PRAKASH PUSARAM LADDHA, Nashik V. ACIT, Central Circle,1, NASHIK, Nashik

ITA 408/PUN/2007

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1679 (ITAT-PUNE)
• Duration Of Justice: 9 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-01-2016
• Assessment Year: misc
• Appeal Filed On: 16-03-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S B MOREY
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Unexplained cash credit; Unexplained investment; Gift; Search and seizure; Document seized; Source of fund; Block assessment; Documents seized
• Section: 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.408/PN/2007 BLOCK PERIOD : 1997-98 TO 2003-04 SHRI PRAKASH PUSARAM LADDHA, KAUSHAL BUNGLOW, OPP : MEHATA HOSPITAL, S.V. ROAD, SHARANPUR, NASHIK 422 002 PAN NO. AAHPL3023D . / APPELLANT V/S ACIT, CENTRAL CIRCLE - 1, NASHIK . / RESPONDENT / APPELLANT BY : SHRI SUNIL PATHAK / RESPONDENT BY : SHRI S.B. MOREY, CIT / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 28-12-2006 OF THE CIT(A)-I, NASHIK RELATING TO THE BLOCK PERIOD 1997-98 TO 2003-04. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF BUILDER/DEVELOPER AND CIV IL CONTRACTOR. HE IS ALSO A DIRECTOR IN M/S. PRAKASH CONSTRUWELL PVT. LTD., M/S. Q.FAB CEMENT PVT. LTD., AND M/S. VASTUKRIPA CONSTRUCTION (I) PVT. LTD. HIS REGULAR SOURCES OF INCOME COMPRISED OF (A) SALARY AND REM UNERATION (B) OFFICE RENT, CAR/TRUCK/COMPUTER HIRE/RENT CHARGES (C) DIVIDE NDS AND BANK INTEREST. THE ASSESSEE IS ALSO THE PROPRIETOR OF M/ S. PRACHI & ASSOCIATES. A SEARCH AND SEIZURE ACTION U/S.132(1) OF THE I.T. ACT WAS / DATE OF HEARING :26.04.2016 / DATE OF PRONOUNCEMENT:27.06.2016 2 ITA NO.408/PN/2007 CONDUCTED IN THE LADDHA GROUP OF CASES AT NASHIK ON 09 -06-2002. THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE WAS ALS O COVERED DURING THE SAID SEARCH. IN RESPONSE TO NOTICE U/S.158BC DATED 10-03- 2003, WHICH WAS SERVED ON THE ASSESSEE ON 14-03-2003, THE ASSESSEE FILED HIS BLOCK RETURN ON 28-04-2003 DECLARING UNDISCLOSED IN COME OF RS.29,66,846/- 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE SHRI PRAKASH P. LADDHA IS THE MAIN PERSON OF THE LADDHA GROUP WHICH IS ENGAGED IN THE BUSINESS OF LAND DEVELOPERS, GOVERNMENT CONTRACTORS AND BUILDERS. HE IS ALSO ENGAGED IN CONSTRU CTION OF RESIDENTIAL AND COMMERCIAL UNITS AT VARIOUS SITES. THE ASSE SSEE OWNS AGRICULTURAL AND NON AGRICULTURAL LANDS AT VARIOUS LOCATIONS AT NASHIK AND SURROUNDING AREAS. THROUGH HIS PROPRIETARY CONCERN M/S. PRACHI AND ASSOCIATES HE HAD ENTERED INTO AN AGREEMENT WITH M /S. VASTUKRUPA CONSTRUCTION (I) PVT. LTD. TO CONSTRUCT THE COMMERCIAL-CU M-RESIDENTIAL COMPLEX AT CANADA CORNER, NASHIK. THIS PROJECT WAS STA RTED IN THE YEAR 1994-95 AND IS DISCONTINUED DUE TO COURT LITIGATION SINCE 1 996-97. HE HAD