISED. 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD. A.O. FOR FRAMING ASSESSMENT ORDER U/S 143(3)/153A OF INCOM E-TAX ACT, 1961 WHICH IS VOID AB-INITIO DESERVES TO BE QUASH ED. 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS. 39 ,50,000/- ON ACCOUNT OF UNDISCLOSED TRANSACTION IN CASH WHICH IS IN FACT OUT OF LC WITHDRAWALS AND THE SOURCE OF WHICH IS DULY EXPLAINED. 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS7,77 ,700/- ON ACCOUNT OF UNDISCLOSED RECEIPT OF COMMISSION WHER EAS THIS ACCOUNT REPRESENT THE PAYMENT OF EXPENSES AS PER SEIZED DOCUMENTS. 26 4. THE ASSESSEE CRAVES YOUR INDULGENCE TO ADD AME ND OR ALTER ALL OR ANY GROUNDS OF APPEAL BEFORE OR AT T HE TIME OF HEARING. 6.2 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE HAS NOT PRESSED THE GROUND NO.1. HENCE, THE SAME IS DISMISS ED BEING NOT PRESSED. 6.3 THE GROUND NO. 4 IS GENERAL IN NATURE WHICH NEE DS NO ADJUDICATION. 6.4 THE GROUND NO. 2 OF THE ASSESSEE IS IN RESPECT OF CONFIRMING THE ADDITION OF RS. 39.50 LACS ON ACCOUNT OF UNDISCLOSE D TRANSACTION IN CASH WHICH IN FACT ACCORDING TO THE ASSESSEE IS OUT OF L C WITHDRAWALS AND THE SOURCE OF WHICH IS DULY EXPLAINED. ON THIS ISSUE, BOTH THE PARTIES HAVE REITERATED THEIR EARLIER ARGUMENTS. IT WAS FOUND TH AT THIS ISSUE IS PART OF THE A.Y. 2008-09 WHICH WE HAVE DECIDED AS ABOVE. THEREF ORE, WITH SIMILAR REASONINGS, WE ORDER TO DELETE THIS ADDITION WHICH IS BASED ON PAPERS ANNEXURE B-1 AND B-2. THE A.O. HAS ARRIVED AT PEAK OF RS. 39.50 LACS ALLEGING THE SAME TO BE UNEXPLAINED CASH RELATABLE TO PAGE 35 WHEREAS ON DATES 25 TH AND 26 TH JULY THE SAME TRANSACTION IN CASH ARE AVAILABLE IN THIS VERY PAGE NO. 35. THIS ADDITION IS ALSO BASED ON SURREND ER MADE BY THE ASSESSEE AS WAS DISCUSSED IN A.Y. 2008-09 AS ABOVE. THEREFORE, ON THE BASIS OF SAME AND SIMILAR REASONING, WE DELETE THIS ADDITION ALSO . IN DOING SO, WE HAVE ALSO CONSIDERED THE FOLLOWING SUBMISSIONS OF THE ASSESSE E. 27 4. CASH TRANSACTIONS ARE EXPLAINABLE NOTWITHSTANDING THE SUBMISSION MADE ABOVE THAT THE PAGE NO. 35 DOES NOT BELONG TO THE ASSESSEE AND THAT IT IS A DU MP PAPER, IT IS FURTHER SUBMITTED THAT IF THE PAPER IS ANALYZED IND EPENDENTLY ALL THE TRANSACTION WILL STAND EXPLAINED. THE LEARNED ASSES SING OFFICER HAS CONSIDERED THE AMOUNT OF RS. 39,50,000/- AS A NEGAT IVE CASH BALANCE IN THE CASH BOOK AND HAS THEREFORE MADE THE ADDITION. IN THE CASH BOOK THE CASH TRANSACTIONS HAVE BEEN INCOR PORATED FROM THIS PAGE NO. 35. BUT THE LEARNED ASSESSING OFFICER HAS ACTED SELECTIVELY. WHILE INCORPORATING THE CASH TRANSACTI ON HE HAS TOTALLY IGNORED THE TRANSACTIONS OF MONEY RECEIVED BY CHEQU E WHICH ALSO STAND NOTED ON THE SAME PAGE AND THE ENTRIES OF CHE QUE PRECEDE THE ENTRIES OF CASH. IN OTHER WORDS AMOUNT HAS FIRS T COME BY WAY OF CHEQUE AND THE SAME HAS BEEN DISBURSED IN CASH. ALT HOUGH THE PAPER DOES NOT BELONG TO THE ASSESSEE BUT THE PAPER BEING A MEMORANDUM IS SELF EXPLANATORY. THE RELEVANT ENTRIE S ARE EXPLAINED AS UNDER SR.NO. DATE RECEIPT PAYMENT BALANCE 1 05.07.06 40000 -400000 2 25.07.06 3000000 (CHEQUE) 2600000 3 26.07.06 2500000 100000 4 27.07.06 1000000 (PNB MANUBAN) 1100000 5 27.07.06 550000 550000 THUS IT WOULD BE SEEN THAT AT THE MOST THE NEGATIVE CASH BALANCE IS ONLY OF RS. 4,00,000/- AS ON 05.07.2006 I.E. ALSO BEING THE OPENING ENTRY WHICH IS LIKELY TO BE COVER ED IF THE ENTIRE ENTRIES ARE RECONCILED. THE LEARNED ASS ESSING OFFICER HAS BEEN SELECTIVE IN INCORPORATING THE 28 CASH TRANSACTIONS IN THE CASH BOOK SO PREPARED BY HI M. HAD HE TAKEN NOTE OF THE AMOUNT RECEIVED BY CHEUQUE THE CASH TRANSACTIONS ARE FULLY COVERED. THE PAGE NO . 35 CONTAINS BOTH THE RECEIPT OF AMOUNT BY CHEQUE AND TH E DISBURSEMENT OF THE SAME BY CASH. IN VIEW OF THIS N O ADDITION COULD BE MADE ON THE BASIS OF PAGE NO. 35. TH E LEARNED ASSESSING OFFICER WAS WRONG IN DRAWING A CASH BOOK WITH A NEGATIVE BALANCE ON THE BASIS OF WHICH ADDITIONS HAVE BEEN MADE. THE WORKING OF THE LEARNED ASSESSING OFFICER WAS SELECTIVE AND HENCE THEREFORE DEFECTIVE. 