Savaliya Developers Pvt. Ltd., Ahmedabad V. The Dy.CIT, Central Circle-2(1), Ahmedabad

ITA 402/AHD/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6538 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 07-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR; L P JAIN
• Keywords: Gift; Loose papers; Document seized; Principle of natural justice; Opportunity of cross examination; Tangible material; Block assessment; Documents seized; Set aside
• Section: 143(3); 5(2); 153A; 69B; 131; 69; 132; 139

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NOS. 401/AHD/2014 & 3188/AHD/2015 ( ASSESSMENT YEAR : 2011-12) M/S. SAVALIYA BUILDCON 702, SURMOUNT COMPLEX, ISCON TEMPLE, S. G. HIGHWAY, AHMEDABAD / VS. THE DCIT CENTRAL CIRCLE 2(1) / CIRCLE -3(3), AHMEDABAD ( APPELLANT ) .. ( / RESPONDENT ) & ./ I.T.A. NOS. 410/AHD/2014 & 3544/AHD/2015 WITH CROSS OBJECTION NOS. 117/AHD/2014 & 14/AHD/2016 ( ASSESSMENT YEAR : 2011-12) DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 2(1) / CIRCLE -3(3), AHMEDABAD / VS. M/S. SAVALIYA BUILDCON 702, SURMOUNT COMPLEX, ISCON TEMPLE, S. G. HIGHWAY, AHMEDABAD ./ ./ PAN/GIR NO. : ABIFS6955M ( APPELLANT / RESPONDENT ) .. ( RESPONDENT / CROSS OBJECTOR ) & ./ I.T.A. NO. 402/AHD/2014 ( ASSESSMENT YEAR : 2011-12) SAVALIYA DEVELOPERS PVT. LTD. 702, SURMOUNT COMPLEX, ISCON TEMPLE, S. G. HIGHWAY, AHMEDABAD / VS. THE DCIT CENTRAL CIRCLE 2(1), AHMEDABAD ( APPELLANT ) .. ( / RESPONDENT ) & ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 2 - ./ I.T.A. NO. 411/AHD/2014 WITH CROSS OBJECTION NO. 118/AHD/2014 ( ASSESSMENT YEAR : 2011-12) DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 2(1) / VS. M/S. SAVALIYA DEVELOPERS PVT. LTD. 702, SURMOUNT COMPLEX, OPP. ISCON TEMPLE, S. G. HIGHWAY, AHMEDABAD 380015 ./ ./ PAN/GIR NO. : AAGCS4048B ( APPELLANT / RESPONDENT ) .. ( RESPONDENT / CROSS OBJECTOR ) / ASSESSEE BY : SHRI DHIREN SHAH, A.R. / REVENUE BY : SHRI SURENDRA KUMAR, CIT.DR & SHRI L. P. JAIN, SR. DR DATE OF HEARING 09/04/2019 !'# / DATE OF PRONOUNCEMENT 30/04/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEALS AT THE INSTANCE OF ASSESSEE & REVENUE ARISE FROM THE RESPECTIVE ORDERS OF THE COMMISSIONE R OF INCOME TAX (APPEALS)-III, AHMEDABAD (CIT(A)) AGAINST RESPECT IVE ASSESSMENT ORDERS / PENALTY ORDERS FOR SAME ASSESSMENT YEAR AS TABULATED BELOW: ITA NOS. NAME OF ASSESSEE AY CIT(A)S ORDER DATED AOS ORDER DATED AOS ORDER UNDER SECTION 401 & 410/AHD/14 M/S. SAVALIYA BUILDCON 2011-12 28.11.2013 26.03.2013 143(3) OF THE INCOME TAX ACT, 1961 3188 & 3544 /AHD/15 -DO- -DO- 13.10.2015 23.01.2015 271AAA OF THE ACT ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 3 - 402 & 411/AHD/14 M/S. SAVALIYA DEVELOPERS PVT. LTD. -DO- 28.11.2013 26.03.2013 143(3) OF THE ACT 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE (IN CASE OF M/S. SAVALIYA BUILDCON) IN ITA NO. 401/AHD/2014 READ AS UNDER: I. ADDITION ON ACCOUNT OF ON-MONEY RECEIPT RS. 14,10,000/- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS WHI LE CONFIRMING THE ADDITION OF RS.14,10,000/- ON THE BASIS OF STATEMEN T OF TWO MEMBERS RECORDED BEHIND THE BACK OF THE APPELLANT, COPY OF WHICH WAS NOT PROVIDED TO THE APPELLANT DURING THE COURSE OF ASSESSMENT PR OCEEDINGS AS WELL AS IN ABSENCE OF GRANTING THE OPPORTUNITY OF CROSS EXAMIN ATION OF THESE TWO MEMBERS. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS WHI LE CONSIDERING THE ALTERNATIVE GROUND OF THE APPELLANT THAT THE ADDITI ON OF RS.14,10,000/- AS MADE BY THE LD. A.O. ON ACCOUNT OF ON-MONEY RECEI VED FROM TWO MEMBERS IS REQUIRED TO BE TELESCOPED AGAINST THE DI SCLOSURE OF RS.2 CRORES MADE BY THE APPELLANT FIRM FOR THE FINANCIAL YEAR 2010-11 RELEVANT TO A.Y. 2011-12. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS WHI LE FAILING TO CONSIDER THE FACT THAT VOLUNTARY AND SUO-MOTTO DISCLOSURE OF UNACCOUNTED BOOKING RECEIPTS FROM THE MEMBERS OF THE SCHEME AMOUNTING T O RS.2.00 CRORES BY THE APPELLANT FIRM FOR F.Y. 2010-11 RELEVANT TO A.Y . 2011-12 IS MORE THAN SUFFICIENT TO COVER UP THE ADDITION OF RS.14,10,000 /- CONFIRMED BY HIM IN RESPECT OF ON MONEY RECEIVED FROM TWO MEMBERS AND T HEREFORE, NO SEPARATE ADDITION IS REQUIRED AS DIRECTED BY HIM. 2.1 THE GROUNDS OF APPEAL RAISED BY THE REVENUE (IN CASE OF M/S. SAVALIYA BUILDCON) IN ITA NO. 410/AHD/2014 READ AS UNDER: (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE AD DITION TO RS. 14,10,000/- OUT OF TOTAL ADDITION OF RS. 3,28,13,35 5/- MADE ON ACCOUNT OF ON-MONEY RECEIPTS BY THE A.O. ON THE BAS IS OF EVIDENCE OF RELIABLE NATURE. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT EXT RAPOLATION OF ON- MONEY RECEIPTS CANNOT BE MADE AND THEREBY DELETING THE ADDITION AS ABOVE IN (I). III) THE LD. CIT(A) HAS ERRED IN ALLOWING RELIEF WI THOUT CONSIDERING THE FACT THAT 83 FLATS WERE SOLD DURING THE YEAR, BEFOR E THE DATE OF SEARCH AND WITHOUT APPRECIATING THAT THE ESTIMATION MADE BY THE ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 4 - A.O. IN RESPECT OF SUCH SALE CANNOT BE EQUATED WITH THE RATE OF 4 FLATS MADE AFTER THE SEARCH. 2.2 THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE (I N CASE OF M/S. SAVALIYA BUILDCON) IN CO NO. 117/AHD/2014 READ AS U NDER: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.14,10,000/- OUT OF TOTAL ADDITION OF RS.3,28,13,355/- MADE ON ACCOUNT OF ALLEGED ON-MONEY RECEIPTS BY THE LD. A.O. THE LD. CIT(A) OUGHT TO HAVE DELETED THE ENTIRE ADDITION MADE BY T HE LD.A.O. 2. THE LD. CIT(A) HAS RIGHTLY HELD THAT EXTRAPOLATI ON THEORY OF ON-MONEY RECEIPTS CANNOT BE MADE AND HAS CORRECTLY DELETED T HE ADDITION MADE BY THE LD.A.O. ON ACCOUNT OF EXTRAPOLATION THEORY OF O N-MONEY RECEIPTS. 3. BRIEFLY STATED, THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF RESIDENTIAL FLATS A ND COMMERCIAL SHOPS IN THE NAME AND STYLE OF KRISH AVENUE. A S EARCH ACTION WAS CARRIED OUT IN GROUP CASES OF SAVALIYA GROUP UNDER S.132 OF THE ACT ON 06.01.2011. IN THE COURSE OF SEARCH, A STATEMENT W AS RECORDED UNDER S.132(4) OF THE ACT OF THE KEY PERSONS (SHRI KANTIB HAI T. SAVALIYA & SHRI SANJAYBHAI K. SAVALIYA) OF THE GROUP. THE GRO UP DISCLOSED AN AMOUNT OF RS.25 CRORES IN AGGREGATE. A CASE WAS MA DE OUT BY THE ASSESSEE BEFORE THE AO THAT SUCH DISCLOSURES MADE SUO MOTU FOR F.Y. 2010-11 RELEVANT TO AY 2011-12 WERE VOLUNTARY. AN AMOUNT OF RS.2 CRORE WAS DISCLOSED BY THE GROUP IN RELATION TO CAP TIONED ASSESSEE FIRM TO COVER UP ANY DEFICIENCY. THE ASSESSEE, AT THE TIME OF FILING THE RETURN OF INCOME SUBSEQUENT TO SEARCH, DULY INCLUDE D THE AFORESAID DISCLOSURE OF RS.2 CRORE TOWARDS UNACCOUNTED BOOKIN G RECEIPTS FROM ITS KRISH RESIDENCY 1 & 2 PROJECT AND PAID THE TAXE S THEREON. IN THE COURSE OF THE SCRUTINY PROCEEDINGS AS A CONSEQUENCE OF SEARCH, THE AO OBSERVED THAT IN THE COURSE OF POST SEARCH INQUIRY STATEMENT OF TWO MEMBERS/PURCHASERS (NAMELY; SUREKHABEN M. BHAVSAR & SHRI HASMUKHBHAI M. SOLANKI) OF KRISH RESIDENCY HOUSING PROJECT WERE RECORDED ON OATH UNDER S.131 OF THE ACT. THE AO NO TED THAT AS PER THE STATEMENT SO RECORDED OF THE TWO PURCHASERS THAT ON E OF THE PURCHASERS ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 5 - NAMELY SMT. SUREKHABEN M. BHAVSAR HAS ADMITTED CASH /ONMONEY PAYMENT OF RS.9LAKHS TOWARDS PURCHASE OF RESIDENTIA L FLAT IN KRISH RESIDENCY-1. SIMILARLY, ANOTHER PURCHASER SHRI HAS MUKHBHAI M. SOLANKI ALSO ADMITTED ON-MONEY PAYMENT OF RS.5,10,0 00/- IN CASH TOWARDS PURCHASE OF HIS FLAT. PLACING RELIANCE UPO N THE STATEMENT OF AFORESAID TWO MEMBERS OF KRISH RESIDENCY-1 RECORDED UNDER S. 131 OF THE ACT IN THE COURSE OF POST SEARCH INQUIRY, THE A O TOOK A VIEW THAT SIMILAR ON-MONEY AMOUNT MUST HAVE BEEN RECEIVED IN ALL OTHER BOOKINGS MADE DURING THE YEAR. THE AO ACCORDINGLY APPLIED THE THEORY OF EXTRAPOLATION ON THE BASIS OF ADMISSION M ADE BY THE TWO PURCHASERS OF THE RESIDENTIAL FLATS AND EXTENDED TH IS IN RESPECT OF ALL OTHER SALES HAVING REGARD TO THE AREA SOLD. THE AO COMPUTED ESTIMATED ON-MONEY AMOUNTING OF RS.5,28,13,355/- TO BE UNDISCLOSED CASH COMPONENT IN THE SALE OF FLATS. HAVING REGARD TO THE DISCLOSURE OF RS.2CRORE ALREADY MADE IN THE SEARCH PROCEEDINGS BY WAY OF STATEMENT UNDER S.132(4) OF THE ACT, THE REMAINING AMOUNT OF RS.3,28,13,355/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED BY THE AFORESAID ACTION OF THE AO, THE ASSESSEE PREFERRED THE APPEAL BEFORE THE CIT(A). 4.1 BEFORE THE CIT(A), THE ASSESSEE ONCE AGAIN REIT ERATED THAT NO INCRIMINATING MATERIAL WAS IDENTIFIED FROM THE APPE LLANT FIRM PREMISES OR FROM THE FIRMS PARTNERS RESIDENTIAL PREMISES A S REGARD TO THE UNACCOUNTED BOOKING RECEIPTS AND/OR UNACCOUNTED EXT RA WORK RECEIPTS FROM ANY PURCHASER IN THE PROJECT. IT WAS FURTHER SUBMITTED THAT AO DID NOT PROVIDE THE SO CALLED STATEMENT OF THE TWO MEMBERS NAMELY ONE SMT. SUREKHABEN M. BHAVSAR & SHRI HASMUKHBHAI M . SOLANKI RECORDED BEHIND THE BACK OF THE ASSESSEE FIRM IN TH E POST SEARCH INQUIRY DESPITE SEVERAL REQUESTS IN WRITING VIDE LE TTER DATED 07.01.2013, 17.01.2013, 11.02.2013 & 25.03.2013 TO PROVIDE THE ZEROX ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 6 - COPIES OF THE SO CALLED STATEMENTS OF THE TWO PERSO NS AS WELL AS CROSS EXAMINATION OF SUCH PERSONS. IT WAS CONTENDED THAT THE AO HAS NEITHER PROVIDED THE COPIES OF THE STATEMENT NOR GR ANTED OPPORTUNITY OF CROSS EXAMINATION AND THEREFORE ADVERSE INFERENCE D RAWN BY THE AO ON THE BASIS OF STATEMENT RECORDED OF THIRD PARTY BEHI ND THE BACK OF THE ASSESSEE IS TOTALLY UNJUSTIFIED AND BAD IN LAW. 4.2 THE ASSESSEE ALSO PROPOUNDED ALTERNATIVE CONTEN TION EARLIER PLACED BEFORE THE AO AND SUBMITTED THAT ESTIMATE OF EXTRA BOOKING /EXTRA WORK RECEIPT FROM SOME OF THE PURCHASERS OF THE FLAT IN ITS PROJECT CANNOT BE MADE ON GROSS BASIS AND ONLY CERT AIN ESTIMATED PROFIT MARGIN THEREFROM COULD POSSIBLY BE TAXED IN THE ALTERNATIVE. IT WAS FURTHER POINTED OUT THAT THE ASSESSEE ITSELF HA S DECLARED A LUMP SUM AMOUNT OF RS.2 CRORE TO COVER UNACCOUNTED CASH COMPONENT WITHOUT THERE BEING ANY INCRIMINATING MATERIAL FOUN D IN THIS REGARD AND THE ALLEGED CASH COMPONENT ADMITTED BY THE TWO PURCHASERS ARE FAR LOWER THAN THE AMOUNT ALREADY DECLARED. IT WAS CONT ENDED ON BEHALF OF THE ASSESSEE BEFORE THE CIT(A) THAT EXTRAPOLATION T HEORY ADOPTED IN THE ASSESSMENT ORDER FOR MAKING AN ADDITION OF PRESUMPT ION BASIS IS NOT PERMISSIBLE IN LAW IN THE ABSENCE OF ANY TANGIBLE M ATERIAL IN CORROBORATION. 