UNDERTAKEN TO CONSTRUCT THE COMMERCIAL-CUM-RESIDE NTIAL COMPLEX OF HUMA COOPERATIVE SOCIETY, GAUTAM PARK HOUSING SOCIETY AN D VIJAYGOPAL HOUSING SOCIETY. THE AO FURTHER NOTED THAT T HE ASSESSEE WAS REGULARLY ASSESSED TO INCOME-TAX. HE ASKED THE ASSESS EE TO FURNISH YEAR-WISE BREAK-UP OF THE UNDISCLOSED INCOME OF RS.29,66,84 6/- SHOWN IN THE BLOCK RETURN TO WHICH THE ASSESSEE HAD GIVEN THE FOLLOWING YEAR- WISE BIFURCATION OF THE UNDISCLOSED INCOME : SR. NO. ASSESSMENT YEAR UNDISCLOSED INCOME (RS.) 1 1997 - 98 5,18,846/ - 2 1998 - 99 5,15,845/ - 3 1999 - 2000 11,39,814/ - 4 2000 - 01 4,58,854/ - 3 ITA NO.408/PN/2007 5 2001 - 02 2,11,844/ - 6 2002 - 03 82,643/ - 7 2003 - 04 39,700/ - (FROM 01 - 04 - 2002 TO 09-10-2002) 29,66,846/ - 4. THE AO ASKED THE ASSESSEE TO FURNISH THE DETAILS OF VARIOUS ASSE TS, INVESTMENTS AND EXPENSES WHICH ARE REPRESENTED BY THE ABOVE UNDISCLOSED INCOME OF RS.29,66,846/- AND PRODUCE THE RELEVA NT COPIES OF AGREEMENTS ETC. AND POINT OUT THE REFERENCES TO THE SEIZED MATERIALS. THE ASSESSEE IN RESPONSE TO THE SAME SUBMITTED THE CO MPUTATION OF UNDISCLOSED INCOME VIDE HIS REPLY DATED 15-04-2004 FROM A .Y. 1997-98 TO 2002-03 WHICH HAS BEEN REPRODUCED BY THE AO AT PA GES 5 TO 8 OF THE ASSESSMENT ORDER. IT WAS CLAIMED BY THE ASSESSEE THAT HE WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF VARIOUS BUILDINGS LIKE GAUT AM PARK CO-OP HOUSING SOCIETY, VIJAYGOPAL HOUSING SOCIETY AND HUM A COOPERATIVE SOCIETY WHICH WERE NOT AT ALL DISCLOSED TO THE INCOME-TAX DEPARTMENT AT ANY TIME THOUGH THEY WERE CARRIED OUT BY HIM PRIOR TO 01- 04-2006. HE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT FOR SUCH ACTIVITIES. THE ASSESSEE PREPARED THE YEAR-WISE RECEIPT AND PAYMENTS ACCOUNTS IN RESPECT OF SUCH UNDISCLOSED ACTIVITIES FOR THE PERIOD FROM 01-04-1996 ONWARDS TO THE DATE OF SEARCH. IN THIS REC EIPT AND PAYMENT ACCOUNT THE ASSESSEE HAD SHOWN THE RECEIPTS FROM SALE OF FLATS AND SHOPS OF THE ABOVE PROJECT AND THE PROFIT EARNED FROM THE SAID PROJECTS. THE ASSESSEE IN THE SAID RECEIPT AND PAYMENT ACCOUNT H AD CONSIDERED THE UNACCOUNTED INVESTMENT AND EXPENSES WHICH WERE AP PEARING IN THE SEIZED MATERIALS. SIMILARLY, IN THE SAID RECEIPT AND PAYMENT ACCOUNTS HE HAS ALSO CONSIDERED THE AMOUNTS IN RESPECT OF OTHER IRRE GULARITIES COMMITTED AND OTHER MANIPULATIONS MADE BY HIM IN THE REGU LAR BOOKS OF ACCOUNTS. IN THIS RECEIPT AND PAYMENT ACCOUNT THE ASSESSEE HAD 4 ITA NO.408/PN/2007 SHOWN THE YEAR-WISE FIGURES OF INCOME AS SUMMARISED IN THE ABOVE CHART. 