5. ALLEGED SURRENDER BY THE ASSESSEE THE LEARNED ASSESSING OFFICER HAS REFERRED TO SURRE NDER OF RS. 35,00,000/- BY THE ASSESSEE. IT IS SUBMITTED THAT I NCOME HAS TO BE ASSESSED AS PER THE PROVISIONS OF THE INCOME TAX AC T, 1961 AND NOT ON ACCOUNT OF SURRENDER BY THE ASSESSEE ON A WRONG ASSUMPTION. WHAT HAPPENS WITH THE ASSESSEE IN A SEARCH CASE IS THAT HE IS TIRED OF ATTENDING VARIOUS HEARINGS FIRST BEFORE THE INVE STIGATION WING AND THEN BEFORE THE LEARNED ASSESSING OFFICER. IN THESE CIRCUMSTANCES THE ASSESSEE TRIES TO GET RID OF THE PROCEEDINGS SO THAT HE CAN DEVOTE TO HIS BUSINESS. WITH THIS BACKGROUND HE MAK ES SURRENDER EITHER BEFORE THE INVESTIGATION WING OR BEFORE THE LEARNED ASSESSING OFFICER BUT SUCH SURRENDER HAS NO BASIS AND IS NOT SUPPORTED BY ANY PIECE OF EVIDENCE. HENCE THE LEARNED ASSESSING OFFI CER CANNOT BASE HIS ADDITION WITH REFERENCE TO SUCH SURRENDER MADE BY THE ASSESSEE WHICH IS OUT OF VARIOUS PRESSURES. THE ASS ESSEE BACK TRACKS SUCH SURRENDER AS IT HAS NO LEGS NOR ANY EVIDENCE. THERE ARE PLETHORA OF DECISIONS WHICH HAVE LAID DOWN THAT ADD ITION CANNOT BE MADE SIMPLY ON THE BASIS OF THE STATEMENT OF THE ASSESSEE OR ON THE BASIS OF SURRENDER MADE BY THE ASSESSEE WHICH L ACKS SUPPORTING EVIDENCE. THE FOLLOWING DECISIONS ARE QUOTED IN SUP PORT 29 (A) PULLANGUEGODE RUBBER & PRODUCE CO. LTD. VS. STATE OF KERALA 91 ITR 18 (SUPREME COURT) AN ADMISSION IS EXTREMELY AN IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. (B) JAIN TRADING CO. V/S ITO (2007) 17 SOT 574 (MUM ) ADDITION ON THE BASIS OF ADMISSION MADE DURING SURVEY RETRACTED DURING ASSESSMENT. AN ASSESSEE OFFERING ADDITIONAL INCOME DURING THE COURSE OF SURVEY IS NOT BOUND BY THE SAID OFFER FOR ALL TIMES T O COME ---- DURING SURVEY ASSESSES OFFERED AN ADDITIONAL INCOME OF RS/- 25 LAC ON BEING POINTED BY THE SURVEY PARTY THAT THERE WAS UNDER STATEMENT OF STOCK. ASSESSES DID NOT DECLARE SUCH INCOME IN THE IT RETURN A.O. MADE ADDITION OF RS. 25 LAC. NOT JUSTIFIE D. (C) KAILASH BEN MOHANLAL CHOKSI V/S CIT (2008) 14 DTR (GUJ) 257 IT IS TOO MUCH TO GIVE CREDIT TO A STATEMENT RECORDE D AT MIDNIGHT WHERE A PERSON MAY NOT BE IN A POSITION TO MAKE ANY CORRECT AND CONSCIOUS DISCLOSES DISCLOSURE STATEMENT RECORDED AT ODD HOURS CANNOT BE CONSIDERED TO BE A VOLUNTARY STATEMENT. . (D) CONTECH TRANSPORT SERVICE (P) LTD ORS V/S ACIT ( 2009) 19 DTR 191 (MUMBAI) 28-11-08 NO ADDITION CAN BE MADE ONLY ON THE BASIS OF ADMISSION IN STATEMENT V/S 132 (4) (E) CHITRA DEVI V/S ACIT (JODHPUR BRANCH) (2002) 77 T TJ (JD) 640 30 STATEMENT RECORDED DURING SEARCH ARE NOT EVIDENCES FOUND DURING SEARCH. ADDITION CANNOT BE MADE ON THE BASIS OF STATEMENT ALONE. (F) AJIT CHINTAMAN KARVE V/S I.T.O. (2009) 311 ITR (A T) 66 (PUNA) ITAT BRANCH . THAT MERELY BECAUSE AN OFFER WAS MADE HAVING NO COG ENT BASIS OR APPROVAL OF LAW THAT SHOULD NOT STOP A TAX PAYER FROM CORRECTING HIS MISTAKE. IT WAS THE DULY OF THE A.O. TO TAX ONLY THE LEGITIMATE AMOUNT FROM A TAXPAYER. IN VIEW OF THE AFORESAID FACTS THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION WITH REFERENCE TO THE SURRENDER MADE BY THE ASSESSEE WITHO UT HAVING ANY SUBSTANTIATING MATERIAL. IN THE CASE OF THE ASSESSEE THE LEARNED ASSESSING OFFICER HAS FAILED TO LINK THE SEIZED PAPERS WITH THE AFFAIRS OF THE ASSESSEE. NO ENQUIRES WORTH THE NAME HAVE BEEN CONDUCTED ON THE CONTENTS OF THE SEIZED PAPERS WHICH CONTAIN A LOT MA NY NAMES. IN THE CIRCUMSTANCES THE ADDITION MADE IS PURE LY AN ADDITION ON THE BASIS OF DUMP PAPERS. THE SAME DESERVES TO BE DELETED. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITI ONS. HE HAS OBSERVED THAT SUBMISSIONS OF THE ASSESSEE LA CK EVIDENCE. ON THE CONTRARY THE ASSESSEE HAS EXPLAINED THE SEIZED PAPERS THEMSELVES WHICH DO NOT NEED ANY SUPPORTING MATERIAL. IN VIEW OF THIS IT IS PLEADED T HAT ADDITIONS MADE MAY KINDLY BE DELETED. 6.5 ACCORDINGLY, WE ORDER TO ALLOW GROUND NO. 2 OF THIS APPEAL. 7.1 THE FACTS APROPOS TO GROUND NO. 3 OF THIS APPEA L RELATING TO CONFIRMATION OF ADDITION OF RS. 7,77,000/- ARE THAT THIS ADDITION IS BASED ON PREMISES THAT THIS NOTING REPRESENTS UNDISCLOSED RE CEIPT OF COMMISSION . AS 31 PER ASSESSEE, THIS AMOUNT IS PAYMENT OF EXPENSES AS PER SEIZED DOCUMENTS. THE SUBMISSION OF THE ASSESSEE IN THIS REGARD IS AS UNDER:- THE LEARNED ASSESSING OFFICER HAS MADE THE ADDITION ON THE BASIS OF PAGE 32 TO 34 OF ANNEXURE A-5 SEIZED FROM THE RE SIDENCE OF SHRI ASHISH AGARWAL. AS SUBMITTED IN THE EARLIER PARAS W ITH RESPECT TO PAGE NO. 35, THE SAME IS TRUE IN RESPECT OF PAGE NO . 