4.3 THE CIT(A) TOOK NOTE OF THE DETAILED SUBMISSION S MADE ON BEHALF OF THE ASSESSEE AND FOUND CONSIDERABLE MERIT THEREIN. THE CIT(A) ACCORDINGLY OBSERVED THAT THE AO WAS NOT JUS TIFIED IN MAKING EXTRAPOLATION ON BASIS OF STATEMENT OF TWO PURCHASE RS AND ESTIMATION OF PROBABLE ON-MONEY RECEIPTS FROM REMAINING OTHER FLAT BYERS. THE CIT(A) ACCORDINGLY DELETED THE ADDITION ON ACCOUNT OF ON-MONEY RECEIPT OF RS.3,28,13,355/- MADE BY THE AO. HOWEVE R, IT SUSTAINED RS.14,10,000/- BEING AGGREGATE OF THE CONFESSIONAL AMOUNT FROM TWO PURCHASERS WHOSE STATEMENTS WERE ACTUALLY RECORDED. IN SHORT, THE ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 7 - CIT(A) SUSTAINED ADDITION OF RS.14,10,000/- OUT OF TOTAL ADDITION OF RS.3,28,13,355/- MADE BY THE AO. IT WOULD BE APT T O REPRODUCE THE RELEVANT OPERATIVE PARA OF THE ORDER OF THE CIT(A) HEREUNDER: 8. BEFORE TAKING A DECISION IN THIS CASE, IT WILL BE WORTHWHILE TO GO THROUGH THE RELEVANT JUDICIAL DECISIONS IN THIS REG ARD: (A) IT WAS HELD BY HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. C. J. SHAH & CO. (246 ITR 671) THAT ESTIMATION OF U NDISCLOSED PROFIT MADE BY AO FOR THE ENTIRE BLOCK PERIOD ON TH E BASIS OF SEIZED LOOSE PAPERS WHICH INDICATED UNDISCLOSED SALES FOR THREE MONTHS WAS NOT JUSTIFIED. (B) IN THE CASE OF DOLPHIN BUILDERS PVT. LTD (356 ITR 420), HON'BLE HIGH COURT OF MADHYA PRADESH HELD THAT MAKING ADDIT ION MERELY ON THE BASIS OF SEIZED DOCUMENTS WITHOUT COGENT EVIDEN CE THAT EXCESS AMOUNT MENTIONED IN SEIZED DOCUMENT WAS ACTUALLY PA SSED ON TO THE ASSESSEE WAS NOT SUSTAINABLE WHERE BOOKS OF ACCOUNT OF ASSESSEE WERE DULY AUDITED. (C) IT WAS HELD BY HON'BLE ITAT PUNE BENCH IN THE CASE OF SAMRAT BEER BAR (75 ITD 19) THAT IN THE ABSENCE OF ANY OTHER EV IDENCE, AO IS NOT EMPOWERED TO ESTIMATE THE SUPPRESSION OF SALES FOR A LARGER PERIOD ON THE BASIS OF THE DIARY FOUND IN SEARCH SH OWING SUPPRESSION OF SALES FOR A PARTICULAR PERIOD. (D) IN THE CASE OF D. N. KAMANI HUF (70 ITD 77) HO N'BLE ITAT PATNA BENCH HELD THAT DOCUMENTS REGARDING RECEIPT OF ON-M ONEY BY ASSESSES HAVING BEEN FOUND IN RESPECT OF SALE OF FL ATS TO ONE PARTY, ADDITION COULD NOT BE MADE IN RESPECT OF ALL THE PA RTIES TO WHOM ASSESSEE SOLD FLATS MERELY ON THE BASIS OF PRESUMPT ION. (E) IN THE CASE OF FORT PROJECTS PVT. LTD (63 DTR 145) HON'BLE ITAT KOLKATA BENCH HELD THAT AO WAS NOT JUSTIFIED IN EXT RAPOLATING FEW NOTINGS IN A SEIZED DIARY TO BALANCE FLATS IN THREE PROJECTS GIVEN THAT NO INCRIMINATING EVIDENCE PERTAINING THERETO W AS FOUND IN THE COURSE OF SEARCH. (F) IN THE CASE OF OR. K. M, L. MEHROTRA (64 TTJ 25 9) HON'BLE ITAT ALLAHABAD BENCH HELD THAT ESTIMATION OF UNDISCLOSED INCOME FOR BLOCK ASSESSMENT CANNOT BE MADE ON THE BASIS OF MUL TIPLICATION FORMULA DERIVED FROM SUPPRESSION PERCENTAGE OF A FE W DAYS. (G) IN THE CASE OF RAJDEEP BUILDERS (52 SOT 62) HON 'BLE ITAT CHANDIGARH BENCH HELD THAT AO WAS NOT JUSTIFIED TO MAKE ADDITION ON THE BASIS OF STATEMENT OF ONE OF THE PURCHASER W HO SUBSEQUENTLY RETRACTED HIS STATEMENT IN CROSS-EXAMINATION. (H) IN THE CASE OF JAWAHARBHAI ATMARAM HATHIWALA [ 128 TTJ 36] ADDITION ON ACCOUNT OF ON MONEY WAS MADE FOR PURCHA SE OF FLAT. IN THIS CASE, DURING THE COURSE OF SEARCH DOCUMENTS WE RE SEIZED FROM DEVELOPER FIRM WHICH INDICATED THAT ASSESSEE HAS MA DE PAYMENT OF ON MONEY FOR PURCHASE OF A FLAT. IT WAS HELD BY HON 'BLE ITAT, ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 8 - AHMEDABAD 'C' BENCH THAT NO EVIDENCE WAS BROUGHT ON RECORD BY REVENUE TO SHOW THAT APPELLANT HAD ACTUALLY PAID TH E ON MONEY. IT WAS FURTHER HELD THAT ASSESSEE'S DENIAL CANNOT BE B RUSHED ASIDE WITHOUT BRINGING ANY POSITIVE MATERIAL ON RECORD. T HE ADDITION WAS HELD NOT BE JUSTIFIED IN SUCH A CASE. (I) A SIMILAR VIEW WAS HELD IN THE CASE OF BHARAT A MEHTA [86 TTJ 369] BY HON'BLE ITAT, 'B' BENCH. IN THIS CASE ADDITION U /S. 69 WAS MADE ON ACCOUNT OF ON MONEY PAID ON PURCHASE OF BUNGALOW ON THE BASIS OF ADMISSION MADE BY BUILDER DURING THE SEARCH. HOW EVER, NO DOCUMENT WAS RECOVERED DURING THE SEARCH REGARDING ON MONEY PAID BY ASSESSEE. IN. SUCH A CASE, THE ADDITION WAS DIRECTED TO BE DELETED BY HON'BLE ITAT. (J) IN THE CASE OF CIT VS. D KANTA [205 TAXMAN 115 (KAR)], ADDITION WAS MADE U/S. 69B R.W.S. 147 ON ACCOUNT OF UNEXPLAI NED INVESTMENT IN PURCHASE OF LAND. SEARCH WAS CONDUCTED IN THE CA SE OF SON OF VENDOR FROM WHOM THE LAND WAS PURCHASED. DURING THE COURSE OF SEARCH, SON OF VENDOR STATED THAT ASSESSEE HAD RECE IVED CONSIDERATION OF RS.75 LAKHS. AO REOPENED ASSESSMEN T AND MADE ADDITION ON THE BASIS OF THIS INFORMATION. IT WAS H ELD BY HON'BLE HIGH COURT THAT FINDING OF AO WAS NOT BASED UPON MA TERIAL FOUND DURING THE SEARCH AND IT WAS BASED ON STATEMENT OF SON OF VENDOR. THEREFORE, ADDITION WAS NOT JUSTIFIED AND THE SAME WAS DIRECTED TO BE DELETED. (K) IN THE CASE OF PRARTHANA CONSTRUCTION PVT. LTD. , IT WAS HELD BY HON'BLE JURISDICTIONAL HIGH COURT THAT REVENUE IS N OT JUSTIFIED IN RESTING ITS CASE ON THE LOOSE PAPERS AND DOCUMENTS FOUND FROM THE RESIDENCE OF A THIRD PARTY, EVEN IF SUCH DOCUMENTS CONTAIN NARRATION OF TRANSACTIONS WITH THE ASSESSEE. IT WAS ALSO HELD THAT SUCH LOOSE PAPERS CANNOT BE CONSTRUED AS BOOKS OF A CCOUNTS REGULARLY KEPT IN THE COURSE OF BUSINESS AND THEREF ORE SUCH EVIDENCE WOULD BE OUTSIDE THE PURVIEW OF SECTION 34 OF THE E VIDENCE ACT, 1872 IN VIEW OF DECISION OF HON'BLE APEX COURT IN T HE CASE OF CBI V/S V.C. SHUKLA & OTHERS (1998) 3 SCC 410. (L) SIMILAR VIEW HAS BEEN HELD BY THE HON'BLE ITAT JAIPUR BENCH IN THE CASE OF SUNITA DHADDHA IN ITA NO. 751/JP/2011. IN T HAT CASE, DURING SEARCH IN THE CASE OF A BUILDERS, CERTAIN DO CUMENTS WERE FOUND REFLECTING PAYMENTS OF 'ON MONEY' IN CASH TO THE ASSESSEE. AO MADE ADDITION IN THE CASE OF ASSESSEE, WHICH WAS DE LETED BY HON'BLE ITAT. IT WAS OBSERVED BY HON'BLE ITAT THAT SECONDARY EVIDENCE CANNOT BE RELIED ON AS NEITHER THE WITNESS NOR THE PERSON WHO PREPARED THE DOCUMENTS WERE PRODUCED. THEREFORE , SALE CONSIDERATION AS SHOWN IN THE DOCUMENTS IS TO BE AC CEPTED. 9. WHEN THE PRESENT CASE IS EXAMINED IN VIEW OF THI S LEGAL POSITION, IT IS FOUND THAT THE ENTIRE ADDITION IN RESPECT OF ON- MONEY PAYMENT HAS BEEN MADE BY AO ON THE BASIS OF STATEMENT OF TWO MEMBERS OF THE SCHEME I.E. SMT. SUREKHABEN BHAVSAR AND SHRI HASMUKHBHAI SOLANK I. MOREOVER, THE ADDITION WAS MADE BY AO WITHOUT ALLOWING OPPORTUNIT Y OF CROSS- EXAMINATION OF THESE MEMBERS TO THE APPELLANT. NO C ORROBORATIVE EVIDENCE WAS FOUND FROM PREMISES OF APPELLANT DURING THE COU RSE OF SEARCH REGARDING RECEIPT OF ON-MONEY BY HIM. THERE IS NO R EFERENCE IN ASSESSMENT ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 9 - ORDER OF ANY DOCUMENT SEIZED DURING THE COURSE OF S EARCH WHICH RECORD OR INDICATE RECEIPT OF ON-MONEY BY APPELLANT. APPELLAN T FIRM MADE DISCLOSURE OF RS. 2 CRORE AS UNACCOUNTED BOOKING RECEIPT FROM PROJECT KRISH RESIDENCY-I & II. THIS AMOUNT WAS DULY INCLUDED IN RETURN OF INCOME AS MENTIONED BY AO IN THE ASSESSMENT ORDER. IN VIEW OF ALL THESE FACTS, I HOLD THAT AO IS NOT JUSTIFIED IN MAKING EXTRAPOLATION ON THE BASIS OF STATEMENT OF SMT. SUREKHABEN BHAVSAR AND SHRI HASMUKHBHAI SOL ANKI AND ESTIMATING TOTAL ON-MONEY RECEIPT IN RESPECT OF 87 FLATS AT RS . 528,13,355/-. MERELY ON THE BASIS OF STATEMENT OF TWO MEMBERS, IT CANNOT BE PRESUMED THAT APPELLANT RECEIVED SIMILAR AMOUNT FROM EACH AND EVE RY CLIENT. IT IS A WELL ESTABLISHED PRINCIPLE THAT SUSPICION; HOWEVER, STRO NG CAN NEVER TAKE THE PLACE OF EVIDENCE. IN THIS CASE, AO COULD HAVE MADE ADDITION OF RS. 900,000/- WHICH WAS ADMITTED BY SMT. SUREKHABEN BHA VSAR AND RS. 510,000/-WHICH WAS ADMITTED BY SHRI HASMUKHBHAI SOL ANKI. I, THEREFORE HOLD THAT ADDITION ON ACCOUNT OF ON-MONEY RECEIPT I S TO BE RESTRICTED TO RS. 14,10,000/- AS AGAINST RS. 3,28,13,355/- MADE B Y AO. THE AO IS THEREFORE DIRECTED TO RESTRICT ADDITION ON THIS ACC OUNT TO RS. 14,10,000/-. GROUND NO. 1 OF THE APPEAL IS THUS PARTLY ALLOWED. THE CIT(A) ACCORDINGLY GRANTED PARTIAL RELIEF TO T HE ASSESSEE AS NOTED ABOVE. 5. AGGRIEVED BY THE RELIEF GRANTED BY THE CIT(A) DE LETING RS.3,14,03,355/- SO GRANTED BY THE CIT(A) OUT OF TO TAL ADDITION OF RS.3,28,13,355/- MADE BY THE AO TOWARDS UNACCOUNTED RECEIPT, REVENUE HAS PREFERRED THE APPEAL BEFORE THE TRIBUNA L AS PER CAPTIONED ITA NO. 410/AHD/2014, WHEREAS THE ASSESSEE HAS ALSO CHALLENGED THE ACTION OF THE CIT(A) IN PARTLY SUSTAINING THE ADDIT ION TO THE EXTENT OF RS.14.10 LAKHS BY THE CIT(A) AS PER CAPTIONED APPEA L OF THE ASSESSEE IN ITA NO. 401/AHD/2014 & CROSS OBJECTION OF ASSESS EE IN CO NO. 117/AHD/2014 CAPTIONED ABOVE. 6. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED AR FOR THE ASSESSEE POINTED OUT THAT IN THE COURSE OF SEARCH P ROCEEDINGS INITIATED UNDER S.132 OF THE ACT, THE ASSESSEE GROUP MADE A V OLUNTARY AND SUO MOTO DISCLOSURE MADE IN STATEMENT OF KEY PERSONS RECORD ED UNDER S.132(4) OF THE ACT DATED 07.01.2011 WHEREIN INTER ALIA THE DISCLOSURE OF RS.2 CRORES WAS MADE ATTRIBUTABLE TO ASSESSEE FI RM. THE LEARNED AR SUBMITTED THAT THE DISCLOSURE WAS MADE ON LUMP S UM BASIS FOR ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 10 - WHICH NO INCRIMINATING MATERIAL/DOCUMENTS WERE FOUN D FROM THE PREMISES SEARCHED TO CORROBORATE SUCH STATEMENTS. THE ASSESSEE HOWEVER HONORED ITS STATEMENT AND FILED THE RETURN OF INCOME WHEREIN AFORESAID DISCLOSURE WAS DULY ACCOUNTED FOR. THE A SSESSEE ALSO PAID TAXES THEREON DESPITE ABSENCE OF ANY ADVERSE MATERI AL. THE AO CLAIMS TO HAVE MADE INQUIRY WITH TWO OF ITS PURCHASERS OF RESIDENTIAL FLAT WHEREIN SUCH PURCHASERS HAVE ALLEGEDLY MADE CONFESS ION TO THE EFFECT THAT THEY HAVE ALSO PAID ON-MONEY / CASH TOWARDS PU RCHASE OF FLATS AGGREGATE TO RS.14,10,000/-. THE STATEMENT WAS NEI THER PROVIDED NOR THE DEPONENTS OF ALLEGED STATEMENT WERE PERMITTED T O BE CROSS EXAMINED TO UNEARTH TRUTH DESPITE SEVERAL WRITTEN R EQUESTS MADE IN THIS REGARD. THE AO HAS EVENTUALLY IMAGINED ILLUSORY CA SH RECEIPT ON ALL SALES OF RESIDENTIAL FLATS MADE BY THE ASSESSEE APP LYING THE RESULTS OF THE STATEMENT OF TWO PURCHASERS NOTWITHSTANDING TOT AL ABSENCE OF ANY CORROBORATION IN THIS REGARD. 6.1 THE LEARNED AR FOR THE ASSESSEE REFERRED TO VA RIOUS SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AS REPRODUCED BY THE CIT(A) IN ITS APPELLATE ORDER AND SUBMITTED THAT THE DISCLOSURE W AS MADE FOR A LUMP SUM AMOUNT FOR THE ENTIRE F.Y. 2010-11 BY THE PARTN ERS OF THE FIRM. THE AUTHORIZED OFFICER HAS NOT RAISED ANY DISPUTE O N SUCH DISCLOSURE FOR THE WHOLE OF THE YEAR. THE LEARNED AR CONTENDE D THAT IF THE REVENUE SEEKS TO DISCARD THE STATEMENT GIVEN BY THE PARTNER AND GO BEYOND THE ASSERTIONS MADE IN THE STATEMENT RECORDE D UNDER S.132(4) OF THE ACT MAKING DISCLOSURE FOR ENTIRE FINANCIAL Y EAR THEN IN THAT CIRCUMSTANCES ANY ADDITION CAN BE MADE ONLY ON THE BASIS OF COGENT MATERIAL AND EVIDENCES AGAINST THE ASSESSEE AND CON SEQUENTLY NO ADDITION CAN POSSIBLY SURVIVE IN THE ABSENCE OF ANY ADVERSE MATERIAL BROUGHT ON RECORD. THE LEARNED AR CONTENDED THAT T HE ASSESSEE HAS ALREADY DISCLOSED A LUMP SUM AMOUNT OF RS.2 CRORES IN RESPECT OF EXTRA BOOKING ETC. FROM SOME OF THE MEMBERS OF THE PROJEC T WHICH WILL ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 11 - NATURALLY INCLUDE ANY AMOUNT ALLEGEDLY CONFESSED BY TWO OF THE PURCHASERS WHICH CONFESSION REMAINS UNVERIFIED AND UNILATERAL NEVERTHELESS. THE LEARNED AR SUBMITTED THAT THE AP PELLANT FIRM HAD DECLARED ADDITIONAL INCOME OF RS.2 CRORE MERELY TO BUY PEACE, SAVE TIME AND COSTS AND TO AVOID PROTRACTED LITIGATION A ND ALSO TO CO-OPERATE WITH THE DEPARTMENT AS A GOODWILL GESTURE WITHOUT A NY SUBSTANTIVE EVIDENCES IN POSSESSION OF THE REVENUE. IN THE CIR CUMSTANCES, ESTIMATION OF INCOME FOR THE REMAINING PERIOD POST SEARCH BETWEEN 06.01.2011 TO 31.03.2011 MERELY ON SURMISES AND CON JUNCTURES IS TOTALLY UNCALLED FOR. 6.2 WITHOUT PREJUDICE AND IN ALTERNATIVE, THE LEARN ED AR FOR THE ASSESSEE SUBMITTED THAT THE ENTIRE ESTIMATED CASH R ECEIPT ON THE BASIS OF EXTRAPOLATION CANNOT BE ADDED OVER AND ABOVE WHA T HAS BEEN DECLARED SUO MOTU . THE REVENUE AT BEST CAN ASSESS A REASONABLE PROF IT MARGIN OF 10% TO 15% OF THE ESTIMATED CASH RECEIPTS AND IN THAT CIRCUMSTANCES, DISCLOSURE MADE BY THE ASSESSEE CANN OT BE RECKONED. IN SUCH EVENTUALITY, THE ASSESSED INCOME WILL BE FA R LOWER THAN THE RETURNED INCOME ALREADY FILED BY THE ASSESSEE IN PU RSUANCE OF THE SEARCH. THE LEARNED AR THUS SUBMITTED THAT THE SO CALLED UNVERIFIED STATEMENT OF TWO OF THE PURCHASERS CANNOT LEAD TO E STIMATION FOR REMAINING FLATS MORE PARTICULARLY WHEN THE STATEMEN T WERE RECORDED BEHIND THE BACK WITHOUT ANY CROSS EXAMINATION DESPI TE SEVERAL REQUESTS AND ALSO IN THE BACKDROP OF LUMP SUM DECLA RATION ALREADY MADE BY THE ASSESSEE. THE LEARNED AR REFERRED TO S EVERAL JUDICIAL PRECEDENTS TO PROP UP ITS CASE AND SUBMITTED THAT T HE ACTION OF THE AO RESORTING TO ESTIMATED ADDITIONS BY WAY OF EXTRAPOL ATION OVER AND ABOVE INCOME ALREADY OFFERED CANNOT BE COUNTENANCED BY ANY MEANS. 6.3 THE LEARNED AR ALSO ASSAILED THE ACTION OF THE CIT(A) IN RETAINING THE AGGREGATE AMOUNT OF RS.14,10,000/- TO WARDS ON-MONEY ON THE BASIS OF UNVERIFIED STATEMENT OF TWO PURCHAS ERS OVER AND ABOVE ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 12 - AMOUNT ALREADY DECLARED IN THE SEARCH PROCEEDINGS A S MISCONCEIVED. THE LEARNED AR SUBMITTED THAT ON THE FACE OF UNSUPP ORTED VOLUNTARY DISCLOSURE OF WHOPPING AMOUNT OF RS.2 CRORE, IT WAS NOT LEGITIMATE FOR THE CIT(A) TO FLIPPANTLY SUSTAIN THE ADDITION OF RS .14,10,000/- WHILE DELETING THE REMAINING ADDITION OUT OF RS.3,28,13,3 55/- ESTIMATED BY THE AO. THE LEARNED AR ACCORDINGLY SUBMITTED THAT THE RELIEF PRAYED ON BEHALF OF THE REVENUE IS OPPOSED TO THE LAW HAVI NG REGARD TO THE FACTS OF THE CASE AND THEREFORE TOTALLY UNSUSTAINAB LE. SIMILARLY, IT WAS ALSO URGED ON BEHALF OF THE ASSESSEE THAT THE ADDIT IONS SUSTAINED BY THE CIT(A) TO THE EXTENT OF RS.14.10 LAKH CHALLENGED BY THE ASSESSEE IN ITS GROUNDS OF APPEAL IN ITA NO. 401/AHD/2014 AS WELL A S AS PER ITS MEMORANDUM OF CROSS OBJECTION REQUIRES TO BE ALLOWE D AND THE ADDITION SUSTAINED REQUIRES TO BE DELETED BEING NOT SUSTAINABLE. 7. THE LEARNED DR FOR THE REVENUE, ON THE OTHER HAN D, RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT WHERE TWO OF THE PURCHASERS HAVE UNEQUIVOCALLY CONFESSED PAYMENTS OF CASH MONEY TO THE ASSESSEE IN THE POSTS SEARCH INQUIRY, A NATURAL AND LOGICAL INFERENCE WOULD ARISE AGAINST THE ASSESSEE IN RESPECT OF REMAINING FLATS SOLD. THE AO WAS ACCORDINGLY JUSTIFIED IN ESTIMATING THE CASH COMPON ENT IN RESPECT OF ALL THE FLATS. IT WAS FURTHER SUBMITTED THAT THE A O WAS QUITE FAIR IN GRANTING RELIEF IN RESPECT OF AMOUNT ALREADY DECLAR ED IN THE CONFESSIONAL STATEMENT RECORDED UNDER S.132(4) OF T HE ACT AND ONLY THE BALANCE AMOUNT IN EXCESS OF WHAT WAS DECLARED HAS B EEN ADDED IN THE HANDS OF THE ASSESSEE FIRM. IN THE CIRCUMSTANCES, IT WAS CONTENDED THAT THERE WAS NO JUSTIFICATION FOR THE CIT(A) TO C ANCEL THE ADDITIONS SO MADE. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. BOTH ASSESSEE AS WELL AS THE REVENUE ARE AGGRIEVED BY TH E ORDER OF THE CIT(A). THE ADDITION ON ACCOUNT OF ALLEGED ON MONE Y RECEIPT TOWARDS ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 13 - SALE OF RESIDENTIAL FLAT BY THE ASSESSEE IS SUBJECT MATTER OF CONTROVERSY. WHILE IT IS THE CASE OF THE ASSESSEE THAT IN VIEW O F THE VOLUNTARY DECLARATION MADE BY THE ASSESSEE IN ITS OWN RECORD TO THE TUNE OF RS.2 CRORE WHICH SUFFICIENTLY COVERS ANY REMOTELY POSSIB LE ON MONEY RECEIPT ON SALE OF FLATS, SEPARATE ADDITION OVER AN D ABOVE WHICH IS VOLUNTEERED NOT PLAUSIBLE. THE REVENUE, ON THE OTH ER HAND, SEEKS TO CONTEND THAT QUANTIFICATION OF ON-MONEY RECEIPT ACT UALLY WORKS OUT TO RS.5,28,13,355/- AND THEREFORE ADDITION OF RS.3,28, 13,355/- OVER AND ABOVE RS.2 CRORE DECLARED IS FULLY JUSTIFIED. IN T HE COURSE OF SEARCH CONDUCTED UNDER S.132 OF THE ACT, THE PARTNERS OF T HE ASSESSEE ARE STATED TO HAVE VOLUNTARILY DISCLOSED AN AMOUNT OF R S.25 CRORE IN AGGREGATE AS UNDISCLOSED INCOME FOR AND ON BEHALF O F THE SAVALIYA GROUP CONCERNS FOR F.Y. 2010-11 RELEVANT TO AY 2011 -12. THE DISCLOSURE OF RS.2 CRORE OUT OF AGGREGATE DISCLOSUR E OF RS.25 CRORES PERTAINS TO THE ASSESSEE FIRM HEREIN. IT APPEARS T HAT AFTER THE POST SEARCH INQUIRY, TWO OF THE PURCHASERS OF THE RESIDE NTIAL FLATS IN THE HOUSING PROJECTS OF THE ASSESSEE HAVE CONFESSED TO HAVE GIVEN RS.9LAKHS AND RS.5.10 LAKHS TO ASSESSEE IN A STATEM ENT RECORDED UNDER S.131 OF THE ACT. THE AO ON THE BASIS OF SUC H STATEMENTS AT ITS COMMAND, PROCEEDED TO MAKE ESTIMATION OF PROBABLE U NACCOUNTED RECEIPT FROM SALE OF RESIDENTIAL FLATS IN RESPECT O F ALL THE FLATS SOLD DURING THE YEAR. APPLYING THE THEORY OF EXTRAPOLAT ION TO REMAINING 87 FLATS ON THE BASIS OF STATEMENT RECORDED IN RESPECT OF THE TWO FLATS, THE AO ARRIVED AT AN ESTIMATED ON-MONEY RECEIPT OF RS.5 ,28,13,355/- IN THE HANDS OF THE ASSESSEE. AFTER GIVING CREDIT FOR THE AMOUNT ALREADY DISCLOSED IN THE SEARCH PROCEEDINGS AMOUNTING TO RS .2 CRORE, THE AO MADE AN ADDITION OF REMAINING AMOUNT OF RS.3,28,13, 355/- IN THE HANDS OF THE ASSESSEE. 8.1 IN THE FIRST APPEAL, THE CIT(A) FOUND MERIT IN THE PLEA OF THE ASSESSEE THAT SUO MOTU DISCLOSURE CONCEDED IN THE COURSE OF SEARCH ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 14 - PROCEEDINGS WAS WITHOUT ANY INCRIMINATING MATERIAL TOWARDS ANY CLANDESTINE INCOME. THE DISCLOSURE WAS MADE TO BUY PEACE AND AVOID PROTRACTED LITIGATION. THE CIT(A) ALSO OPINED THAT EXTRAPOLATION OF SUCH CONFESSION TO THE REMAINING FLATS IS NOT POSSI BLE ON THE BASIS OF STATEMENT OF TWO PURCHASERS. THE CIT(A) ACCORDINGL Y DELETED THE ADDITIONS MEASURED ON THE BASIS OF EXTRAPOLATION TH EORY BUT HOWEVER RETAINED THE ADDITIONS TO THE EXTENT OF ADMISSION A CTUALLY MADE BY TWO PURCHASERS OVER AND ABOVE THE DISCLOSURE MADE. WHI LE THE REVENUE SEEKS ADDITION FOR ON ACCOUNT OF ON-MONEY RECEIPT F OR ALL THE FLATS APPLYING EXTRAPOLATION THEORY, THE ASSESSEE SEEKS T O CHALLENGE THE ADDITION OF RS.14.10LAKHS SUSTAINED BY THE CIT(A) O N THE BASIS OF STATEMENTS OF TWO PURCHASERS ON THE FACT OF GENERIC DECLARATION ALREADY MADE. 8.2 THE STATEMENT OF TWO PURCHASERS IS THE BEDROCK FOR ADDITIONS IN CONTROVERSY. IT IS AN ADMITTED POSITION THAT THE S TATEMENTS OF TWO PURCHASERS ALLEGEDLY CLAIMING TO HAVE PAID CASH MON EY OF RS.14.10 LAKHS IN AGGREGATE, WERE OBTAINED BEHIND THE BACK O F THE ASSESSEE. THE COPY OF THE STATEMENT WAS NOT PROVIDED TO THE A SSESSEE AT ALL. THE CROSS EXAMINATION OF THE PURCHASERS WERE ALSO NOT P ROVIDED BY THE REVENUE AUTHORITIES DESPITE SEVERAL REQUESTS MADE B Y THE ASSESSEE. SUCH OVERWHELMING FACTS REMAIN UNREBUTTED ON BEHALF OF THE REVENUE. THIS BEING