5. THE AO CONSIDERED THE DOCUMENTS SEIZED, STATEMENTS RECORDED DURING THE SEARCH PROCEEDINGS AND POST SEARCH ENQUIRIES AND BLOCK ASSESSMENT PROCEEDINGS, ENQUIRIES MADE DURING THE POST S EARCH AND BLOCK ASSESSMENT PROCEEDINGS AND AFTER CONSIDERING THE E XPLANATION GIVEN AND INFORMATION FURNISHED BY THE ASSESSEE DETERMINED THE TOTAL UNDISCLOSED INCOME OF THE ASSESSEE AT RS.1,24,74,111/-, THE COMPUTATION OF WHICH IS AS UNDER : SR. NO. PARA NO. DETAILS UNDISCLOSED AMOUNT (RS.) 1 5.2 CREDITS IN TRIAL BALANCE OF M/S. PRACHI & ASSOCIATE IN THE NAME OF SHRI KESHAV KAWALE 3,21,000/ - 2 5.3 CREDITS IN THE NAMES OF SHRI VITTHAL AGHAM 2,35,000/ - 3 6.3 UNEXPLAINED CASH CREDITS IN THE NAMES OF SUB-CONTRACTORS OF PCPL 25,00,000/ - 4 7.6 UNEXPLAINED PAYMENT TO M/S. MUNDADA AGENCIES 6,00,000/ - 5 8.3 INTEREST 2,96,944/ - 6 8.3 ADVANCES 49,00,000/ - 7 10.2 PAYMENT TO D.G. DHONGADE 21,000/ - 8 11.7 INVESTMENT AND EXPENDITURE 36,00,167/ - TOTAL UDI 1,24,74,111/ - 6. BEFORE CIT(A) THE ASSESSEE MADE ELABORATE SUBMISSIONS BASED ON WHICH THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. AFTER CONSIDERING THE REMAND REPORT OF THE AO AND THE COMMEN TS OF THE ASSESSEE TO SUCH REMAND REPORT THE LD.CIT(A) GAVE PART RELIEF TO THE ASSESSEE. 7. AGGRIEVED WITH SUCH PART RELIEF GIVEN BY THE CIT(A) THE ASSESSEE AS IS IN APPEAL BEFORE BY TAKING THE FOLLOWING GROUNDS : GROUNDS BY ASSESSEE : THE FOLLOWING GROUNDS ARE TAKEN WITHOUT PREJUDICE TO EACH OTHER - ON THE FACTS AND IN LAW, 5 ITA NO.408/PN/2007 1. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THA T THE BLOCK ASSESSMENT PASSED BY THE AO. WAS INVALID SINCE NO YEARWISE B REAK-UP OF THE UNDISCLOSED INCOME WAS GIVEN BY THE A.O. IN THE BLOCK ASSESSMENT AND THUS, IT WAS INVALID IN LAW. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE VARIO US ADDITIONS IN THE BLOCK ASSESSMENT WHICH WOULD RESULT IN THE UNDISCLOSED INC OME OF RS.1,24,74,111/- AS AGAINST THE RETURNED UNDISCLOSED INC OME OF RS.29,66,846/- SHOWN BY THE ASSESSEE. 3. THE LEARNED CIT(A) ERRED IN NOT DETERMINING THE UNDISCLOSED INCOME IN THE BLOCK ASSESSMENT AS PER THE REQUIREMENT OF SECTION 15888 WHEREIN IT IS CLEARLY STIPULATED THAT THE AO WOULD DETERMINE THE TOTAL INCOME OF THE ASSESSEE FOR EVERY YEAR SEPARATELY IN THE BLOCK PERIOD. THE ASSESSEE PRAYS FOR A DIRECTION TO THE ABOVE EFFECT. 4. THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THE SUBMISSIONS MADE WITH RESPECT TO GROUND NO.2 BEFORE THE CIT(A), THE E VIDENCES PRODUCED IN SUPPORT THEREOF & THE BLOCK PERIOD RETURN SUBMITTED B Y ASSESSEE, BY TREATING IT AS UNSPECIFIC & SUPERFLUOUS THEREFORE, IT IS PRAYED TO ACCEPT THE SUBMISSIONS MADE UNDER GROUND NO.2, BEFORE THE CIT(A) & ACCEPT THE MANNER OF CALCULATION OF UNDISCLOSED INCOME CONTAINED IN THE BLOCK PERIOD RETURN OF INCOME, AS REFLECTED IN THE FINANCIAL STAT EMENTS OF UNDISCLOSED TRANSACTIONS, PREPARED AND SUBMITTED AFTER SEARCH. 5. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT IONS ON ACCOUNT OF BOOKING ADVANCES OF RS.3,21,000/- AND RS.2,35,000/- FROM SHRI KESHAV KAWALE AND SHRI. VITTHAL AGHAM ON THE GROUND THAT T HE ASSESSEE DID NOT PROVE THE CREDIT WORTHINESS OF THESE PARTIES. 