32 TO 34 ALSO. THESE PAPERS ARE ALSO DUMP PAPERS. THE LEARNED ASSE SSING OFFICER HAS FAILED TO LINK THESE PAPERS WITH THE BUSINESS A FFAIRS OF THE ASSESSEE. THE TRANSACTIONS NOTED IN THESE PAPERS DO NOT HAVE ANY REFERENCE EITHER TO THE ASSESSEE OR TO HIS GROUP. A LL THE THREE PAGES HAVE REFERENCE TO TDS AND SERVICE TAX WITH THE NAME OF THE PERSON BUT NO ENQUIRIES HAVE BEEN CONDUCTED BY THE LEARNED ASSESSING OFFICER. THE DETAILS ARE AS UNDER SR.NO. PAGE NO. DATE NAME OF THE PARTY TDS/ SERVICE TAX AMOUNT 1 32 21.01.06 BAYER (TDS) 59359 2 33 31.10.05 KAY INTEL (TDS) 135541 3 34 31.08.05 BAYER(TDS) 1385708 4 34 31.08.05 BAYER(TDS) 101620 5 34 31.08.05 GHCL(TDS) 1644259 6 34 31.08.05 GS(TDS) 461737 7 34 31.08.05 PERFECT DROP PIN (SERVICE TAX) 424406 8 33 31.10.05 KAY INTEL (SERVICE TAX) 181359 9 33 22.09.05 THARMAX (SERVICE TAX) 639173 32 THE ASSESSEE HAS GOT NOTHING TO DO WITH THE AFORESAI D PARTIES. HENCE THE PAPER DOES NOT RELATE TO THE ASSE SSEE. IF THERE WAS ANY WILL LEFT IN THE ASSESSING OFFICER , HE COULD HAVE CAUSED ENQUIRIES FROM THE AFORESAID PARTIES TO UNEARTH THE TRUTH BUT THIS HAS NOT BEEN DONE. THE LE ARNED ASSESSING OFFICER HAS ADOPTED A PREJUDICIAL SHORT CU T METHOD AND HAS MADE THE ADDITION. THE ADDITION HAS BEEN MADE WITHOUT ANY BASE, WITHOUT CAUSING ENQUIRI ES, WITHOUT ESTABLISHING THAT THE ENTRIES IN THESE PAPE RS WERE BELONGING TO THE ASSESSEE AND WITHOUT LINKING THE PA GES WITH THE BUSINESS AFFAIRS OF THE ASSESSEE. FURTHER AS SUBMITTED IN THE FORGOING PARAS THESE PAGES DO NOT M AKE ANY SENSE AND HENCE ARE DUMP PAPERS. THE WRITER OF THESE PAPERS HAS NOT BEEN EXAMINED WITH REFERENCE TO THESE PAPERS, HENCE THE SAME COULD NOT BE UTILIZED AGAINST THE ASSESSEE. 7. NO RECEIPT OF COMMISSION BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS SUBMITTED THAT THE ASSESSEE DID NOT RECEIVE ANY COMMISSION. A CLOS E SCRUTINY OF THE PAGES WILL REVEAL THAT THE ENTRIES RELEVANT TO COMM ISSION SHOW THAT IT WAS A RECEIPT IN THE HANDS OF KRISHNA TO WHOM TH ESE PAPERS BELONGED. IN THE NARRATION OF THESE ENTRIES NAME OF THE ASSESSEE DOES NOT FIND PLACE AND HENCE THESE CANNOT BE HELD TO BELONG TO THE ASSESSEE. THEREFORE ADDITION IS WRONG FIRSTLY B ECAUSE THERE IS NO RECEIPT IN THE HANDS OF THE ASSESSEE AND SECONDLY T HE ENTRIES DO NOT RELATE TO THE BUSINESS OF THE ASSESSEE. THE LEA RNED ASSESSING OFFICER WAS WRONG FIRSTLY IN ASSUMING THAT IT WAS A RECEIPT AND SECONDLY THAT TOO IN THE HANDS OF THE ASSESSEE. THU S THE CONTENTS OF THE PAPERS HAVE NOT BEEN APPRECIATED PROPERLY AS HI S PERCEPTION WAS HIGHLY PREJUDICIAL AGAINST THE ASSESSEE. IN THE CIRCUMSTANCES IT IS PRAYED THAT THE ADDITION DESERVES TO BE DELETED. 72 ON THE OTHER HAND, THE LD DR HAS RELIED ON THE O RDER OF THE LD CIT(A). 33 7.3 AFTER CONSIDERING THE RIVAL SUBMISSIONS IN THE SAME MANNER AS WE HAVE DONE IN EARLIER YEARS, WE ORDER TO DELETE THIS ADDITION AS WELL AND ALLOW GROUND NO.3 OF THIS APPEAL. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ITA NO.397/JP/2013 ASSESSEE & 591/JP/2013 REVEN UE ( A.Y. 2009-10) 8.1 THESE ARE THE CROSS APPEALS FILED AGAINST THE O RDER OF THE LD CIT(A)- CENTRAL, JAIPUR DATED 15-03-2013 FOR THE A.Y. 2008- 09. 8.2 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD. A.O. FOR FRAMING ASSESSMENT ORDER U/S 143(3)/153A OF INCOM E-TAX ACT, 1961 WHICH IS VOID AB-INITIO DESERVES TO BE QUASH ED. 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS. 36 ,32,837/- ON ACCOUNT OF UNACCOUNTED INCOME SURRENDERED BY THE ASSESSEE BY INITIATING THE PENALTY PROCEEDINGS U/S 271AAA OF THE INCOME- TAX ACT, 1961 3. THE ASSESSEE CRAVES YOUR INDULGENCE TO ADD AME ND OR ALTER ALL OR ANY GROUNDS OF APPEAL BEFORE OR AT T HE TIME OF HEARING. 8.3 THE REVENUE HAS RAISED THE FOLLOWING GROUND:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A), CENTRAL, JAIPUR HAS ERRED IN DEL ETING ADDITION OF RS. 16,49,430/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED CASH FOUND DURING SEARCH OPERATIO N. 34 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A), CENTRAL, JAIPUR HAS ERRED IN DEL ETING ADDITION OF RS. 14,30,775/- MADE BY A.O. ON ACCO UNT OF UNEXPLAINED JEWELLERY FOUND DURING SEARCH OPERAT ION MERELY ON THE BASIS OF INSTRUCTION NO. 1916 DATE D 11-05- 1994 WHICH IS APPLICABLE TO THE SEIZURE OF JEWEL LERY FOUND. 3. THE APPELLANT CRAVES THE RIGHT TO AMEND/ ALTE R OR ADDITION TO ANY OF THE GROUNDS OF APPEAL GIVEN A BOVE. 8.4 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE HAS NOT PRESSED THE GROUND NO.1. HENCE, THE SAME IS DISMISS ED BEING NOT PRESSED. 8.5 THE GROUND NO. 3 IS GENERAL IN NATURE WHICH NEE DS NO ADJUDICATION. 