SO, THE ACTION OF THE AO IN PLACING RELI ANCE UPON STATEMENT OF THIRD PARTY TO CRUCIFY THE ASSESSEE IS CLEARLY I N NEGATION OF OVERRIDING PRINCIPLES OF NATURAL JUSTICE WHICH IS S UPPOSED TO BE GUIDING FACTOR IN AN ADJUDICATION PROCESS. NEEDLES S TO SAY, THE APPROPRIATE OPPORTUNITY TO AN AFFECTED PARTY IS NOT A GIFT BUT AN ABSOLUTE AND SALUTARY RIGHT WHICH CANNOT BE SIMPLY BYPASSED. THE INFRINGEMENT OF BASIC PRINCIPLES OF NATURAL JUSTICE HAS THUS VITIATED THE ORDER OF THE AO TO THE CORE. THE LEGITIMATE EXPECTA TION OF THE ASSESSEE TO SEEK CROSS EXAMINATION OF A PERSON MAKING ADVERS E COMMENTS ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 15 - AGAINST THE ASSESSEE TO ENABLE IT TO TRAVERSE THE A SSERTIONS CANNOT BE SHUNNED IN SUB-VERSION OF JUDICIAL PROPRIETY WHILE WEIGHING AN ISSUE. THE RIGHT TO FAIR HEARING IS A GUARANTEED RIGHT. E VERY PERSON AFFECTED BY THE STATEMENT OF THIRD PARTY HAS INDISPENSIBLE R IGHT TO KNOW THE EVIDENCE USED AGAINST HIM. THE AO AS WELL AS THE C IT(A) HAS VIOLATED THIS CARDINAL PRINCIPLE AS SQUARELY UNDERSCORED IN KISHANCHAND CHELLARAM VS. CIT 125 ITR 713 (SC) AND HOST OF OTHE R DECISIONS. APART FROM A BALD STATEMENT OF THIRD PARTY LOADED A GAINST THE ASSESSEE WHICH WAS NEVER CONFRONTED, THE REVENUE HAS NOT ADD UCED ANY MATERIAL WHICH COULD EXPOSE THE FALSEHOOD IN THE RE CORDS OF THE ASSESSEE DESPITE DRASTIC ACTION OF SEARCH. THEREFO RE, WE ARE UNABLE TO SUBSCRIBE TO THE VIEW TAKEN BY THE AO FOR EXERCISE OF THE POWER IN A MANNER MOST BENEFICIAL TO THE REVENUE AND CONSEQUEN TLY MOST ADVERSE TO THE ASSESSEE IN TOTAL DISREGARD OF FAIRNESS IN I TS ACTION. FROM ITS SUBMISSIONS BEFORE LOWER AUTHORITIES, THE ASSESSEE HAS CLEARLY DEMONSTRATED THAT IT HAS REPEATEDLY ASKED FOR CROSS EXAMINATION OF THE WITNESSES AGAINST HIM. THE DEPARTMENT WAS THUS DUT Y BOUND TO PRODUCE ITS WITNESS FOR CROSS EXAMINATION MORE PART ICULARLY WHEN NO OTHER TANGIBLE MATERIAL IS SHOWN TO BE AVAILABLE TO IMPLICATE THE ASSESSEE. IN THE ABSENCE OF ANY CORROBORATING EVID ENCE AND IN THE ABSENCE OF CROSS EXAMINATION OFFERED, THE STATEMENT OF THIRD PARTY CANNOT BE TAKEN COGNIZANCE OF, AS IT WILL APPARENTL Y LEAD TO MISCARRIAGE OF JUSTICE. THEREFORE, WE FIND TOTAL J USTIFICATION IN THE ACTION OF THE CIT(A) IN DIRECTING THE AO TO DELETE THE ESTIMATED ADDITIONS TOWARDS UNACCOUNTED RECEIPT IN RESPECT O F FLATS SOLD ON THE BASIS OF SOME UNVERIFIED AND BALD STATEMENT. ONCE SUCH STATEMENTS OF THE PURCHASERS ARE TAKEN OUT OF RECKONING, THE EDIF ICE OF ESTIMATED ADDITIONS TOWARDS SALE OF RESIDENTIAL FLATS WOULD C RUMBLE DOWN. 8.3 BESIDES, ESTIMATED CASH RECEIPTS ON-MONEY OF SA LE OF ALL FLATS MERELY ON THE BASIS OF STATEMENT OF TWO PURCHASERS WITHOUT ANY ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 16 - TANGIBLE CORROBORATION CLEARLY FALLS IN THE REALM O F CONJUNCTURES AND SURMISES. IT IS OBVIOUS THAT DRIVEN BY MISPLACED S USPICION, THE AO HAS PRESUMED THE PRESENCE OF ON-MONEY IN RESPECT OF EAC H OF THE RESIDENTIAL FLAT SOLD. THE ACTION OF THE AO IS A M ERE IPSE DIXIT WHICH IS NOT OBJECTIVELY JUSTIFIABLE BY SOME INCULPATORY EVIDENCE. IT IS ONLY ELEMENTARY TO SAY THAT ESTIMATION OF UNACCOUNTED MO NEY CANNOT BE MADE ONLY ON THE BASIS OF CONTEMPLATION. THE ORDER OF THE AO IN MAKING ADDITIONS OF RS.3.28 CRORES IS THUS CLEARLY ARBITRARY AND UNSUSTAINABLE IN LAW. IT IS WELL SETTLED THAT THE REVENUE AUTHORITIES CANNOT BASE ITS FINDINGS ON SUSPICIONS, CONJUNCTURE S OR SURMISES NOR SHOULD IT ACT ON NO EVIDENCE AT ALL OR ON VAGUE CON SIDERATIONS PARTLY ON EVIDENCE AND PARTLY ON SUSPICION, CONJUNCTURES OR S URMISES. THE REVENUE COULD NOT DEMONSTRATE ANY MATERIAL EXCEPT U NSUPPORTED STATEMENTS OF TWO PERSONS. SUCH UNVERIFIED STATEME NTS WITHOUT ANY PROOF TOWARDS ITS ASSERTIONS ARE NOT A GOOD EVIDENC E AND DO NOT RAISE ANY ESTOPPEL AGAINST THE ASSESSEE. THEREFORE, THE ADDITION MADE BY THE AO IS IN THE REALM OF SPECULATION WITHOUT ANY BASIS WHATSOEVER. HENCE, WE DECLINE TO INTERFERE WITH THE ORDER OF TH E CIT(A) IN SO FAR AS APPEAL OF THE REVENUE IS CONCERNED. 8.3 WE SHALL NOW ADVERT TO THE MAINTAINABILITY OF A DDITION OF RS.14.10 LAKHS CONFIRMED BY THE CIT(A) ON THE BASIS OF STATEMENT OF TWO PURCHASERS. AS EMPHATICALLY NOTED ABOVE, THE S TATEMENT OF TWO PERSONS CANNOT BE RECOGNIZED TO THE PREJUDICE OF AS SESSEE IN THE ABSENCE OF CORROBORATION AND/OR CROSS EXAMINATION T HEREOF. THE ADDITION SUSTAINED ON THE BASIS OF A BALD ADMISSION OF THIRD PARTY AGAINST THE ASSESSEE HAS NO PROBATIVE VALUE AND THU S UNSUSTAINABLE IN LAW. WE FIND POTENCY IN THE PLEA OF THE ASSESSEE T HAT DESPITE SEARCH, NO REFERENCE TO ANY INCRIMINATING MATERIAL RECOVERE D FROM ASSESSEE IS FOUND IN THE ASSESSMENT ORDER AND THE BASIS OF ADDI TION IS SOME POST SEARCH ENQUIRY FROM PURCHASERS ALONE SUBSEQUENT TO SEARCH. ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 17 - SIGNIFICANTLY, THE ASSESSEE HAS REPEATEDLY POINTED OUT THE ABSENCE OF CONTEMPORANEOUS MATERIAL BEFORE THE LOWER AUTHORITI ES. SUCH ASSERTIONS ON BEHALF OF THE ASSESSEE REMAIN UNREBUT TED. THE ONUS WAS ALWAYS ON THE REVENUE TO SUPPORT THE STATEMENT RECO RDED BEHIND THE BACK OF THE ASSESSEE IN SOME REALISTIC MANNER PARTI CULARLY WHEN THE CROSS EXAMINATION WAS DEPRIVED DESPITE HAVING BEEN SPECIFICALLY DEMANDED. THE ONUS IS CLEARLY NOT DISCHARGED BY RE VENUE. THE ADDITIONS TOWARDS UNACCOUNTED CASH RECEIPT CANNOT B E HYPOTHETICALLY ATTRIBUTED. HENCE THE ADDITION SUSTAINED BY THE CI T(A) SOLELY ON THE BASIS OF ORAL EVIDENCE OF THIRD PARTY WITHOUT ITS V INDICATION IS CLEARLY WITHOUT ANY LEGAL FOUNDATION. THEREFORE, THE ACTIO N OF THE CIT(A) IN SUSTAINING PART ADDITION REQUIRES TO STRUCK DOWN. 9. IN THE LIGHT OF THE AFORESAID DISCUSSION, THE AP PEAL OF THE REVENUE IN ITA NO. 410/AHD/2014 IS DISMISSED AND AP PEAL OF THE ASSESSEE IN ITA NO. 401/AHD/2014 AND CROSS OBJECTIO N IN CO NO. 117/AHD/2014 IS ALLOWED. 10. THE GROUNDS OF APPEAL RAISED BY THE REVENUE (IN CASE OF M/S. SAVALIYA BUILDCON) IN ITA NO. 3544/AHD/2015 READ AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY OF RS.20,00,000/- LEVIED U/S.271AAA OF THE ACT. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE FACTS THAT THE ASSESSEE HAD FAILED TO SUBSTANTI ATE THE MANNER IN WHICH UNDISCLOSED INCOME OF RS.2,00,00,000/- WAS EA RNED AND THEREFORE HE WAS NOT ELIGIBLE FOR ANY IMMUNITY FOR PENALTY U/S.271AAA. 10.1 THE ASSESSEE HAS MOVED MEMORANDUM OF CROSS OBJ ECTION IN THE AFORESAID REVENUES APPEAL. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE (IN CASE OF M/S. SAVALIYA BUILDCON) IN CO NO. 14/AHD/2016 READ AS UNDER: ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 18 - 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY LEVIED U/S. 271AAA OF THE ACT OF RS.1,41,00 0/- OUT OF TOTAL PENALTY LEVIED OF RS.21,41,000/-. ON THE FACTS AND CIRCUMST ANCES OF THE CASE, THE ASSESSEE HAS NEITHER CONCEALED THE INCOME NOR HAS S UBMITTED ANY INACCURATE PARTICULARS OF INCOME. IN VIEW OF THIS, THE LD. CIT(A) OUGHT TO HAVE DELETED THE ENTIRE PENALTY LEVIED U/S. 271AAA OF THE ACT OF RS.21,41,000/-. 10.2 APART FROM CO NOTED ABOVE, THE ASSESSEE HAS AL SO FILED CROSS APPEAL REITERATING THE GRIEVANCE RAISED AS PER CO. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE (IN CASE OF M/S. SAVA LIYA BUILDCON) IN ITA NO. 3188/AHD/2015 READ AS UNDER: I. LEVY OF PENALTY U/S. 271AAA OF THE ACT 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY LEVIED U/S. 271AAA OF THE ACT OF RS.1,41,000/- OUT OF TOTAL PENALTY LEVIED BY THE LD. A.O. OF RS.21,41,000/-. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS WHI LE NOT CONSIDERING THE FACT THAT NO PENALTY CAN BE LEVIED ON THE ADDITION OF RS.14,10,000/- ON ACCOUNT OF ON-MONEY RECEIVED FROM TWO MEMBERS AS THE SAME IS REQUIRED TO BE TELESCOPED AGAINST THE DISCLOSURE OF RS.2 CRO RES MADE BY THE APPELLANT FIRM FOR THE FINANCIAL YEAR 2010-11 RELEV ANT TO A.Y. 2011-12. 11. THE CAPTIONED APPEALS FILED BY THE REVENUE AND THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) ARISES FROM THE PEN ALTY ORDER PASSED BY THE AO UNDER S.271AAA OF THE ACT CONCERNING AY 2 011-12. AS NOTED ABOVE, THE ASSESSEE HAS ALSO FILED CROSS OBJE CTION AGAINST THE APPEAL OF THE REVENUE RAISING GRIEVANCE FOR PARTIAL CONFIRMATION OF THE PENALTY SIMILAR TO ITS CROSS APPEAL IN ITA NO. 3188 /AHD/2015 (SUPRA). 12. THE CAUSE OF GRIEVANCE IN ALL THE CAPTIONED AP PEALS/CROSS OBJECTION IS COMMON. IN VIEW OF SIMILARITY OF THE FACTS AND SOLITARY GRIEVANCE TOWARDS LEVY OF PENALTY UNDER S.271AAA OF THE ACT, ALL THE THREE MATTERS CONCERNING IMPOSITION OF PENALTY ARE BEING DISPOSED OF BY THIS COMMON ORDER. 13. WE SHALL FIRST RECORD FACTS IN BRIEF TO ADJUDIC ATE THE ISSUE AS NOTED IN THE QUANTUM APPEAL. A SEARCH ACTION WAS C ARRIED OUT IN THE ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 19 - GROUP CASES OF SAVALIYA GROUP UNDER S. 132 OF THE A CT ON 06.01.2011. THE STATEMENTS OF KEY PERSONS OF THE GROUP WERE REC ORDED UNDER S.132(4) OF THE ACT IN THE COURSE OF SEARCH. THE A SSESSEE FIRM INTER ALIA DECLARED RS.2 CRORE BY WAY OF SUO MOTU DISCLOSURE TO COVER ANY POSSIBLE UNDISCLOSED INCOME OF THE FIRM. A CASE WA S REPEATEDLY MADE OUT BY THE ASSESSEE BEFORE THE REVENUE AUTHORITIES IN THE QUANTUM PROCEEDINGS THAT NO INCRIMINATING MATERIAL WAS FOUN D IN THE COURSE OF SEARCH TO ESTABLISH ANY EVASION OF UNDISCLOSED INCO ME INDEPENDENTLY, SUO MOTU DISCLOSURE BY WAY OF STATEMENT UNDER S.132(4) OF T HE ACT NOTWITHSTANDING. CONSEQUENT UPON SEARCH, THE ASSES SEE FILED RETURN OF INCOME WHICH INCLUDED THE AFORESAID DISCLOSURE OF R S.2 CRORES MADE IN THE STATEMENT DEPOSED UNDER S.132(4) OF THE ACT. THE AO FRAMED ASSESSMENT UNDER S.143(3) R.W.S. 153A OF THE ACT AN D MADE FURTHER ADDITION OF RS.3,28,13,355/- TO THE RETURNED INCOME TOWARDS UNACCOUNTED ON-MONEY RECEIPTS OVER AND ABOVE THE DI SCLOSURE OF RS.2 CRORE MADE BY THE ASSESSEE. THE ASSESSMENT SO FRAM ED WAS CHALLENGED BY THE ASSESSEE BEFORE THE CIT(A). THE CIT(A) RETAINED THE ADDITION OF RS.14,10,000/- REPRESENTING ON-MONE Y RECEIVED FROM TWO MEMBERS FOUND AS A RESULT OF POST SEARCH INQUIR IES AND HELD THAT THE ASSESSEE HAS FAILED TO DISCLOSE THE AFORESAID A MOUNT. THE REMAINING ADDITION I.E. RS.3,14,03,355/- WAS DELETE D IN THE QUANTUM PROCEEDINGS. 