5.1 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE ABOVE ADDITIONS WERE NOT JUSTIFIED IN THIS ASSESSMENT AS THESE AMOUNTS WERE PROP ERLY CREDITED IN THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE BEFORE SEAR CH AND THERE WAS NO EVIDENCE FOUND DURING THE SEARCH TO INDICATE THAT THE ABOVE CREDITS WERE BOGUS AND REPRESENTED ASSESSEE'S INCOME. 6. THE LEARNED CIT(A) ERRED IN CONFIRMING AN AD DITION OF RS.25,00,000/- RECEIVED FROM SEVEN PERSONS BY PAY ORDERS ON THE GROUND THAT THE ASSESSEE WAS UNABLE TO PROPERLY EXPLAIN THE SOURCES OF RECEIPT OF THE ABOVE AMOUNT. 6.1 THE CIT(A) FAILED TO APPRECIATED THAT THE ABOV E ADDITIONS WERE NOT JUSTIFIED IN THIS ASSESSMENT AS THESE AMOUNTS WERE PROPER LY CREDITED IN THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE BEFORE SEARCH AN D THERE WAS NO EVIDENCE FOUND DURING THE SEARCH TO INDICATE THAT TH E ABOVE CREDITS WERE BOGUS AND REPRESENTED ASSESSEE'S INCOME. 7. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION OF RS.6,00,000/- ON ACCOUNT OF THE AMOUNT PAID TO MUNDADA AGENCIES BY VASTUKRUPA CONSTRUCTION INDIA PVT LTD ON BEHALF OF THE ASSESSEE WIT HOUT APPRECIATING THE EVIDENCES PRODUCED BY THE ASSESSEE AND THE CONTENTIO NS IN SUPPORT OF HIS CLAIM 7.1 THE LEARNED CIT(A) FAILED TO APPRECIATED THAT THE ASSESSEE HAD PROPERLY EXPLAINED THE SOURCES OF RS.6,00,000/- AND T HEREFORE, THE ADDITION WAS NOT JUSTIFIED AT ALL. 7.2 THE LEANED CIT(A) ERRED IN NOT CONSIDERING THE EVIDENCE IN THE FORM OF AFFIDAVIT OF SHRI SHRIKANT GAIKWAD. 6 ITA NO.408/PN/2007 8. THE LEARNED CIT(A) ERRED IN CONFIRMING AN ADDIT ION OF RS.49,00,000/- ON ACCOUNT OF THE LOOSE PAPER NO 126 - ANNEXURE 'A-1' FOUND DURING THE COURSE OF SEARCH. 8.1 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE AMOUNT OF RS.49,00,000/- WAS PROPERLY EXPLAINED BY THE ASSESSEE BY WAY OF THE RECEIPTS & PAYMENTS ACCOUNT SUBMITTED AFTER SEARCH AND THEREFORE, NO ADDITION WAS WARRANTED ON THIS COUNT. 8.2 THE LEARNED CIT(A) ERRED IN UNNECESSARILY CAPITA LIZING ON INADVERTENT MISTAKE IN ENCLOSING SEIZED PAPER AS ENCLOSU RE 'O THOUGH THE SUBMISSIONS /ARGUMENTS OF THE ASSESSEE WERE RELATED TO THE SEIZED PAPER AT PAGE NO. 126 OF ANNEXURE 'A-1' AND NOT ON ANY OTHER LOOSE PAPER. 9. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION OF RS.41,10,000/- ON ACCOUNT OF PAYMENTS TO SHRI. J.R KA PSE WITHOUT APPRECIATING THAT THE ASSESSEE HAD EXPLAINED THE SOURC ES OF ABOVE PAYMENTS AND THEREFORE NO ADDITION WAS JUSTIFIED. 9.1 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE PART OF THE ABOVE AMOUNT WAS DULY RECORDED IN THE REGULAR BOOKS AND THE BALANCE AMOUNT WAS PAID FROM THE RECEIPTS ARISING ON ACCOUNT OF SALE OF F LATS. ETC INCLUDED IN THE RECEIPTS & PAYMENTS ACCOUNT SUBMITTED AFTER SEARCH AND HENCE, THE ADDITION MADE OUGHT TO HAVE BEEN DELETED. 10. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADD ITION OF RS.36,00,167/-, BEING AGGREGATE OF VARIOUS PAYMENTS WITHOUT APPRECIATING THAT ALL SUCH PAYMENTS WERE FROM THE RECEIPTS ON ACCOU NT OF SALE OF FLATS/ OFFICES INCLUDED IN THE RECEIPTS AND PAYMENTS ACCOUNT AND HENCE, THE ADDITION WAS NO JUSTIFIED AT ALL. 10.1 THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADD ITION OF RS.10,12,111/- ON ACCOUNT OF PAYMENTS TO SHRI Y.R. BANSODE WHICH WER E NOT APPEARING IN THE SEIZED RECORDS BUT WERE RECORDED IN THE RECEIPTS & PAYMENTS ACCOUNT AND HENCE, THE ADDITION SHOULD NOT HAVE BEEN MADE. 10.2 THE LEARNED CIT(A) ERRED IN CONFIRMING THE AD DITION IN RESPECT OF THE DEPOSITS OF RS.32,40,000/- IN THE BANK ACCOUNT NO.6198 WITH ORIENTAL BANK OF COMMERCE WITHOUT APPRECIATING THAT THE SAID ACCO UNT WAS OF PRAKASH P LADDHA (HUF) AND THUS. NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE. 11. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADD ITION OF RS.21,000/-, BEING PAYMENT MADE TO SHRI. D.G. DHONGADE & OTHERS, WITHOUT APPRECIATING THAT THE SAID PAYMENT WAS CLEARLY EXPLAINABLE OUT OF THE AMOUNTS RECEIVED ON SALE OF FLATS/ OFFICES WHICH WERE NOT RECORDED IN THE BOOKS. BUT DULY COVERED IN THE RECEIPTS & PAYMENTS ACCOUNT SUBMITTED A FTER SEARCH. 12. THE LEARNED CIT (A) ERRED IN NOT ALLOWING ASSESSE E'S ALTERNATE PLEA FOR THE SETOFF AGAINST SUBSEQUENT UTILISATION OF RS 10,00 ,000/-. RELEASED FROM THE PAYMENTS MADE TO THE CREDITORS FOR RS 25,00,000/- (CONTESTED AT GROUND N06 ABOVE), AFTER UPHOLDING THE ASSESSMENT OF RS. 25,00, 000/- AS UDI IN THE HANDS OF ASSESSEE THEREFORE. IF THE GROUND NO.6 IS NOT AL LOWED, THEN IT IS ALTERNATIVELY PRAYED TO ALLOW THE SETOFF OF RS 10,00, 000/- RELEASED ON PAYMENTS TO THE CREDITORS, AGAINST THE SUBSEQUENT UTILIZ ATION. 7 ITA NO.408/PN/2007 13. THE LEARNED CIT(A) ERRED IN NOT ALLOWING THE SE T-OFF/TELESCOPING BENEFIT PROPERLY IN RESPECT OF THE VARIOUS ADDITIONS C ONFIRMED BY HIM. 14. THE LEARNED CIT(A) ERRED IN NOT ALLOWING THE SE T-OFF OF THE BENEFIT OF THE ADDITION OF RS.6,24,000/- MADE IN THE HANDS OF M/ S. PRAKASH CONSTROWELL PVT. LTD. FOR PAYMENTS TO ASSESSEE. IT IS PRAYED THAT I F THE ADDITION IS RETAINED IN THE HANDS OF M/S. PRAKASH CONSTROWELL PVT. LTD., THEN THE BENEFIT OF SET-OFF OF THE SAME IN THE HANDS OF THE ASSESSEE BE AL LOWED FOR SUBSEQUENT UTILIZATION. 15. THE ASSESSEE CRAVES LEAVE TO ADD, ALTER, AMEND OR DE LETE ANY OF THE ABOVE GROUNDS OF APPEAL. 8. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GROU NDS OF APPEAL NO.1 TO 4 FOR WHICH THE LD. DEPARTMENTAL REPRESENTATIVE HAS NO OBJECTION. ACCORDINGLY, THE ABOVE GROUNDS ARE DISMISSED AS NOT PRESSED. 