9.1 THE ONLY SURVIVING GROUND IS GROUND NO. 2 WHICH IS IN RESPECT OF CONFIRMATION OF ADDITION OF RS. 36,32,837/- MADE ON ACCOUNT OF UNACCOUNTED INCOME SURRENDERED BY THE ASSESSEE BY INITIATING PE NALTY PROCEEDINGS U/S 271AAA OF THE ACT. THE SUBMISSION OF THE IN RELATIO N TO REVENUES GROUND OF APPEAL IS INTERPRETED FROM THE ASSESSEE'S PAPER BOOK. THIS SUBMISSION ASSESSMENT ORDER COVERS THE GROUND NO. 2 OF THE ASS ESSEE'S APPEAL. IN THIS CASE CASH OF RS. 16,49,430/- WAS FOUND AT R ESIDENTIAL PREMISES AND BUSINESS PREMISES. ON THE OTHER HAND ALM OST EQUIVALENT CASH WAS FOUND SHORT AT THE BUSINESS PRE MISES OF THE GROUP COMPANIES WITH REFERENCE TO THE RELEVANT CASH BOOKS. BEFORE THE LEARNED CIT(A) IT WAS PLEADED THAT SINCE CASH BALANCES AS PER CASH BOOKS OF THE COMPANIES WAS IN DISPUTE AND THE SAME WAS NOT FOUND AT THE BUSINESS PREMISES B ECAUSE FOR PURPOSES OF SAFETY THE SAME WAS TAKEN AT THE RE SIDENCES. CONSIDERING THIS THE LEARNED CIT(A) HAS DELETED THE ADDI TION BECAUSE CASH FOUND IN EXCESS AT RESIDENCES MATCHED WIT H 35 CASH FOUND SHORT AT THE BUSINESS PREMISES. IN VIEW O F THIS THERE IS NO CASH LEFT FOR ANY APPEAL FOR THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A). THE APPEAL HAS BEEN FILED BY THE REVENUE FOR THE SAKE OF APPEAL. THE ASSESSEE REPEATS THE SUBMISSIONS MADE BEFORE TH E LEARNED CIT(A). THE SAME ARE QUOTED BELOW - 1. BRIEF FACTS DURING THE COURSE OF SEARCH CASH WAS FOUND AND SEIZ ED AS PER TABLE BELOW AS MENTIONED ON PAGE NO. 3 OF THE ASSES SMENT ORDER SR. NO. PREMISES CASH FOUND CASH SEIZED REMARKS 1. RESIDENTIAL PREMISES : 5/2 PUNJABI BAGH, NEW DELHI 411500 350000 THE CASH PERTAIN TO PRIME GOLD INDIA LTD WHERE AS PER BOOKS THE BALANCE ON THE DATE OF SEARCH WAS RS. 4,40,200/- FOR PURPOSES OF SAFETY, THE SAME WAS USUALLY KEPT AT THE RESIDENCE OF THE DIRECTOR. THE CASH IS FULLY EXPLAINED. 2. RESIDENTIAL PREMISES : ASHISH AGARWAL, FLAT- 24, C-8, SECTOR-8, ROHINI, NEW DELHI 902730 870000 THE CASH FOUND WITH THE EMPLOYEE 36 3. BUSINESS PREMISES : M/S KAMDHENU CEMENT LTD. 335200 335200 ASHISH AGARWAL AND AT THE BUSINESS PREMISES OF KAMDHENU CEMENT LTD. TOTALS TO RS. 12,37,930/- BELONGED TO KAMDHENU CEMENT LTD. WHERE AS PER CASH BOOK THE BALANCE AS ON THE DATE OF SEARCH WAS RS. 12,17,795/-. THUS THE ENTIRE CASH IS EXPLAINED. NO ADDITION WAS REQUIRED. TOTAL :- 1649430 1555200 IN SUPPORT OF THE CASH FOUND/SEIZED COPIES OF SEIZU RE MEMO ARE AVAILABLE ON PAPER BOOK PAGE NO. 1 TO 3. IN SUPPORT OF CASH BALANCE OF CASH BOOK AS ON 17.09.2008 IN THE CASH B OOK OF M/S PRIME GOLD INDIA LTD AND M/S KAMDHENU CEMENT LTD. C OPIES OF THE RELEVANT PAGE OF CASH BOOK ARE AVAILABLE ON PAPER BOOK PAGE NO. 4 TO 5. THUS APPARENTLY CASH FOUND/SEIZED WAS FULLY EXPLAINED. THERE WAS NO UNACCOUNTED CASH. THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION. THE ACTION OF THE LEARNED ASSESSING OFFICER IS ASSAILED AS UNDER 2 . CASH OF RS. 4,11,500/- FOUND AT 5/2, PUNJABI BAGH E XTN. NEW DELHI 37 AS HAS BEEN INDICATED IN THE REMARKS COLUMN OF THE ABOVE TABLE IT IS SUBMITTED THAT THE ENTIRE CASH FOUND AT THE RESI DENCE OF THE ASSESSEE WAS FULLY EXPLAINED. THE CASH BELONGED TO M/S PRIME GOLD INDIA LTD. AND AS ON THE DATE OF SEARCH THE BALANCE AS PER THE CASH BOOK OF THE COMPANY WAS RS. 4,40,200/-. THUS T HE CASH WAS IN FACT SHORT BY A VERY SMALL AMOUNT. THIS WAS SO BECA USE EMPLOYEES WERE GIVEN PETTY ADVANCES TO MEET OUT EXIGENCIES. C OPY OF CASH BOOK OF M/S PRIME GOLD INDIA LTD AS ON 17.09.2008 S HOWING CASH BALANCE OF RS. 4,40,000/- IS AVAILABLE ON PAPER BOOK CITED SUPRA. BEFORE THE LEARNED ASSESSING OFFICER HAS OBJECTED T HAT WHY COMPANY'S CASH WAS KEPT AT THE RESIDENCE OF THE ASS ESSEE. IN THIS REGARD IT SUBMITTED AT THE CLOSE OF THE DAY AFTER B ANKING HOURS IF IS NOTICED THAT THERE WAS SUBSTANTIAL CASH IN HAND, TH E SAME WAS TAKEN TO RESIDENCE FOR PURPOSES OF SAFETY. THERE IS NOTHING UNBECOMING OR UNTOWARD IN THIS. THE LEARNED ASSESSI NG OFFICER HAS OBSERVED THAT TRANSPORTING OF CASH FROM ONCE PLACE TO ANOTHER WAS RISKY IN VIEW OF DAY LIGHT ROBBERIES. HOWEVER THE L EARNED ASSESSING OFFICER HAS IGNORED THE FACT THAT THERE WAS MORE RI SK IN LEAVING THE CASH DURING NIGHT HOURS AT THE BUSINESS PREMISES OF THE COMPANY. MOREOVER THE DISCRETION OF THE ASSESSEE IN THIS REG ARD FOR CONDUCTING THE DAY TO DAY BUSINESS MATTERS CANNOT B E REPLACED BY THE OPINION OF THE LEARNED ASSESSING OFFICER. IT IS WELL SETTLED PRINCIPLE OF LAW THAT THE REVENUE AUTHORITIES CANNO T DICTATE THE MANNER, METHOD AND THE PROCEDURE FOR CONDUCTING THE DAY TO DAY AFFAIRS OF BUSINESS. THE ASSESSEE OR THE BUSINESSMA N KNOWS WELL THE EXPEDIENCIES AND EXIGENCIES OF THE BUSINESS. THE AS SESSEE HAS NOT COMMITTED ANY ILLEGALITY BY KEEPING THE CASH FOR PU RPOSES OF SAFETY AT THE RESIDENCE OF THE DIRECTOR. THUS THE LEARNED ASSESSING OFFICER ERRED IN MAKING THE ADDITION ON THIS GROUND. THE LEARNED ASSESSING OFFICER HIMSELF HAS OBSERVED T HAT AT THE VARIOUS BUSINESS PREMISES OF THE ASSESSEE CA SH WAS FOUND SHORT TO THE EXTENT OF 29.54 LACS WHICH INCLUD ED THE PREMISES OF KAMDHENU CEMNT LTD., KAMDHENU INDUSTRIES AND PRIME GOLD INDIA LTD. THIS IS AS PER PARA 'D' ON P AGE 5 OF THE ASSESSMENT ORDER. WHEN THE LEARNED ASSESSING OFFICER HIMSELF ADMITS THAT CASH WAS FOUND SHORT AT O NE 38 PLACE AND WAS FOUND IN EXCESS AT ANOTHER PLACE, HE SHOULD HAVE HIMSELF VOLUNTARILY MATCHED THE AVAILABILITY OF CAS H BY ADJUSTING THE EXCESS CASH OF ONE PLACE AGAINST THE SHORTAGE OF CA SH AT ANOTHER SPECIALLY WHEN THE PREMISES COVERED WERE OF THE SAM E GROUP. THUS ON THIS ACCOUNT ALSO THE ADDITION MADE BY THE LEARN ED ASSESSING OFFICER IS MOST UNJUSTIFIED. THE SAME DESERVES TO B E DELETED . 