13.1 AS A SEQUEL TO THE ASSESSMENT MADE BY THE AO A ND PARTIALLY CONFIRMED BY THE CIT(A), THE AO INVOKED THE PROVISI ONS OF SECTION 271AAA OF THE ACT AND IMPOSED PENALTY @10% ON RS.2, 14,10,000/- SUSTAINED BY CIT(A) IN QUANTUM BEING AGGREGATE OF R S.2 CRORE DISCLOSED BY THE ASSESSEE IN THE STATEMENT UNDER S. 132(4) OF THE ACT AND RS.14,10,000/- CONFIRMED BY THE CIT(A). A PENAL TY OF RS.21,41,000/- WAS ACCORDINGLY IMPOSED ON THE ASSES SEE VIDE ORDER DATED 23.01.2015 PASSED UNDER S.271AAA OF THE ACT. ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 20 - 13.2 AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFOR E THE CIT(A). 13.3 ON REAPPRAISAL OF FACTS AND CIRCUMSTANCES OF T HE CASE, THE CIT(A) DELETED PENALTY TO THE EXTENT OF RS.20LAKHS LEVIED @ 10% IN RESPECT OF DISCLOSURE MADE OF RS.2 CRORES IN THE ST ATEMENT UNDER S.132(4) OF THE ACT AND IN THE RETURN OF INCOME. T HE CIT(A) HOWEVER CONFIRMED THE PENALTY @ 10% AS PER THE PROVISIONS O F SECTION 271AAA OF THE ACT ON REMAINING ADDITION OF RS.14,10 ,000/- UPHELD IN THE QUANTUM PROCEEDINGS BY THE FIRST APPELLATE AUTH ORITY. IN THE RESULT, THE CIT(A) DELETED THE PENALTY OF RS.20 LAKHS AND C ONFIRMED THE REMAINING PENALTY OF RS.1,41,000/- OUT OF TOTAL PEN ALTY OF RS.21,41,000/- IMPOSED BY THE AO UNDER S.271AAA OF THE ACT. THE RELEVANT OPERATIVE PORTION OF THE CIT(A)S ORDER IS REPRODUCED HEREUNDER: 3.1 I HAVE CONSIDERED THE FACTS OF THE CASE, ORDER OF THE A.O., SUBMISSIONS OF THE APPELLANT AND STATEMENT OF THE P ARTNER SHRI SANJAYBHAI SAVALIYA AND SHRI KANTIBHAI SAVALIYA RECORDED U/S.1 32{4) OF THE ACT ON 07-1-2011 AND LETTER OF THE APPELLANT FIRM FILED BE FORE ITO(INV.) AFFIRMING THE DISCLOSURE STATEMENT U/S. 132(4) OF THE ACT GIV EN BY THE PARTNERS OF THE FIRM FILED ON 06.04.2011 RESPECTIVELY DURING THE CO URSE OF SEARCH PROCEEDINGS AND THE RETURN OF INCOME FILED BY THE A PPELLANT FIRM COMPILED IN THE PAPER BOOK. 3.2 IT IS SEEN THAT DURING THE COURSE OF SEARCH, TH E PARTNER OF THE APPELLANT FIRM SHRI SANJAYBHAI SAVALIYA AND SHRI KA NTIBHAI SAVALIYA IN HIS STATEMENT RECORDED U/S.132(4) DATED 07-01-2011 IN ANSWER TO QUESTION NO.28, HAD SUO-MOTTO AND VOLUNTARILY DISCLOSED A SU M OF RS.25,00,00,000/- FOR THE F.Y. 2010-11 RELEVANT TO A.Y.2011-12 OVER A ND ABOVE REGULAR BOOKS OF ACCOUNTS PERTAINING TO HIMSELF AND HIS BUS INESS CONCERN. IT WAS ALSO STATED THAT THE FINAL BREAK-UP OF THE VOLUNTAR ILY DISCLOSED ADDITIONAL INCOME AMONGST DIFFERENT ASSESSEES OF THIS FAMILY A ND BUSINESS CONCERN, THE MANNER OF EARNING THE ADDITIONAL INCOME DISCLOS ED AND ITS ASSETS IDENTIFICATION WOULD BE SUBMITTED SUBSEQUENTLY AS A PART AND PARCEL OF MY STATEMENT RECORDED U/S. 132 (4) OF THE ACT. SUBSEQU ENTLY HE FILED A LETTER WITH ITO (INV.) UNIT-1, AHMEDABAD DATED 21.01.2011, WHEREIN HE STATED THE BREAK-UP OF THE DISCLOSURE OF RS.25,00,00,000/- WHEREIN HE HAS ALSO BIFURCATED THE DISCLOSURE MADE OF RS.2,00,00,000/- IN THE CASE OF THE APPELLANT FIRM BEING UNACCOUNTED BOOKING RECEIPTS / EXTRA RECEIPTS FROM SOME (FEW) MEMBERS OF THE SCHEME KNOWN AS 'KRISH RE SIDENCY', FOR WHICH NO INCRIMINATING MATERIAL WAS FOUND DURING THE COUR SE OF SEARCH PROCEEDINGS. THE PARTNER OF THE APPELLANT FIRM ALSO REQUESTED IN HIS STATEMENT THAT NO PENALTY SHOULD BE LEVIED IN RESPE CT OF THE SAID DISCLOSURE IN PURSUANCE OF PROVISIONS OF SECTION 13 2 (4) R.W.S,271AAA OF ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 21 - THE ACT. IT IS FURTHER SEEN THAT AFTER OBTAINING TH E SAID DISCLOSURE STATEMENT WITH A REQUEST OF NOT LEVYING PENALTY, TH E STATEMENT U/S. 132 (4) HAS BEEN CONCLUDED BY THE AUTHORIZED OFFICER AND NO FURTHER SPECIFIC QUESTION AS REGARDS THE MANNER OF EARNING THE UNDIS CLOSED INCOME OR SUBSTANTIATION THEREOF WAS PUT FORTH BY THE AUTHORI ZED OFFICER. 3.3 DURING THE POST SEARCH PROCEEDINGS, WHEN THE AP PELLANT FIRM IN PURSUANCE OF THE STATEMENT OF THE PARTNER'S STATEME NT U/S. 132(4) OF THE ACT SUBMITTED A LETTER TO THE ITO (INV.) UNIT-1, AH MEDABAD VIDE LETTER DATED 06-04-2011 CONFIRMING THE DISCLOSURE STATEMEN TS GIVEN BY THE PARTNER FOR AND ON BEHALF OF THE APPELLANT FIRM FOR AN AMOUNT OF UNDISCLOSED INCOME OF RS.2,00,00,000/- IN RESPECT O F UNACCOUNTED BOOKING RECEIPTS/EXTRA RECEIPTS FROM SOME (FEW) MEMBERS OF THE SCHEME KNOWN AS 'KRISH RESIDENCY' IN ITS LETTER DATED 06-04-2011 FO R WHICH NO RECORDS HAVE BEEN MAINTAINED AND IN THE SEARCH PROCEEDINGS, NO INCRIMINATING MATERIAL/RECORDS HAVE BEEN FOUND. 3.4 IT IS FURTHER SEEN THAT ON THE BASIS OF THE STA TEMENT OF PARTNER RECORDED U/S.132(4) OF THE ACT, THE APPELLANT FIRM HAS OFFER ED THE INCOME OF RS.2,00,00,000/- IN THE RETURN OF INCOME OF THE CUR RENT FINANCIAL YEAR 2010-11 RELEVANT TO A.Y. 2011-12 IN ITS RETURN OF I NCOME FILED ON 30-09- 2011 U/S.139 AND EVEN PAID THE TAX THEREON ALONG WI TH INTEREST IN THE PRESENT CASE OF APPELLANT FIRM, THE SEARCH TOOK PLA CE ON 06/07-01-2011 AND THEREFORE, FOR F.Y.2010-11 RELEVANT TO A.Y. 201 1-12, DATE OF FILING THE RETURN OF INCOME WAS DUE ON THE DATE SUBSEQUENT TO THE DATE OF SEARCH. HENCE, IN THE CASE OF THE APPELLANT FIRM, THE PROVI SIONS OF SECTION 271AAA OF THE ACT ARE APPLICABLE. 3.5 THE FACTS OF APPELLANT FIRM'S CASE HAVE BEEN EX AMINED IN THE LIGHT OF PROVISIONS OF SECTION 271AAA(2) OF THE ACT. THE PAR TNER OF THE APPELLANT FIRM HAS DISCLOSED THE UNDISCLOSED INCOME WHILE GIV ING THE STATEMENT U/S.132(4) OF THE ACT DURING THE COURSE OF SEARCH F OR AND ON BEHALF OF THE APPELLANT FIRM. THE APPELLANT FIRM HAS PAID THE TAX THEREON ALONGWITH INTEREST AND SHOWN THE UNDISCLOSED INCOME IN THE RE TURN OF INCOME UNDER THE HEAD 'INCOME FROM BUSINESS' AND IN THE NOTES FO RMING PART OF STATEMENT OF TOTAL INCOME ALSO STATED IN DETAIL THE MANNER OF EARNING THE INCOME AND GAVE THE IDENTIFICATION OF ASSETS. THE A .O HAS ACCEPTED THE RETURN OF INCOME OF THE APPELLANT AND HAS ACCORDING LY PASSED THE ASSESSMENT ORDER U/S. 153A R.W.S.143(3) OF THE ACT ACCEPTING THE UNDISCLOSED INCOME OFFERED BY THE APPELLANT FIRM UN DER THE HEAD 'INCOME FROM BUSINESS' BEING UNACCOUNTED BOOKING-RECEIPTS / EXTRA RECEIPTS FROM SOME (FEW) MEMBERS OF THE SCHEME KNOWN AS 'KRISH BU NGALOWS'. 3.6 TO CLAIM EXEMPTION FROM PENALTY U/S.271AAA, THE APPELLANT FIRM IS REQUIRED TO FULFIL THE THREE CONDITIONS OF PROVISIO NS OF SECTION 271AAA(2)VIZ :- (I) IN THE COURSE OF SEARCH, IN A STATEMENT U NDER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPEC IFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED; AND ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 22 - (III) PAYS THE TAX TOGETHER WITH INTEREST, IF AN Y, IN RESPECT OF THE UNDISCLOSED INCOME. CLAUSE (I) LAYS DOWN THE FIRST CONDITION THAT UNDIS CLOSED INCOME SHOULD HAVE BEEN ADMITTED BY THE ASSESSES IN THE STATEMENT U/S.132(4) AND THE ASSESSEE SHOULD HAVE SPECIFIED THE MANNER IN WHICH IT HAS BEEN DERIVED. IN THE PRESENT CASE OF THE APPELLANT FIRM, IN THE STAT EMENT OF THE PARTNER OF THE APPELLANT FIRM, SHRI SANJAYBHAI SAVALIYA, RECOR DED U/S. 132(4) (IN ANSWER TO QUESTION NO.28 OF THE STATEMENT RECORDED U/S.132(4) DATED 07- 01-2011) DURING THE COURSE OF SEARCH PROCEEDINGS, T HE SHRI SANJAYBHAI SAVALIYA AND KANTIBHAI SAVALIYA HAS MADE A DISCLOSU RE FOR AN AMOUNT OF RS.25,00,00,000/- FOR THE F.Y.2010-11RELEVANT TO A. Y.2011-12 OVER AND ABOVE REGULAR BOOKS OF ACCOUNTS PERTAINING TO HIMSE LF AND HIS BUSINESS CONCERN. IT WAS ALSO STATED THAT THE FINAL BREAK-UP OF THE VOLUNTARILY DISCLOSED ADDITIONAL INCOME AMONGST DIFFERENT ASSES SEES OF HIS FAMILY AND BUSINESS CONCERN, THE MANNER OF EARNING THE ADDITIO NAL INCOME DISCLOSED AND ITS ASSETS IDENTIFICATION WILL BE SUBMITTED SUB SEQUENTLY AS A PART AND PARCEL OF HIS STATEMENT RECORDED U/S.132(4) OF THE ACT. AND FURTHER HE FILED A LETTER WITH ITO (INV.) UNIT-1. AHMEDABAD WHEREIN DATED 21.01.2011, WHEREIN HE HAS STATED THE BREAKUP OF THE DISCLOSURE OF RS.25,00,00,000/- WHEREIN HE HAS BIFURCATED THE DISCLOSURE MADE OF. R S.2,00.00,000/- IN RESPECT OF INCOME EARNED BY THE APPELLANT FIRM BEIN G ACCOUNTED BOOKING RECEIPTS/EXTRA RECEIPTS FROM SOME (FEW) MEMBERS OF THE SCHEME KNOWN AS 'KRISH RESIDENCY', FOR WHICH NO INCRIMINATING MATER IAL WAS FOUND DURING THE COURSE OF SEARCH PROCEEDINGS. 