3. CASH AT THE RESIDENCE OF ASHISH AGARWAL/BUSINESS PREMISES OF M/S KAMDHENU CEMENT LTD. CASH WAS FOUND AT THE RESIDENTIAL PREMISES OF SHRI ASHISH AGARWAL AT FLAT NO. 24, C-8, SECTOR-8, ROHINI, NEW DELHI OF RS . 9,02,730/- AND CASH OF RS. 3.35.200/- WAS FOUND AT THE BUSINESS PR EMISES OF M/S KAMDHENU CEMENT LTD. THIS TOTALS TO RS. 12,37,930/- . IT IS SUBMITTED THAT THIS CASH WAS NOT FOUND AT THE RESIDENCE OF TH E ASSESSEE AND HENCE THE SAME COULD NOT BE CONSIDERED IN HIS HANDS . THE LEARNED ASSESSING OFFICER ERRED IN CONSIDERING THE CASH FOU ND AT THE BUSINESS OF M/S KAMDHENU CEMENT LTD IN THE HANDS OF THE ASSE SSEE WHEREAS THE CASH BELONGED TO THE COMPANY ITSELF AND IS COVE RED BY THE CASH BALANCE OF RS. 12,17,795/- AS ON THE DATE OF S EARCH. BOTH THE COPIES OF THE SEIZURE MEMO OF CASH FROM THE PREMISE S OF THE COMPANY AS WELL AS THE COPY OF CASH BOOK OF THE DAY OF THE COMPANY ARE AVAILABLE ON PAPER BOOK CITED SUPRA. SI MILARLY THE CASH FOUND AT THE RESIDENCE OF ASHISH AGARWAL ALSO PERTAINED TO THE COMPANY. THE TOTAL CASH FOUND AT BOTH THE PLACE S IS OF RS. 12,37,930/- WHEREAS THE BALANCE AS PER CASH BOOK OF THE COMPANY IS RS. 12,17,795/-. THE PETTY DIFFERENCE IS OF NEGL IGIBLE NATURE. THE SAME IS DUE TO THE FACT THAT A SMALL OF RS. 20,000/ - BELONGED TO SHRI ASHISH AGARWAL ITSELF AT WHOSE RESIDENCE THE CASH W AS FOUND. THUS THE ENTIRE CASH STANDS EXPLAINED. IT IS FURTHER SUBMITTED THE CASH FOUND AT THE BUSINES S PREMISE OF THE KAMDHENU CEMENT LTD. CAN IN NO CIRCUMSTANCES BE CONSIDERED IN THE HANDS OF THE ASSESSEE. THE SAME IS COVERED BY THE BALANCE SHOWN I N THE REGULAR CASH BOOK. SIMILARLY THE LEARNED ASSESS ING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECO RD THAT THE CASH FOUND AT THE RESIDENCE PREMISES OF SHRI ASHISH AGARWAL BELONGED TO THE ASSESSEE. IN FACT 39 ASHISH AGARWAL WAS EMPLOYEE OF THE GROUP AND IT WAS CUSTOMARY THAT AT THE END OF THE DAY CASH WAS TAKEN B Y HIM AT HIS RESIDENCE. THE DIRECTORS OF THE COMPANY HA D FULL TRUST AND FAITH IN HIM. IN THESE CIRCUMSTANCES THE CASH IS FULLY EXPLAINED. 4. OVERALL POSITION OF CASH IT IS FURTHER SUBMITTED THAT IF THE OVERALL POSITIO N OF CASH FOUND IS CONSIDERED WITH REFERENCE TO THE BOOKS OF ACCOUNTS THE SAME IS SHORT. THE LEARNED ASSESSING OFFICER HIMSELF HAS OB SERVED IN PARA (D) ON PAGE 5 OF THE ASSESSMENT ORDER THAT CASH WAS FOUND SHORT BY RS. 29,54,000/- AT THE VARIOUS BUSINESS PREMISES OF THE ASSESSEE GROUP SUCH AS M/S KAMDHENU CEMENT LTD., M/S KAMDHEN U INDUSTRIES LTD. ETC. ON THE ONE HAND THE CASH WAS F OUND SHORT AND AT THE OTHER HAND THE LEARNED ASSESSING OFFICER IS TREATING THE CASH IN EXCESS. EVEN IF THE ENTIRE CASH FOUND OF RS. 16, 49,430/- IS CONSIDERED AGAINST THE BOOK POSITION OF CASH OF M/S KAMDHENU CEMENT LTD. WHICH IS RS. 12,17,795/- AND OF M/S PRI ME GOLD INDIA PVT. LTD. RS. 4,40,200/- TOTALING TO RS. 16,57,995/ - THE CASH IS SHORT BY SMALL AMOUNT OF RS. 8,365/-. THUS MORE OR LESS THE POSITION OF CASH IS RECONCILED. ON THE OTHER HAND THE LEARNED ASSESSING OFFICER HAS HIMSELF MENTIONED THAT THE CASH FOUND SHORT AT VARIOUS BUSI NESS PLACES WAS OF RS. 29,54,000/-. IF THIS IS SET OFF BY THE CASH FOUND OF RS. 16,49,430/- EVEN THAN THERE REMAINS SHORTAGE OF CASH OF RS. 13, 04,570/-. THIS SHORTAGE WAS BECAUSE OF VARIOUS ADVANCES GIVEN TO EMPLOYEES/DIRECTORS FOR MEETING DAY TO DAY EXPENSES AND EXIGENCIES. IN ANY CASE THERE WAS NO EXCESS CASH AV AILABLE ON THE DATE OF SEARCH IN THIS GROUP CASE. THE LEARNED ASSE SSING OFFICER HAS ERRED IN MAKING ADDITION ON THE GROUND THAT THERE W AS EXCESS CASH AVAILABLE WITH THE ASSESSEE ON THIS DATE. IN VIEW O F THIS THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER DESERVES TO B E DELETED.' IN VIEW OF THE ABOVE THE LEARNED CIT(A) WAS JUSTI FIED IN DELETING THE ADDITIONS. THE LEARNED CIT(A) HAS RIGHTLY HE LD THAT THE COMPANY NAMELY KAMDHENU CEMENT LTD., PRIME GOLD INDIA PVT LTD ARE CLOSELY HELD 40 COMPANIES AND THE ASSESSEE IS ASSOCIATED WITH THESE COMPANIES. IN VIEW OF THIS POSITION THE CASH HAS TO BE CONSIDERED TAKI NG OVERALL POSITION OF THE GROUP. WHEN COMPARED WITH THE AVAILABILITY OF THE C ASH IN THE BOOKS OF ACCOUNTS OF THE COMPANIES, NO EXCESS CASH WAS LEFT FOUND AT RESIDENTIAL PREMISES. THUS THE DECISION OF THE LEARNED CIT(A) D ESERVES TO BE CONFIRMED AND APPEAL OF THE REVENUE ON THIS ACCOUNT S FAILS. REVENUES GROUND NO. 2:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) (CENTRAL) JAIPUR HAS ERRED IN DELETING ADDITION OF RS. 1430775/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED JEWELLERY FOUND DU RING SEARCH OPERATION MERELY ON THE BASIS OF INSTRUCTION NO. 19 16 DATED 11.05.1994 WHICH IS APPLICABLE TO THE SEIZURE OF JEWELLERY FOU ND. IN THE CASE DURING THE COURSE OF SEARCH JEWELLERY W AS FOUND OF RS. 14,30,775/-. THE ASSESSEE EXPLAINED THE SAME AS BEL ONGING TO WIFE, TWO SONS AND SELF WITH REFERENCE TO INSTRUCTION NO. 191 6 DATED 11.05.94. AS PER THIS INSTRUCTION OF BOARD GOLD JEWELLERY OF 250 GRA MS PER MARRIED LADY AND 100 GRAM PER MALE WAS NOT REQUIRED TO BE SEIZED. HO WEVER THE LEARNED ASSESSING OFFICER MADE THE ADDITION REJECTING THE E XPLANATION OF THE ASSESSEE ON THE GROUND THAT THE INSTRUCTION RELATED FOR THE SEIZURE ONLY. HOWEVER THE LEARNED CIT(A) ACCEPTED THE EXPLANATION OF THE ASSESSEE AND DELETED THE ADDITION ON THE GROUND THAT THIS WA S THE ESTABLISHED POSITION OF LAW. THE FOLLOWING SUBMISSIONS MADE BEF ORE THE LEARNED CIT(A) ARE REPEATED FOR KIND CONSIDERATION 'THE TOTAL GOLD JEWELLERY FOUND DURING THE COURSE O F SEARCH WAS 871.885 GRAM. THE VALUE OF THE SAME WAS DETERMINED AT RS. 1 4,30,775/-. THE LEARNED ASSESSING OFFICER HAS MADE ADDITION OF RS. 14,30,775/- BEING THE VALUE OF ENTIRE JEWELLERY FOUND. THUS THE LEARNED A SSESSING OFFICER HAS TREATED THE ENTIRE GOLD JEWELLERY AS UNEXPLAINED. T HE ACTION OF THE LEARNED ASSESSING OFFICER IN NOT IN ORDER. HE HAS E VEN IGNORED THE BOARDS INSTRUCTION NO. 1916 DATED 11.05.94. THE BOARD'S IN STRUCTION IS SPECIFICALLY FOR THE PURPOSES OF SEARCH. WHEREIN IT HAS BEEN DIR ECTED THAT GOLD JEWELLERY AND ORNAMENTS 500 GRAMS PER LADY, 250 GRA MS TO UNMARRIED LADY AND 100 GRAMS PER MALE MEMBER DID NOT REQUIRE TO BE SEIZED. THE ENTIRE 41 PURPOSES OF THIS INSTRUCTION WAS THAT IN THE OPINIO N OF THE BOARD TO THE ABOVE EXTENT THE GOLD ORNAMENTS AND JEWELLERY SHOUL D BE TREATED AS EXPLAINED. FOLLOWING THIS INSTRUCTION, IN THE HANDS OF THE ASSESSEE GOLD JEWELLERY AND ORNAMENTS STAND EXPLAINED TO THE EXTE NT OF 800 GRAMS AS UNDER (I) SMT. GEETA AGARWAL WIFE 500 GRAMS (II) SHRI PRADEEP AGARWAL ASSESSEE 100 GRAMS (III) SHRI ACHIN AGARWAL SON 100 GRAMS (IV) SHRI PULKIT AGARWAL SON 100 GRAMS TOTAL 800 GRAMS IT IS FURTHER SUBMITTED THAT IN THE INCOME TAX RECOR DS OF SMT. GEETA AGARWAL JEWELLERY TO THE EXTENT OF RS. 55,000 /- STOOD DISCLOSED. THIS WAS THE JEWELLERY WHICH SHE PURCHASE D OUT OR HER INCOME AND HENCE THE SAME WAS DISCLOSED IN THE I NCOME TAX RECORDS FROM ASSESSMENT YEAR 2003-04 TO 2009-10. THE GOLD JEWELLERY AND ORNAMENTS RECEIVED AT THE TIME OF MARRI AGE FROM HER IN-LAWS AND PARENTS BEING STRI-DHAN WAS NEVER D ISCLOSED IN THE INCOME TAX RECORDS. THUS THE LEARNED ASSESSING OF FICER WAS NOT JUSTIFIED IN MAKING ADDITION ON ACCOUNT OF GOLD J EWELLERY. THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED IN GI VING HIS OWN MEANING TO THE INSTRUCTION OF THE BOARD. THE INSTRUC TION NO. 1916 DATED 11.05.2004 OF THE BOARD IS NOT ONLY FOR PURPOSE OF SEIZURE BUT IT IS FOR THE PURPOSES OF THE INCOME TAX ACT WH ICH INCLUDES THE ASSESSMENT PROCEEDINGS ALSO. THERE ARE VARIOUS DECISIONS OF THE COURTS HOLDING THAT THE BOARD'S INSTRUCTIONS ARE FOR ASSESSMENT PURPOSES AND AS PER THE INSTRUCTION JEWEL LERY SHOULD BE TREATED EXPLAINED TO THE EXTENT MENTIONED IN THE INSTRUCTION. THE FOLLOWING CASE LAW IS QUOTED IN SUP PORT (I) CIT VS. RATAN LAL VYAPARI LAL JAIN 339 ITR 351 (GUJ) 42 SEARCH AND SEIZUREBLOCK ASSESSMENTCOMPUTATION OF UNDISCLOSED INCOMESEIZURE OF JEWELLERYINSTRUCTION NO. 1916, DT. 11TH MAY, 1992 WHICH LAYS DOWN GUIDELINES FOR SEIZU RE OF JEWELLERY AND ORNAMENTS IN THE COURSE OF SEARCH TAKES INTO AC COUNT THE QUANTITY OF JEWELLERY WHICH WOULD GENERALLY BE HELD BY THE FAMILY MEMBERS OF AN ASSESSEETHOUGH THE SAID CIRCULAR HAS BEEN ISSUED FOR THE PURPOSE OF LAYING DOWN GUIDELINES FOR SEIZU RE OF JEWELLERY, UNLESS ANYTHING CONTRARY IS SHOWN, IT CAN BE SAFELY PRESUMED THAT THE SOURCE TO THE EXTENT OF THE JEWELLERY STATED IN THE CIRCULAR STANDS EXPLAINEDHENCE, TRIBUNAL COMMITTED NO LEGAL ERROR IN TREATING THE EXTENT OF JEWELLERY SPECIFIED IN THE SAID CIRCULAR TO BE A REASONABLE QUANTITY AND IN DELETING ADDITION ON THAT BASIS. (II) CIT VS. KAILASH