3.6.1 CLAUSE (II) LAYS DOWN THE SECOND CONDITION TH AT ASSESSEE SHOULD HAVE SUBSTANTIATED THE MANNER IN WHICH UNDISCLOSED INCOM E HAS BEEN DERIVED. IN THE PRESENT CASE OF THE APPELLANT FIRM, AFTER TH E PARTNER OF THE APPELLANT FIRM MADE THE DISCLOSURE IN HIS STATEMENT U/S. 132( 4) OF THE ACT FOR AND ON BEHALF OF THE APPELLANT FIRM FOR AN AMOUNT OF RS.2, 00,00,000/- FOR THE F.Y.2010-11 RELEVANT TO A.Y.2011-12 BEING UNACCOUNT ED BOOKING RECEIPTS/EXTRA RECEIPTS FROM SOME (FEW) MEMBERS OF THE SCHEME KNOWN AS KRISH RESIDENCY' NO FURTHER QUESTION WAS ASKED BY T HE AUTHORIZED OFFICER OF THE SEARCH. WHEN THE APPELLANT FIRM ALSO FILED I TS LETTER DATED 06-04- 2011 TO THE ITO (INV.) UNIT-1, AHMEDABAD, CONFIRMIN G THE DISCLOSURE MADE BY THE PARTNER OF THE FIRM, FOR AND ON BEHALF OF TH E APPELLANT FIRM BY STATING THE MANNER OF EARNING THE INCOME, THE SEARC H IN CHARGE OFFICER DID NOT RAISE ANY FURTHER QUESTION TO THE APPELLANT FIR M. 3.7 IT IS FURTHER CLEAR THAT THE PRINCIPLES LAID DO WN BY THE HON'BLE HIGH COURTS IN THE CASES OF CIT V. MAHENDRA C. SHAH [200 8] 299 ITR 305 (GUJ.) CIT V. RADHA KRISHNA GOEL [2005), 278 ITR 45 47(2006], AND 152 TAXMAN 290 (ALL.), ARE ALSO SQUARELY APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. IN THE CASE OF CIT V. MAHENDRA C. SHAH, HON'BLE JURISDICTIONAL HIGH COURT HAS OBSERVE D THAT 'WHEN THE STATEMENT IS BEING RECORDED BY THE AUTHOR IZED OFFICER, IT IS INCUMBENT UPON THE AUTHORIZED OFFICER TO EXPLAIN TH E PROVISION OF EXPLANATION 5 IN ENTIRELY TO THE ASSESSEE CONCERNED AND THE AUTHORIZED OFFICER CANNOT STOP SHORT AT A PARTICULAR STAGE SO AS TO PERMIT THE REVENUE TO TAKE ADVANTAGE OF SUCH LAPSE IN THE STATEMENT. T HE REASON IS NOT FAR TO SEEK, IN THE FIRST INSTANCE, THE STATEMENT IS BEING RECORDED IN. THE QUESTION AND ANSWER FORM AND THERE WOULD BE, NO OCCASION FOR AN ASSESSEE TO STATE AND MAKE AVERMENTS IN THE EXACT FORMAT STIPULATED B Y THE PROVISIONS ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 23 - CONSIDERING THE SETTING IN WHICH SUCH STATEMENT IS BEING RECORDED. SECONDLY, CONSIDERING THE SOCIAL ENVIRONMENT IT IS NOT POSSIBLE TO EXPECT FROM AN ASSESSEE, WHETHER LITERATE OR ILLITERATE, T O BE SPECIFIC AND TO THE POINT REGARDING THE CONDITIONS STIPULATED BY THE SE COND EXCEPTION WHILE MAKING STATEMENT UNDER SECTION. EVEN 'IF THE STATEM ENT DOES NOT SPECIFY THE MANNER IN WHICH THE INCOME IS COMPLIANCE NOT DE RIVED ), IF THE INCOME IS DECLARED AND TAX THEREON PAID, THERE WOULD BE SU BSTANTIAL WARRANTING ANY FURTHER DENIAL OF THE BENEFIT'. IN THE CASE OF C/T V. RADHA KRISHNA GOEL [2005] 278 ITR 454, THE HON'BLE ALLAHABAD HIGH COURT GAVE SIMILAR FINDINGS AND LAID DOWN SIMILAR PRINCIPLES AS UNDER .- 'FROM A PERUSAL OF EXPLN. 5 IT IS EVIDENT THAT IN C IRCUMSTANCES WHICH OTHERWISE DID NOT ATTRACT THE PENALTY PROVISIONS OF S. 271(1)(C), A DEEMING PROVISION WAS INTRODUCED AS TO ATTRACT THE PENALTY PROVISIONS TO THOSE CASES AS WELL. BUT AN EXCEPTION IS PROVIDED IN CL. (2) OF EXPLN. 5 WHERE THE DEEMING PROVISION WILL NOT APPLY IF DURING THE COUR SE OF SEARCH THE ASSESSEE MAKES THE STATEMENT UNDER SUB-S. (4) OF S. 132 THAT THE MONEY, BULLION, JEWELLERY, ETC., FOUND IN HIS POSSESSION H AS BEEN ACQUIRED OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN H IS RETURN OF INCOME TO BE FURNISHED BEFORE THE EXPIRY OF TIME SPECIFIED IN S. 139 AND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX TOGETHER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME. THE EXCEPTION APPEARS TO BE TO PROVIDE AN O PPORTUNITY TO THE ASSESSEE TO MAKE A CLEAN AND FAIR CONFESSION AND TO SURRENDER HIS INCOME AND ALSO TO DEPOSIT THE TAX AND INTEREST THEREON WH ICH MAY RESULT IN AN AGREED ASSESSMENT. THE PARAMOUNT INTENTION APPEARS TO BE THAT IN THE CASE OF FAIR AND CLEAN CONFESSION AND SURRENDER OF HIS I NCOME, DURING THE COURSE OF SEARCH FURTHER LITIGATION MAY BE AVOIDED AND THE REVENUE MAY GET THE TAX AND INTEREST, ETC., AT AN EARLIEST AND THE ASSESSEE MAY BE SAVED FROM FURTHER LITIGATION. UNDER S. 132(4), IT IS THE AUTHORISED OFFICER, WHO EXAMINES ON OATH ANY PERSON, WHO IS FOUND TO BE IN POSSESSION OR CONTROL OF ANY BOOKS OF ACCOUNT, DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING, THEREFORE, IT IS FOR THE AUTHORISED OFFICER TO RECORD THE STATEMENT IN HIS OWN WAY. THEREFORE, IT IS NOT EXPECTED FROM THE PERSON TO STATE THOSE THINGS, WHICH ARE NOT ASKED B Y THE AUTHORISED OFFICER. DURING THE COURSE OF SEARCH PERSON IS SO T ORTURED, HARASSED AND PUT TO A MENTAL AGONY THAT HE LOSES HIS NORMAL MENT AL STATE OF MIND AND AT THAT STAGE IT CANNOT BE EXPECTED FROM A PERSON TO P RE-EMPT THE STATEMENT REQUIRED TO BE GIVEN IN LAW AS A PART OF HIS DEFENC E. UNDER S. 132(4), UNLESS THE AUTHORISED OFFICER PUTS A SPECIFIC QUEST ION WITH REGARD TO THE MANNER IN WHICH INCOME HAS BEEN DERIVED, IT IS NOT EXPECTED FROM THE PERSON TO MAKE A STATEMENT IN THIS REGARD AND IN CA SE IN THE STATEMENT THE MANNER IN WHICH INCOME HAS BEEN DERIVED HAS NOT BEE N STATED BUT HAS BEEN STATED SUBSEQUENTLY, THAT AMOUNTS TO THE COMPL IANCE WITH EXPLN. 5(2). IN CASE, THERE IS NOTHING TO THE CONTRARY IN THE STATEMENT RECORDED UNDER S. 132(4), IN THE ABSENCE OF ANY SPECIFIC STA TEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED, IT CAN BE IN FERRED THAT SUCH UNDISCLOSED INCOME WAS DERIVED FROM THE BUSINESS WH ICH HE WAS CARRYING ON OR FROM OTHER SOURCES. THE OBJECT OF THE PROVISI ON IS ACHIEVED BY MAKING THE STATEMENT ADMITTING THE NON-DISCLOSURE O F MONEY, BULLION, JEWELLERY, ETC. THUS, MUCH IMPORTANCE SHOULD NOT BE ATTACHED TO THE STATEMENT ABOUT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. IT CAN BE INFERRED ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, IN THE ABSENCE OF ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 24 - ANYTHING TO THE CONTRARY. THEREFORE, MERE NON-STATE MENT OF THE MANNER IN WHICH SUCH INCOME WAS DERIVED WOULD NOT MAKE EXPLN. 5(2) INAPPLICABLE. FOR THE REASONS STATED ABOVE, THERE IS NO ERROR IN THE ORDER OF THE TRIBUNAL AND THE SAME IS UPHELD'. 3.8 AFTER GOING THROUGH THE STATEMENT OF THE PARTNE R UNDER SECTION 132(4) OF THE ACT AND THE APPELLANT FIRM'S LETTER DATED 06 -04-2011 FILED WITH THE ITO (INV.) UNIT-1, AHMEDABAD, A.O HAS ASSESSED THE UNDISCLOSED INCOME IN THE ASSESSMENT ORDER ON THE BASIS OF STATEMENT O F THE PARTNER U/S.132(4) OF THE ACT AND ON THE BASIS OF UNDISCLOS ED INCOME DISCLOSED BY THE APPELLANT FIRM IN THE RETURN AS INCOME FROM BUS INESS, IT IS OBSERVED THAT THE HONORABLE COURTS HAVE LAID DOWN THE PRINCI PLES THAT THE AUTHORIZED OFFICER HAS TO EXPLAIN THE PROVISIONS TO THE ASSESSEE AND ASK THE RELEVANT QUESTIONS ON THE MANNER IN WHICH THE U NDISCLOSED INCOME WAS EARNED. IN THE PRESENT CASE AND AS PER SECTION 271A AA, THE STATEMENT OF THE PARTNER RECORDED U/S. 132 (4) IN THE SEARCH PRO CEEDINGS, THE AUTHORIZED OFFICER WAS SATISFIED WITH THE MANNER IN WHICH THE INCOME WAS EARNED BY THE ASSESSEE AND WAS SATISFIED ABOUT THE SUBSTANTIATING THE MANNER IN WHICH UNDISCLOSED INCOME WAS EARNED. CLAUSE (III) LAYS DOWN THE THIRD CONDITION REGARDIN G THE PAYMENT OF TAX ALONGWITH INTEREST ON UNDISCLOSED INCOME ADMITTED I N THE COURSE OF SEARCH. IT IS AN UNDISPUTED FACT THAT THE TAX AND I NTEREST HAS BEEN PAID BY THE APPELLANT FIRM ON THE UNDISCLOSED INCOME ADMITT ED IN THE COURSE OF SEARCH PROCEEDINGS BY DISCLOSING IN THE RETURN OF I NCOME. 3.9 ON THE BASIS OF THE PRINCIPLES AND RATIO LAID D OWN BY THE HONORABLE JURISDICTIONAL HIGH COURT AND BY THE ALLAHABAD HIGH COURT CITED SUPRA AND OTHER COURTS HAVE ALSO GIVEN SIMILAR VERDICTS I N CASES SUCH AS (I) DECISION OF HONORABLE ITAT IN THE CASE OF DCIT VS. SMT. SULOCHANADEVI A. AGARWAL, ITA NO.1052/AHD/2012, A.Y.2009-10, DATED 2 0-07-2012,) (II) ITO VS. SHILPA V. GUPTA, ITA NO.1784/AHD/2012 & CO. 179/AHD/2012 A.Y.2009-10, DATED 14-12-2012, (III) RAJENDRA PRASA D DOKANIA, ITA NO. 525/AHD/2012 DATED 4-5-2012, (IV) DCIT, CENTRAL, SU RAT VS. RIVVA EXPORTS LTD., (V) DCIT, CENTRAL, SURAT VS. SHRI HARIKISHAN S. VIRMANI (ITA NO.2718 & 2719/AHD/2012) DATED 7-6-2013, AND IN VIE W OF FACTS OF CASE AS MENTIONED ABOVE, IT CAN BE STATED THAT ALL THE THRE E CONDITIONS LAID DOWN, IN THE PROVISIONS OF SECTION 271AAA (2) OF THE ACT ON THE BASIS OF WHICH THE APPELLANT CAN BE ELIGIBLE FOR IMMUNITY FROM PEN ALTY HAS BEEN FULFILLED IN APPELLANT'S CASE. THE APPELLANT CAN BE SAID TO H AVE SUBSTANTIALLY DISCHARGED THE ONUS OF SUBSTANTIATING THE MANNER OF EARNING UNDISCLOSED INCOME. THE ASSESSING OFFICER MADE THE ASSESSMENT O N THE BASIS OF THE DISCLOSURE MADE BY THE PARTNER OF THE APPELLANT FIR M IN HIS STATEMENT U/S.132(4) OF THE ACT AND INCOME DISCLOSED BY THE A PPELLANT FIRM IN ITS RETURN OF INCOME AND THE A.O HAS ACCEPTED THE INCOM E DECLARED BY THE APPELLANT FIRM IN THE ASSESSMENT ORDER WITHOUT MAKI NG ANY FURTHER ADDITION TO THE INCOME. THIS SHOWS THAT THE A.O HIM SELF WAS SATISFIED ABOUT THE INCOME DISCLOSED IN THE RETURN OF INCOME. 3.10 I AM OF THE CONSIDERED VIEW THAT ALL THE EXEMP TION CONDITIONS AVAILABLE U/S.271AAATO THE APPELLANT, HAVE BEEN FUL FILLED INCLUDING THE PAYMENT OF TAXES. IN THIS BACKGROUND, NO PENALTY CA N BE LEVIED U/S.271AAA OF THE ACT IN THE CASE OF APPELLANT IN RESPECT OF D ISCLOSURE OF RS.2 CRORES ALREADY SHOWN IN THE RETURN OF INCOME FILED BY THE APPELLANT FIRM U/S. 139(1} OF THE ACT ALONG WITH TAX AND INTEREST THERE ON AND THE A.O. HAS ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 25 - DIRECTED TO DELETE THE PENALTY OF RS.20,00,000/- LE VIED @ 10% IN RESPECT OF DISCLOSED AMOUNT OF RS.2 CRORES IN THE RETURN OF IN COME AS PER PROVISIONS OF SECTION 271AAA(2) OF THE IT ACT, 1961. 3.11 FURTHER WITH REGARDS TO THE PENALTY LEVIED ON THE ADDITION OF RS.14,10,000/- UPHELD BY THE CIT(A) ON THE BASIS OF THE STATEMENT OF TWO MEMBERS, I HELD THAT THE PENALTY @ 10% AS PER THE P ROVISIONS OF SECTION 271AAA OF THE ACT IS CORRECTLY LEVIED BY THE A.O AN D I HEREBY CONFIRM THE LEVY OF PENALTY @ 10% OF ADDITION CONFIRMED BY THE CIT(A) IN THE APPELLATE ORDER FOR AN AMOUNT OF RS.1,41,000/-. IN THE RESULT OUT OF THE TOTAL PENALTY OF RS.21,41,000/-, THE APPELLANT GETS RELIEF OF RS.20 LACS AND THE PENALTY OF RS. 1,41,000 IS HEREBY CONFIRMED U/S .271AAA OF THE IT ACT, 1961. 14. AGGRIEVED BY THE MODIFICATION MADE BY THE CIT(A ) IN THE QUANTUM OF PENALTY IMPOSED UNDER S.271AAA OF THE AC T, THE REVENUE HAS PREFERRED APPEAL BEFORE THE TRIBUNAL AS PER ITA NO. 3544/AHD/2015 (SUPRA). THE ASSESSEE HAS FILED CROS S OBJECTION IN THE REVENUES APPEAL IN CO NO. 14/AHD/2016 (SUPRA). TH E ASSESSEE HAS ALSO FILED SEPARATE CROSS APPEAL IN ITA NO. 3188/AH D/2015 WHEREBY IT SEEKS TO CHALLENGE THE ACTION OF THE CIT(A) IN CONF IRMING THE REMAINING PENALTY OF RS.1,41,000/- ON ADDITIONS MAD E AND SUSTAINED BY THE CIT(A) ON THE BASIS OF STATEMENT OF TWO PURC HASERS IN THE HOUSING PROJECT OF THE ASSESSEE BUILDER. THE CROSS OBJECTION HAS ALSO BEEN FILED ON THE SAME FOOTING. 