CHAND SHARMA 198 CTR 201 (RAJ HIGH COURT) IN VIEW OF THESE DECISIONS THE ENTIRE DECISION MADE BY THE LEARNED ASSESSING OFFICER DESERVES TO BE DELETED.' THE LEARNED CIT(A) DELETED THE ADDITIONS CONSIDERIN G THE DECISION OF JURISDICTIONAL HIGH COURT OF RAJASTHAN. THE POSITIO N BEING SUCH THE DECISION OF THE LEARNED CIT(A) DESERVES TO BE CONFI RMED AND THE APPEAL OF THE REVENUE ON THIS GROUND MERITS REJECTION. ASESSEES GROUND NO. 1:- UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LEARNED ASSES SING OFFICER FOR FRAMING ASSESSMENT ORDER U/S 143(3)/153A OF INCOME TAX ACT, 1961 WHICH IS VOID AB-INITIO DESERVES TO BE QUASHED . NOT PRESSED. ASSESSEES GROUND NO. 2:- UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE L EARNED CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS. 36,32,837/- ON ACCOUNT OF UNACCOUNTED 43 INCOME SURRENDERED BY THE ASSESSEE AND IN INITIATIN G THE PENALTY PROCEEDINGS U/S 271AAA OF THE INCOME TAX ACT, 1961. AS IS THE FASHION, DURING THE COURSE OF SEARCH SURR ENDER OF INCOME IS OBTAINED FROM ASSESSEES BY THE INVESTIGATION WING O F THE DEPARTMENT DESPITE THE CIRCULAR OF THE BOARD TO THE CONTRARY. IN THIS CASE ALSO, THE ASSESSEE BEING UNDER LOT OF STRESS, DURESS, MENTAL AGONY MADE SURRENDER OF INCOME OF RS. 36,32,837/- BEFORE THE INVESTIGATI ON WING OF THE DEPARTMENT. SUCH SURRENDER WAS NOT MADE WITH REFERE NCE TO ANY SEIZED MATERIAL FOUND DURING SEARCH. AS SUCH NO INCOME WAS DISCLOSED WHILE FILING THE RETURN U/S 153A. HOWEVER THE LEARNED ASS ESSING OFFICER FOLLOWING THE SURRENDER MADE BEFORE THE INVESTIGATION AUTHORI TY MADE ADDITIONS OF RS. 36,32,837/-. THE MAIN PLEA OF THE ASSESSEE HAS BEEN THAT SURRENDER ALONE CANNOT BE THE BASIS OF ADDITION. THE DEPARTME NT HAS TO DISCHARGED HIS DUTY BY BRINGING ON RECORD THE MATERIAL PERTAIN ING AND ESTABLISHING THE ESCAPED INCOME. IN THIS CASE THE LEARNED ASSESSING OFFICER HAS NOT DONE HIS JOB. NO ENQUIRIES WORTH THE NAME WERE CONDUCTED . NO MATERIAL HAS BEEN BROUGHT ON RECORD ESTABLISHING ESCAPED INCOME OF RS. 36,32,837/-. IT WAS VEHEMENTLY ARGUED BEFORE THE LEARNED CIT(A) THA T IT WAS ESTABLISHED POSITION OF LAW THAT ADDITION CANNOT BE MADE SIMPLY ON THE BASIS OF STATEMENT/SURRENDER WITHOUT THE SAME BEING SUBSTANT IATED WITH ADEQUATE EVIDENCES. HOWEVER THE LEARNED CIT(A) HAS SUMMARILY REJECTED THE SUBMISSIONS OF THE ASSESSEE AND HAS CO NFIRMED THE ADDITIONS IN A MECHANICAL MANNER. THE LEARNED CIT(A) HAS QUOT ED CERTAIN DECISIONS OVER AND ABOVE THE DECISIONS PLACED BEFOR E HIM BY THE ASSESSEE. THE LEARNED CIT(A) HAS IGNORED THE MOST C OMMON POSITION OF LAW THAT WHEN THERE ARE DIVERSE OPINION ON AN ISSUE THE ONE FAVOURABLE TO THE ASSESSEE IS REQUIRED TO BE FOLLOWED 88 ITR 192. THE FOLLOWING SUBMISSIONS MADE BEFORE THE LEARNED C IT(A) ARE QUOTED BELOW FOR FAVOURBALE CONSIDERATION- 'THE LEARNED ASSESSING OFFICER HAS MADE ADDITION OF RS. 36,32,837/- ON THE GROUND THAT BEFORE THE INVESTIGATION WING UNDER LE TTER DATED 20.01.2009 THE ASSESSEE GAVE BIFURCATION OF UNACCOUNTED I NCOME OF RS. 83,07,825/- OF VARIOUS PERSONS WHICH WAS INTRODUCED IN M/S RAGHUVEER METAL INDUSTRIES. THE SHARE OF UNDISCLOSED INCOME OF THE ASSESSEE WAS OF RS. 36,32,837/- OUT OF RS. 83,07,825/-. THE ASSESSEE DID NOT DISCLOSE THIS INCOME IN THE RETURN FILED BEFORE THE LEARNED ASSESSING OFFICER AS THERE WAS NO SUCH INCOME IN HIS HANDS. BUT SIMPLY O N THE GROUND THAT THE ASSESSEE HAD MADE SURRENDER THE LEARNED ASSESSING O FFICER HAS MADE THE ADDITION. THE LEARNED ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL 44 ON RECORD ESTABLISHING THE AFORESAID INCOME AT RS. 36,32,837/-. HE HAS ALSO NOT REFERRED TO ANY OF THE SEIZED PAPERS WHICH INDI CATE THE AFORESAID INCOME. IT IS ALSO SUBMITTED THAT THERE WAS NO INCR IMINATING MATERIAL WITH THE LEARNED ASSESSING OFFICER NOR THE SAME HAS BEEN MENTIONED IN THE ASSESSMENT ORDER JUSTIFYING THE AFORESAID ADDITION. ADDITION HAS BEEN MADE SIMPLY ON THE BASIS OF SURRENDER MADE BY THE A SSESSEE WHICH IS NOT JUSTIFIED. IT IS COMMON KNOWLEDGE THAT BEFORE THE I NVESTIGATION WING SURRENDER IS MADE IN ORDER TO AVOID HARASSMENT AT T HE HANDS OF THE REVENUE AUTHORITIES. SURRENDER MADE UNDER STRESS AN D COMPULSION CANNOT BE TERMED AS A VOLUNTARY SURRENDER. HAD THERE BEEN ANY GENUINE SURRENDER OF INCOME BY THE ASSESSEE THE SAME WOULD HAVE BEEN DISCLOSED IN THE RETURN OF INCOME FILED BEFORE THE LEARNED ASSESSING OFFICER. BUT THE ASSESSEE DID NOT DISCLOSE ANY SUCH INCOME IN THE RETURN FILED BEFORE THE LEARNED ASSESSING OFFICER AS SUCH ESTABLISHES BEYOND DOUBT THAT THERE WAS NO GENUINE SURRENDER BY THE AS SESSEE. ANY ADDITION MADE SIMPLY ON THE BASIS OF THE SURRENDER OR ON THE BASIS OF STATEMENT WITHOUT SUBSTANTIATING MATERIAL IS NO ADDITION AND THE SAME DESERVES TO BE DELETED. THE FOLLOWING CASE LAWS ARE QUOTED IN S UPPORT (A) PULLANGUEGODE RUBBER & PRODUCE CO. LTD. VS. STATE OF KERALA 91 ITR 18 (SUPREME COURT) AN ADMISSION IS EXTREMELY AN IMPORTANT PIECE OF EVI DENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. (B) JAIN TRADING CO. V/S ITO (2007) 17 SOT 574 (MUM ) ADDITION ON THE BASIS OF ADMISSION MADE DURING SURVEY RETRACTED DURING ASSESSMENT. AN ASSESSEE OFFERI NG ADDITIONAL INCOME DURING THE COURSE OF SURVE Y IS NOT BOUND BY THE SAID OFFER FOR ALL TIMES TO 45 COME ---- DURING SURVEY ASSESSES OFFERED AN ADDITIONA L INCOME OF RS/- 25 LAC ON BEING POINTED BY THE SURVEY PARTY THAT THERE WAS UNDER STATEMENT OF STOCK. ASSE SSES DID NOT DECLARE SUCH INCOME IN THE IT RETURN A.O. MADE ADDITION OF RS. 25 LAC. NOT JUSTIFIED. (C) KAILASH BEN MOHANLAL CHOKSI V/S CIT (2008) 14 DTR ( GUJ) 257 IT IS TOO MUCH TO GIVE CREDIT TO A STATEMENT RECORD ED AT MIDNIGHT WHERE A PERSON MAY NOT BE IN A POSITION TO MAKE ANY CORRECT AND CONSCIOUS DISCLOSES DISCLOSURE STATEMENT RECORDED AT ODD HOURS CANNOT BE CONSIDERED TO BE A VOLUNTARY STATEMENT. . (D) CONTECH TRANSPORT SERVICE (P) LTD ORS V/S ACIT ( 2009) 19 DTR 191 (MUMBAI) 28-11-08 NO ADDITION CAN BE MADE ONLY ON THE BASIS OF ADMISSION IN STATEMENT V/S 132 (4) (E) CHITRA DEVI V/S ACIT (JODHPUR BRANCH) (2002) 77 T TJ (JD) 640 STATEMENTS RECORDED DURING SEARCH ARE NOT EVIDENCES FOUND DURING SEARCH. ADDITION CANNOT BE MADE ON THE BASIS OF STATEMENT ALONE. (F) AJIT CHINTAMAN KARVE V/S I.T.O. (2009) 311 ITR (A T) 66 (PUNA) ITAT BRANCH THAT MERELY BECAUSE AN OFFER WAS MADE HAVING NO COGENT BASIS OR APPROVAL OF LAW THAT SHOULD NOT STOP A TAXPAYER FROM CORRECTING HIS MISTAKE. IT WAS THE DUL Y OF THE A.O. TO TAX ONLY THE LEGITIMATE AMOUNT FROM A TAXPA YER.' THE ASSESSEE HUMBLY REQUESTS THAT THE DECISION OF TH E LEARNED CIT(A) MAY BE QUASHED ON THE ISSUE. THE HON'BLE ITAT IS REQUESTED TO DELETED THE ADDITION OF RS. 36,32,837/- 46 9.2 THE LD DR HAS SUBMITTED THAT THIS ADDITION IS B ASED ON SURRENDER MADE DURING SEARCH WHICH ACCORDING TO THE LD. AR WAS MAD E UNDER PRESSURE. IT WAS STATED BY THE LD DR THAT NOT ONLY THE ASSESSEE HAS NOT RETRACTED THIS SURRENDER BUT HE HAS CONFIRMED THE SURRENDER VIDE L ETTER DATED 2-12-2008. 9.3 AFTER CONSIDERING THE RIVAL SUBMISSIONS REGARDI NG DELETION OF ADDITION OF RS. 16,49,430/- MADE ON ACCOUNT OF UNEXPLAINED C ASH FOUND DURING SEARCH OPERATION AND ADDITION OF RS. 14,30,775/- MADE ON A CCOUNT OF UNEXPLAINED JEWELLERY FOUND DURING SEARCH AND DELETED VIDE INST RUCTION NO.1916 DATED 11- 05-1994, WE ARE CONVINCED BY THE REASONINGS GIVEN B Y THE LD CIT(A) FOR MAKING THESE DELETIONS. WE HAVE GONE THROUGH THE AP PELLATE ORDER AS WELL AS WRITTEN SUBMISSION AND THE ORAL SUBMISSION OF THE L D DR AND HAVE FOUND THT BOTH THE DELETIONS ARE IN ORDER. WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD CIT(A). THEREFORE, GROUND NO. 1 AND 2 OF THE REVENUE ARE DISMISSED. 10.1 THE FACTS OF THE ASSESSEE CASE ARE THAT THE A .O. HAS MADE ADDITION OF RS. 36,32,837/- BASED ON SURRENDER MADE BY THE ASSE SSEE BEFORE THE INVESTIGATION AUTHORITY. THE MAIN PLEA OF THE ASSES SEE HAS BEEN THAT ONLY ON THE BASIS OF THE SURRENDER, NO ADDITION DE HORS ANY MATERIAL FOUND DURING SEARCH CAN BE MADE. IT IS FOUND THAT FOR MAKING THI S ADDITION, NO EVIDENCE WAS FOUND DURING SEARCH. THE LAW IS WELL SETTLED ON THE POSITION OF SURRENDER 47 MADE DE HORS EVIDENCE AVAILABLE ON RECORD THAT SUCH SURRENDER CANNOT BE CONVERTED INTO ADDITION. IN THIS REGARD, THE DECISI ON OF ITAT JODHPUR BENCH IN THE CASE OF CHITRA DEVIVS ACIT (2002) 77 TTJ 640 AND OTHER DECISIONS INCLUDING THAT OF HON'BLE SUPREME COURT AS INCORPOR ATED ABOVE ARE RELEVANT. ACCORDINGLY, BY RESPECTFULLY, FOLLOWING THE ABOVE D ECISIONS, WE ORDER TO DELETE THE IMPUGNED ADDITION AND ALLOW GROUND NO. 2 OF THE ASSESSEE'S APPEAL. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S PARTLY ALLOWED AND THAT OF THE REVENUE IS DISMISSED. 11.0 IN THE RESULT, APPEALS OF THE ASSESSEE ARE PAR TLY ALLOWED AND THAT OF THE REVENUE ARE DISMISSED THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 05-0 3-2014 SD/- SD/- ( N.K. SAINI ) (HARI OM MARATHA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR *MISHRA COPY FORWARDED TO :- 1. SHRI PRADEEP AGARWAL, DELHI 2. THE DCIT/ ACIT, CENTRAL CIRCLE, ALWAR 3. THE LD.CIT(A) 4. THE LD CIT BY ORDER 5. THE D/R 6. GUARD FILE (ITA NO.395/JP/2013) AR ITAT, JAIPUR 48