14.1 THE LEARNED AR FOR THE ASSESSEE RELIED UPON TH E ORDER OF THE CIT(A) TO THE EXTENT OF RELIEF GRANTED BY THE FIRST APPELLATE AUTHORITY AND SUBMITTED IN REITERATION THAT IN THE SEARCH ACT ION UNDER S.132 OF THE ACT CARRIED OUT IN THE PREMISES OF THE ASSESSEE ON 06.01.2011, NO UNACCOUNTED MONEY/ASSET/INVESTMENT ETC. WERE RECOVE RED. NO REFERENCE IN THIS REGARD HAS BEEN MADE IN THE ASSES SMENT ORDER EITHER. LIKEWISE, NO DOCUMENT OR ANY INCULPATORY EVIDENCE H AS BEEN REFERRED IN THE QUANTUM PROCEEDINGS TO LEND CREDENCE TO ANY ALLEGED UNDISCLOSED INCOME. THE LEARNED AR SUBMITTED THAT THE SOLE BASIS OF TAXATION OF RS.2 CRORES AND CONSEQUENT IMPOSITION O F PENALTY THEREON IS THE STATEMENT OF THE PARTNER OF THE FIRM. IT WA S SUBMITTED THAT ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 26 - EXCEPT THE STAND ALONE ORAL EVIDENCE IN THE FORM OF STATEMENT UNDER S.132(4) OF THE ACT, THE REVENUE HAS NOT BROUGHT OU T ANY MATERIAL ON RECORD TO ESTABLISH THE EXISTENCE OF ANY UNDISCLOS ED INCOME WHICH EXPRESSION HAS BEEN STATUTORILY DEFINED IN SECTION 271AAA OF THE ACT ITSELF. THE LEARNED AR SUBMITTED THAT NEITHER DOES THE SCOPE OF SECTION 271AAA OF THE ACT EXTENDS BEYOND UNDISCLOS ED INCOME AS DEFINED NOR DOES A STANDALONE STATEMENT CAN BE TREA TED AS DOCUMENT/TRANSACTION FOUND IN THE COURSE OF SEARCH. THE LEARNED AR ACCORDINGLY SUBMITTED THAT THE CIT(A) RIGHTLY CONCL UDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND DELETED PENALTY UNDER S. 271AAA OF THE ACT TO THE EXTENT OF DISCLOSURE MADE IN THE STATEMENT U NDER S.132(4) OF THE ACT AND ALREADY INCLUDED IN THE RETURN OF INCOME. 14.2 THE LEARNED AR ALSO POINTED OUT THAT THE ASSES SEE HAS SATISFIED THE CONDITIONS PROVIDED IN SUB-SECTION 2 OF SECTION 271AAA OF THE ACT IN AS MUCH AS THE ASSESSEE HAS PAID TAXES ON TH E AMOUNT DISCLOSED UNDER S.132(4) OF THE ACT. THE LEARNED AR ALSO POI NTED OUT THAT IN THE ABSENCE OF ANY SPECIFIC INQUIRY ON THE MANNER OF DE RIVING ALLEGED UNDISCLOSED INCOME AND SUBSTANTIATION THEREOF IN TH E COURSE OF RECORDING STATEMENT, NO OBLIGATION IN THIS REGARD C OULD BE FASTENED ON THE ASSESSEE AS HELD IN SEVERAL JUDICIAL PRONOUNCEM ENTS. THE LEARNED AR ALSO OBSERVED THAT THE AUTHORIZED OFFICER WAS SA TISFIED WITH THE ANSWERS PROVIDED IN RESPONSE TO THE QUESTIONS FRAME D AND THEREFORE THE FAILURE OF THE AUTHORIZED OFFICER, IF ANY, IN P ROBING THE MATTER FURTHER CANNOT OPERATE TO THE PREJUDICE TO THE ASSE SSEE. THE LEARNED AR THUS SUBMITTED THAT THE ACTION OF THE CIT(A) IN DELETING THE PENALTY ON THE AMOUNT ON DISCLOSURE MADE IS IN CONS ONANCE WITH LAW AS JUDICIALLY INTERPRETED AND THEREFORE NO INTERFER ENCE WITH SUCH APPROACH OF THE CIT(A) IS CALLED FOR. 14.3 ADVERTING TO ITS CROSS APPEAL AS WELL AS CROSS OBJECTION SEEKING TO IMPINGE MAINTAINABILITY OF REMAINING PENALTY OF RS.1,41,000/- ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 27 - SUSTAINED BY THE CIT(A), THE LEARNED AR POINTED OU T THAT THE ADDITION HAS BEEN SUSTAINED IN THE QUANTUM PROCEEDINGS MEREL Y ON THE BASIS OF UNVERIFIED STATEMENT OF THIRD PARTIES I.E. TWO PURC HASERS IN THE PROJECT. IT WAS CONTENDED THAT SUCH THIRD PARTIES STATEMENT S ARE FRAGILE AND HAVE NO EVIDENTIARY VALUE IN THE ABSENCE OF CROSS E XAMINATION AND IN THE ABSENCE OF ANY CREDIBLE MATERIAL IN CORROBORATI ON. THE LEARNED AR REITERATED THAT THE QUANTUM ADDITION ITSELF IS NOT JUSTIFIED HAVING REGARD TO THE TOTAL ABSENCE OF ANY CREDIBILITY OF T HE STATEMENTS AND THEREFORE PENALTY UNDER S.271AAA OF THE ACT CANNOT BE RESORTED FOR SUCH ADDITIONS. THE LEARNED AR ACCORDINGLY SUBMITT ED THAT THE REMAINING PENALTY OF RS.1,41,000/- OR ADDITIONS MAD E SOLELY BASED ON UNVOUCHED STATEMENT REQUIRES TO BE DELETED AND CONS EQUENTLY, APPEAL AS WELL AS CROSS OBJECTION OF THE ASSESSEE DESERVES TO BE ALLOWED. 14.3 THE LEARNED DR FOR THE REVENUE, ON THE OTHER H AND, RELIED UPON THE ORDER OF THE AO AND SUBMITTED IN FURTHERANCE TH AT WHERE THE ASSESSEE HIMSELF HAS ADMITTED EXISTENCE OF CERTAIN UNDISCLOSED INCOME IN THE COURSE OF SEARCH AND INCLUDED THE SAME AS PA RT OF RETURN, THE CONSEQUENCES OF PENALTY UNDER S.271AAA OF THE ACT C ANNOT BE ESCAPED AS WRONGLY ADJUDICATED BY CIT(A). IT WAS FURTHER S UBMITTED THAT THE AO HAS ALSO RIGHTLY IMPOSED PENALTY OF RS.1,41,000/ - ON THE EXCESS UNDISCLOSED INCOME FOUND OVER AND ABOVE INCOME OFFE RED UNDER S.132(4) OF THE ACT. 15. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND MATERIAL RE FERRED TO AND RELIED UPON. 15.1 ONE OF THE SIGNIFICANT PLEA RAISED ON BEHALF O F THE ASSESSEE IS THAT THE INCOME DECLARED IN THE RETURN OF INCOME AR ISES OUT OF REGULAR STREAM OF INCOME FROM VARIOUS SOURCES AND ALSO AD HOC DECLARATION ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 28 - COMBINEDLY MADE FOR GROUP CONCERN AND INCLUDED IN T HE RETURN OF INCOME TOWARDS ITS SHARE AND SUCH DISCLOSURE PER SE DOES NOT TANTAMOUNT TO UNDISCLOSED INCOME HAS CODIFIED IN EXPLANATION (A) BELOW SECTION 271AAA OF THE ACT. 15.2 TO PADDLE ITS POINT OF VIEW, THE ASSESSEE HAS RELIED UPON THE STATUTORY DEFINITION OF UNDISCLOSED INCOME TO CONTE ND THAT DECLARATION MADE IN STATEMENT MADE UNDER S.132(4) OF THE ACT WO ULD BE IPSO FACTO RECKONED TO BE UNDISCLOSED INCOME. WE OBSERVE TH AT THE ISSUE IS NO LONGER RES INTEGRA. WE FIND THAT IDENTICAL ISSUE CAME UP FOR CONSIDERATION IN THE CASE OF JASUBHAI ARJANBHAI VAG HASIA VS. ACIT, ITA NO. 58/RJT/2017 ORDER DATED 17.05.2018 IN THE C ONTEXT OF SECTION 271AAA OF THE ACT. THEREFORE, IT IS CONSIDERED EXPE DIENT TO REPRODUCE THE RELEVANT OPERATIVE PARA OF THE DECISION OF THE CO-ORDINATE BENCH ON THE ISSUE:- 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND MATERIAL PLACED ON RECORD. THE CORE CONTROVERSY INVOLVED IN THE PRESENT APPEAL IS TOWAR DS MAINTAINABILITY OF IMPOSITION OF PENALTY UNDER SECTION 271AAA IN THE F ACTS AND CIRCUMSTANCES OF THE CASE. 8.1 THE CASE OF THE ASSESSEE IS TWO FOLD (I) THE IN COME DECLARED IN THE RETURN OF INCOME AMOUNTING TO RS. 2,25,61,020/- ARI SES OUT OF THE REGULAR STREAM OF INCOME FROM VARIOUS SOURCES INCLUDING RS. 90 LAKHS TOWARDS AD- HOC DECLARATION AND THEREFORE THERE IS NO ELEMENT O F UNDISCLOSED INCOME AS DEFINED IN THE EXPLANATION BELOW SECTION 271AAA OF THE ACT. (II) IN THE ALTERNATIVE, IN ANY EVENT, THE INCIDENCE OF PENALTY UNDER SECTION 271AAA CANNOT EXCEED RS. 9 LAKHS (10% OF RS. 90 LAKHS) AT TRIBUTABLE TO AD-HOC INCOME. 8.2 TO BUTTRESS ITS POINT OF VIEW, THE ASSESSEE HAS STRONGLY HARPED ON THE STATUTORY DEFINITION OF UNDISCLOSED INCOME. I T WOULD THEREFORE BE APPOSITE TO REPRODUCE SECTION 271AAA OF THE ACT FOR READY REFERENCE:- 271AAA. PENALTY WHERE SEARCH HAS BEEN INITIATED.( 1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRECT THAT, IN A CASE WHERE SEARCH HA S BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE SHALL PAY BY WAY OF PENALTY, IN ADDITION TO TAX, IF ANY, PAYA BLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCL OSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE, ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 29 - (I ) IN THE COURSE OF THE SEARCH, IN A S TATEMENT UNDER SUB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND S PECIFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II ) SUBSTANTIATES THE MANNER IN WHICH T HE UNDISCLOSED INCOME WAS DERIVED; AND (III ) PAYS THE TAX, TOGETHER WITH INTER EST, IF ANY, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) O F SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT OF THE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, S O FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THI S SECTION. EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (A ) 'UNDISCLOSED INCOME' MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPR ESENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOU NT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHICH HAS (A ) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SE ARCH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NOR MAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B ) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COM MISSIONER OR COMMISSIONER BEFORE THE DATE OF THE SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR RE PRESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXP ENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHIC H IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD TH E SEARCH NOT BEEN CONDUCTED; (B) 'SPECIFIED PREVIOUS YEAR' MEANS THE PREVIOUS YEAR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BUT THE DATE OF FILING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTI ON 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE; OR (II) IN WHICH SEARCH WAS CONDUCTED. 8.3 A PERUSAL OF SPECIAL PROVISIONS OF SECTION 271A AA, CONCERNING SEARCH CASES SHOW THAT IT IS APPLICABLE IN RESPECT OF UNDISCLOSED INCOME IN CONTRAST TO CONCEALED INCOME RELEVANT FOR THE PUR POSES OF PENALTY PROCEEDINGS UNDER NORMAL PROVISIONS OF SECTION 271( 1)(C) OF THE ACT. THE APPLICABILITY OF PENALTY UNDER SECTION 271AAA THUS REVOLVES WITHIN THE SPHERE OF UNDISCLOSED INCOME. 8.4. A PLANE READING OF THE AFORESAID DEFINITION OF UNDISCLOSED INCOME CLEARLY SHOWS THAT THE UNDISCLOSED INCOME SHOULD BE REPRESENTED BY MONEY, BULLION JEWELLERY OR OTHER VALUABLE ARTICLES OR THI NGS OR ANY UNRECORDED ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 30 - ENTRY AS PER DOCUMENTS FOUND OR ANY FALSE ENTRY REC ORDED IN THE BOOKS OF ACCOUNT ETC. NO SUCH REFERENCE OR NEXUS OF DISCLOSU RE TO SUCH SPECIFIED ITEMS WERE MADE IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER. IN VIEW OF THE STATUTORY DEFINITION OF UNDISCLOSED INCOME, A DISCL OSURE MADE MERELY TO BUY PEACE DOES NOT TANTAMOUNT TO UNDISCLOSED INCOME P ER SE. THE APPLICABILITY OF SECTION 271AAA IS DEPENDENT UPON THE INCOME FALL ING WITHIN THE SWEET OF CLEAR AND EXPRESS DEFINITION OF EXPRESSION UNDISCL OSED INCOME. AN AD-HOC AND LUMSUM DECLARATION AS A CONSEQUENT OF SEARCH WI THOUT ANY REFERENCE MADE BY A.O TOWARDS ANY MONEY, BULLION, JEWELLERY O R OTHER VALUABLE ARTICLES OR THING OR ANY ENTRY IN THE BOOKS OF ACCO UNT ETC. CANNOT BE DEEMED TO BE AUTOMATICALLY AN UNDISCLOSED INCOME FOR THE P URPOSES OF IMPOSITION OF PENALTY UNDER SECTION 271AAA OF THE ACT. THE ONUS IS ON A.O TO BRING ON RECORD MATERIAL WHICH POINTS TO UNDISCLOSED INCOME AS DEFINED UNDER SECTION 271AAA OF THE ACT. AS NOTED, NO REFERENCE T O UNDERLYING MATERIAL IS FOUND IN THE ORDERS OF LOWER AUTHORITIES. A SIMPLE DISCLOSURE MADE IN THE COURSE OF SEARCH UNDER SECTION 132(4) IN ITSELF CAN NOT BE DEEMED TO BE UNDISCLOSED INCOME IN VIEW OF THE LIMITATIONS PLA CED IN THE DEFINITION THEREOF. 9. THEREFORE WE ARE OF THE CONSIDERED VIEW THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL REFERRED FOR THE PURPOSES OF ASSESSING ALLEGED UNDISCLOSED INCOME, THE IMPOSITION OF PENALTY UNDER SECTION 271AAA IS WITHOUT ANY LEGAL FOUNDATION AND THUS NOT PERMISSIB LE. 10. IN VIEW OF THE AFORESAID DISCUSSION, WE DO NOT CONSIDER IT NECESSARY TO ADVERT TO THE ALTERNATIVE PLEA OF THE ASSESSEE F OR IMPOSITION OF PENALTY WITH REFERENCE TO AD-HOC AMOUNT OF DECLARATION ALON E. 11. THE ORDER OF THE ASSESSING OFFICER TOWARDS IMPO SITION OF PENALTY UNDER SECTION 271AAA IS THEREFORE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY SO IMPOSED. 12. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . 15.3 AS NOTED ABOVE, THE CO-ORDINATE BENCH HAS DEAL T WITH IDENTICAL ISSUE AND HELD THAT IN THE ABSENCE OF ANY REFERENCE TO TANGIBLE MATERIAL, MERE ACT OF ACQUIESCENCE OF AD HOC INCOME UNDER SECTION 132(4) OF THE ACT CANNOT AUTOMATICALLY BE COVERED W ITHIN THE SWEEP OF UNDISCLOSED INCOME FOR THE PURPOSES OF IMPOSITION OF PENALTY UNDER SECTION 271AAA OF THE ACT. THEREFORE, THE PLEA OF THE ASSESSEE THAT IN THE ABSENCE OF REFERENCE TO ANY INCRIMINATING MATER IAL IMPOSITION OF PENALTY UNDER S. 271AAB OF THE ACT TO BE WITHOUT AN Y LEGAL FOUNDATION GETS CATEGORICAL SUPPORT FROM THE DECISION OF CO-OR DINATE BENCH. IN THE ABSENCE OF ANY REFERENCE MADE IN THE PENALTY OR DER OR THE ASSESSMENT ORDER TOWARDS PRESENCE OF ANY INCRIMINAT ING DOCUMENT OR ANY INCOME FOUND BY WAY OF MONEY, BULLION, JEWELLER Y ETC. TO COVER ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 31 - THE DECLARATION WITHIN THE SPHERE OF UNDISCLOSED I NCOME, THE IMPOSITION OF PENALTY UNDER S. 271AAA OF THE ACT DO ES NOT MEET THE REQUIREMENT OF LAW. 15.4 WE THUS FIND FORCE IN THE PLEA OF THE ASSESSEE FOR AFFIRMING THE CONCLUSION OF THE CIT(A) TOWARDS DELETION OF PENALT Y ON THIS SCORE. 16. THIS APART, WE ALSO FIND CONSIDERABLE FORCE IN THE SECOND PLEA RAISED ON BEHALF OF THE ASSESSEE THAT ONCE THE TAXE S HAVE BEEN PAID ON THE AMOUNT DISCLOSED, THE PENALTY CANNOT BE IMPOSED UNDER S.271AAA OF THE ACT IN THE ABSENCE OF ANY SPECIFIC QUERY RAI SED TO PROBE MANNER/SUBSTANTIATION THEREOF WITH RESPECT TO DISCL OSURE TOWARDS UNDISCLOSED INCOME. THE CIT(A) HAS RIGHTLY APPRECI ATED THE FACTS AND THE CIRCUMSTANCES OF THE CASE IN PERSPECTIVE AND DE LETED THE PENALTY ON THE DISCLOSURE SO IN THE ABSENCE OF SUCH QUERY MADE HAVING REGARD TO THE PLETHORA OF JUDICIAL PRECEDENT AVAILABLE ON THI S PREMISE. THE CONCLUSION DRAWN BY THE CIT(A) ON THIS SCORE THUS R ESONATES WITH THE JUDICIAL VIEW AVAILABLE IN THIS REGARD AND CANNOT B E FAULTED. 17. THEREFORE, THE GRIEVANCE OF THE REVENUE FOR DEL ETION OF PENALTY BY CIT(A) ON INCOME OFFERED BY WAY OF ORAL EVIDENCE UNDER S.132(4) OF THE ACT IS BEREFT OF ANY MERIT ON VARIETY OF REA SONS NOTED ABOVE. 18. THE APPEAL OF THE REVENUE IN ITA NO.3544/AHD/20 15 IS THEREFORE DISMISSED. 19. WE NOW ADVERT TO THE GRIEVANCE OF THE ASSESSEE FOR REMAINING PENALTY OF RS.1,41,000/- SUSTAINED BY THE CIT(A). THE PENALTY SO SUSTAINED ARISES OUT OF QUANTUM ADDITIONS OF RS.14, 10,000/- SUSTAINED BY THE FIRST APPELLATE AUTHORITY IN QUANTUM ON THE GROUND THAT TWO PURCHASERS HAVE GIVEN STATEMENT ON OATH IN THE PROC EEDINGS UNDER ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 32 - S.131 OF THE ACT AGAINST THE ASSESSEE AND CONFESSED THAT THEY HAVE GIVEN ON-MONEY OF RS.14,10,000/- IN AGGREGATE TO TH E ASSESSEE FOR PURCHASE OF RESIDENTIAL FLAT IN THE HOUSING PROJECT . 19.1 THE PENALTY SO IMPOSED AND CONFIRMED BY THE CI T(A) IS NOT SUSTAINABLE UNDER S.271AAA OF THE ACT FOR TWO REASO NS; (I) THE QUANTUM ADDITION OF RS.14,10,000/- ITSELF HAS BEEN DELETED BY US IN THE PRECEDING PARA NO. 9 WITH REFERENCE TO ITA NO.401/A HD/2014 (SUPRA) AND (II) THE ADDITIONS WERE MADE ON THE BASIS OF PO ST SEARCH INQUIRIES AND DO NOT RELATE TO UNDISCLOSED INCOME AS DEFINE D UNDER S.271AAA OF THE ACT. THE QUANTUM ADDITION SO MADE WAS NOT D ISCOVERED OR FOUND PER SE IN COURSE OF SEARCH UNDER S.132 OF THE ACT. THE AD DITIONS WERE MADE ON THE BASIS OF POST SEARCH INQUIRY. SUC H ADDITION CANNOT BE SUBJECT MATTER OF SECTION 271AAA OF THE ACT HAVI NG REGARD TO THE NARROWER SCOPE OF DEFINITION OF UNDISCLOSED INCOME AS PROVIDED THEREIN. THEREFORE, WE FIND MERIT IN THE PLEA OF T HE ASSESSEE FOR DELETION OF PENALTY OF RS.1,41,000/- UNDER S.271AAA OF THE ACT. THE ORDER OF THE CIT(A) IS ACCORDINGLY SET ASIDE TO THI S EXTENT AND THE AO IS DIRECTED TO DELETE THE PENALTY. 19.2 IN THE RESULT, THE CROSS APPEAL OF THE ASSESSE E IN ITA NO.3188/AHD/2015 AND CROSS OBJECTION OF THE ASSESSE E IN CO NO. 14/AHD/2016 ARE ALLOWED. 20. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE (I N CASE OF M/S. SAVALIYA DEVELOPERS) IN ITA NO. 402/AHD/2014 READ A S UNDER: I. ADDITION ON ACCOUNT OF ON-MONEY RECEIPT RS. 8,55,000/- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS WHI LE CONFIRMING THE ADDITION OF RS.8,55,000/- ON THE BASIS OF STATEMENT OF ONE MEMBER RECORDED BEHIND THE BACK OF THE APPELLANT, COPY OF WHICH WAS NOT PROVIDED TO THE APPELLANT DURING THE COURSE OF ASSESSMENT PR OCEEDINGS AS WELL AS IN ABSENCE OF GRANTING THE OPPORTUNITY OF CROSS EXAMIN ATION OF SAID MEMBER. ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 33 - 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS WHI LE CONSIDERING THE ALTERNATIVE GROUND OF THE APPELLANT THAT THE ADDITI ON OF RS.8,55,000/- AS MADE BY THE LD. A.O. ON ACCOUNT OF ON-MONEY RECEI VED FROM ONE MEMBER IS REQUIRED TO BE TELESCOPED AGAINST THE DISCLOSURE OF RS.2 CRORES MADE BY THE APPELLANT COMPANY FOR THE FINANCIAL YEAR 2010-1 1 RELEVANT TO A.Y. 2011-12. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS WHI LE FAILING TO CONSIDER THE FACT THAT VOLUNTARY AND SUO-MOTTO DISCLOSURE OF UNACCOUNTED BOOKING RECEIPTS FROM THE MEMBERS OF THE SCHEME AMOUNTING T O RS.2.00 CRORES BY THE APPELLANT COMPANY FOR F.Y. 2010-11 RELEVANT TO A.Y. 2011-12 IS MORE THAN SUFFICIENT TO COVER UP THE ADDITION OF RS.8,55 ,000/- CONFIRMED BY HIM IN RESPECT OF ON MONEY RECEIVED FROM ONE MEMBER AND THEREFORE, NO SEPARATE ADDITION IS REQUIRED AS DIRECTED BY HIM. 20.1 THE GROUNDS OF APPEAL RAISED BY THE REVENUE (I N CASE OF M/S. SAVALIYA DEVELOPERS) IN ITA NO. 411/AHD/2014 READ A S UNDER: (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE AD DITION TO RS.8,55,000/- OUT OF TOTAL ADDITION OF RS. 3,68,42, 425/- MADE ON ACCOUNT OF ON-MONEY RECEIPTS BY THE A.O. ON THE BAS IS OF EVIDENCE OF RELIABLE NATURE. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT EXTR APOLATION OF ON- MONEY RECEIPTS CANNOT BE MADE AND THEREBY DELETING THE ADDITION AS ABOVE IN (I). III) THE LD. CIT(A) HAS ERRED IN ALLOWING RELIEF WI THOUT CONSIDERING THE FACT THAT 42 FLATS WERE SOLD DURING THE YEAR, BEFOR E THE DATE OF SEARCH AND WITHOUT APPRECIATING THAT THE ESTIMATION MADE BY THE A.O. IN RESPECT OF SUCH SALE CANNOT BE EQUATED WITH THE RATE OF 31 FLATS MADE AFTER THE SEARCH. 20.2 THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ( IN CASE OF M/S. SAVALIYA DEVELOPERS) IN CO NO. 118/AHD/2014 READ AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.8,55,000/- OUT OF TOTAL ADDITION OF RS. 3,68,42,425/- MADE ON ACCOUNT OF ALLEGED ON-MONEY RECEIPTS BY THE LD. A.O. THE LD. CIT(A) OUGHT TO HAVE DELETED THE ENTIRE ADDITION MADE BY T HE LD.A.O. 2. THE LD. CIT(A) HAS RIGHTLY HELD THAT EXTRAPOLATI ON THEORY OF ON-MONEY RECEIPTS CANNOT BE MADE AND HAS CORRECTLY DELETED T HE ADDITION MADE BY THE LD.A.O. ON ACCOUNT OF EXTRAPOLATION THEORY OF O N-MONEY RECEIPTS. 21. THE FACTS AND ISSUE CONCERNING THE ADDITION MAD E IN THE CASE OF ABOVE REFERRED ASSESSEE ARE IDENTICAL GROUP ASSESSE E - SAVALIYA ITA NO. 401/AHD/14 & 8 ORS. [SAVALIYA BUILDCON & SAVALIYA DEVELOPERS PVT. LTD.] A.Y. 2011-12 - 34 - BUILDCON. THUS, WITHOUT DELINEATING ON THE ISSUE A GAIN, THE APPEAL OF THE ASSESSEE AND CROSS OBJECTION OF THE ASSESSEE DE SERVES TO BE ALLOWED AND APPEAL OF THE REVENUE DESERVES TO BE DISMISSED IN THE LIGHT OF OUR CONCLUSION IN ITA NO. 401/AHD/2014, 410/AHD/2014 & CO NO.117/AHD/2014 IN RESPECT OF OTHER GROUP CONCERN O F THE SAME GROUP. 22. IN THE LIGHT OF THE AFORESAID DISCUSSION, THE A PPEAL OF THE REVENUE IN ITA NO. 411/AHD/2014 IS DISMISSED AND AP PEAL OF THE ASSESSEE IN ITA NO. 402/AHD/2014 AND CROSS OBJECTIO N IN CO NO. 118/AHD/2014 IS ALLOWED. 23. IN THE COMBINED RESULT, ALL THREE REVENUES APP EALS ARE DISMISSED WHEREAS ASSESSEES THREE APPEALS AND THRE E CROSS OBJECTIONS ARE ALLOWED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 30/04/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 30/04/201 9