9. GROUNDS OF APPEAL NO. 5 TO 5.1 BY THE ASSESSEE RELATES TO THE OR DER OF THE CIT(A) IN CONFIRMING THE ADDITION ON ACCOUNT OF BOOK ING ADVANCE OF RS.3,21,000/- AND RS.2,35,000/- FROM SHRI KESHAV KAWALE AN D SHRI VITTHAL AGHAM RESPECTIVELY. 10. FACTS OF THE CASE, IN BRIEF, ARE THAT DURING THE COUR SE OF SEARCH THE FILE MARKED AS ANNEXURE A25 TO THE PANCHANAMA WAS SEIZE D FROM THE OFFICE PREMISES OF M/S. PRAKASH CONSTRUWELL PVT. LTD. AS PER PAGE 8 OF THE ANNEXURE 25 WHICH IS TRIAL BALANCE OF M/S. PRACHI AND A SSOCIATES FOR THE PERIOD FROM 01-04-1999 TO 10-01-2000 CERTAIN ADVANCES WE RE SHOWN TO HAVE BEEN RECEIVED FROM VARIOUS PERSONS. THE AO NOT ED THAT AN AMOUNT OF RS.3,21,000/- FROM SHRI KESHAV KAWALE AND AN AM OUNT OF RS.2,35,000/- FROM SHRI VITTHAL AGHAM IS SHOWN TO HAVE BEEN RECEIVED FROM THE ABOVE PERSONS TOWARDS BOOKING ADVANCE. THESE AMOUNTS ARE ALSO CREDITED IN THE REGULAR BOOKS OF ACCOUNT ON 01-04-1 996. THE AO REFERRED TO THE STATEMENT GIVEN BY SHRI SANJAY SONAR, A CCOUNTANT OF THE ASSESSEE FIRM, WHO HAD EXPLAINED IN HIS ANSWER TO QUESTION NO.14 THAT 8 ITA NO.408/PN/2007 THE LIST CONTAINED THE NAMES OF THE PERSONS WITH THEIR BA NK ACCOUNT NUMBERS IN THEIR NAME WITH ORIENTAL BANK OF COMMERCE, NASH IK. THE MODUS OPERANDI ADOPTED BY PCPL WAS BY SHOWING SUB-CON TRACT PAYMENTS IN THE NAMES OF SUCH PERSONS FOR THE PURPOSE OF REDUCING THE PROFITS. HE FURTHER NOTED THAT THIS MODUS OPERANDI WAS A LSO CONFIRMED BY SHRI PRAKASH P. LADDHA IN HIS ANSWER TO QUESTION NO.3 5 OF HIS STATEMENT. THE AO FURTHER REFERRED TO THE STATEMENT OF SHRI KESHAV KAWALE AND SHRI VITTHAL AGHAM RECORDED ON OATH DURING TH E COURSE OF BLOCK ASSESSMENT PROCEEDINGS IN THE CASE OF PCPL ON 28- 09-2011. IN THE SAID STATEMENT THE ABOVE 2 PERSONS HAD CATEGORICA LLY STATED THAT THEY HAVE NOT PAID ANY SUCH ADVANCE. THE AO THEREFORE CONFRONTED THE ASSESSEE TO PROVE THE GENUINENESS, AUTHENTICITY AND CRE DIT WORTHINESS IN RESPECT OF THESE CREDITS. IT WAS ARGUED BY THE ASSES SEE THAT THESE PERSONS WERE WORKING WITH HIM AS LABOUR CONTRACTORS SIN CE LONG AND HAS CARRIED OUT LABOUR CONTRACT WORK DURING F.YRS. 1994- 95 AND 1995- 96. IT WAS ARGUED THAT AT THE FAG END OF F.Y. 1995-96 THE ASSESSEE HAD PAID RS.3,55,000/- TO SHRI KESHAV KAWALE AND RS.2,50,000/- T O SHRI VITTHAL AGHAM AGAINST THE LABOUR JOBS EXECUTED BY THEM . OUT OF THE ABOVE PAYMENT THE ABOVE 2 PERSONS HAVE MADE ADVANCE TO THE ASSESSEE FOR BOOKING THE FLATS. 11. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. ACCORDING TO HIM, THE SUB CONTRACTORS WE RE HELD TO BE NON GENUINE IN THE CASE OF PCPL AND THOSE WERE MAINLY ENGAG ED TO INFLATE THE EXPENDITURE FOR THE PURPOSE OF REDUCING THE PROFIT. F URTHER, SHRI SANJAY SONAR AND SHRI PRAKASH P. LADDHA IN THEIR STATEM ENTS RECORDED U/S.132(4) HAVE ALREADY ACCEPTED THE MODUS OPERANDI. THE ASSESSEE ALSO COULD NOT SUBSTANTIATE THE CREDIT WORTHINESS AND FINA NCIAL CAPACITY 9 ITA NO.408/PN/2007 OF THE ABOVE 2 PERSONS. THE AO ACCORDINGLY MADE ADDITIO N OF RS.3,21,000/- AND RS.2,35,000/- RESPECTIVELY U/S.68 OF THE I.T. ACT. 12. IN APPEAL THE LD.CIT(A) UPHELD THE ADDITION MADE BY THE AO OF THE ABOVE 2 AMOUNTS. WHILE DOING SO, HE NOTED THAT NEITHER T HE ASSESSEE NOR THE ABOVE 2 PERSONS COULD SUBSTANTIATE THEIR CREDIT WORTHINESS WITH SUPPORTING OR CORROBORATIVE EVIDENCE SUCH AS BANK ACCO UNT, BILLS/INVOICES, BOOKS OF ACCOUNT, TDS CERTIFICATES, PROFESSIONAL T AX PAYMENT AND ANY OTHER AUTHENTIC RECORD. 13. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 14. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY OPPOSED THE ORDER OF CIT(A). HE SUBMITTED THAT THE ABOVE 2 PERSONS WERE ACT ING AS SUB- CONTRACTORS AND WORKED AS LABOUR CONTRACTOR FOR THE A SSESSEE DURING 1994-95 AND 1995-96. TOWARDS FAG END OF THE F.Y. 1995-9 6 THE ASSESSEE HAD PAID AN AMOUNT OF RS.3,55,000/- TO SHRI KESH AV KAWALE AND RS.2,50,000/- TO SHRI VITTHAL AGHAM AGAINST THE LABOUR WORK EXECUTED BY THEM. AN AMOUNT OF RS.3,21,000/- FROM MR. KAWALE AND AN AMOUNT OF RS.2,35,000/- FROM SHRI VITTHAL AGHAM WAS RECEIVE D TOWARDS BOOKING OF SHOP IN THE KAUSHAL CASTLE PROJECT AT CANADA CORNER, NASHIK. THE AMOUNTS WERE PAID BY PAY ORDER BY BOTH THE PARTIE S. THE LIST OF PERSONS GIVING BOOKING ADVANCE FOUND FROM M/S. PRAKASH CONSTRUWELL PVT. LTD. CONTAINS THE NAME OF THE ABOVE 2 PERSONS. THE ASSESSEE IN THE BOOKS OF ACCOUNTS HAS ALREADY CREDITED THE ABOVE AMOUN T TOWARDS BOOKING ADVANCE. NO EVIDENCE WAS FOUND DURING THE COURS E OF SEARCH THAT THE ASSESSEE HAS RECEIVED BACK THE PAYMENT. FUR THER, THE AMOUNT HAS BEEN SHOWN AS BOOKING ADVANCE AND HAS NOT BEEN S HOWN AS LOAN. THEREFORE, PROVISIONS OF SECTION 68 CANNOT BE APPLIED. 10 ITA NO.408/PN/2007 15. REFERRING TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE O F CIT VS. RAKESH KUMAR JAIN REPORTED IN 250 ITR 141 HE SU BMITTED THAT ADDITIONS IN BLOCK ASSESSMENT PROCEEDINGS HAS TO BE MADE ONLY ON THE BASIS OF MATERIAL UNEARTHED DURING SEARCH. ASSESSMENT FO R THE BLOCK PERIOD CAN ONLY BE DONE ON THE BASIS OF EVIDENCE FOUND A S A RESULT OF SEARCH OR BOOKS OF ACCOUNT OR DOCUMENTS REQUISITIONED AND SUCH OTHER MATERIALS OR INFORMATION AS AVAILABLE WITH THE AO. 16. REFERRING TO THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SUNDER AGENCIES VS. DCIT REPORTED IN 63 ITD 245 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD T HAT UNDISCLOSED INCOME HAS TO BE COMPUTED ON THE BASIS OF MATERIAL/EVIDENCE FOUND DURING THE COURSE OF SEARCH. THE INCOME MUST RESULT ON ACCOUNT OF DETECTION OF INCRIMINATING MATERIAL. S INCE IN THE INSTANT CASE NO SUCH INCRIMINATING MATERIAL/DOCUMENT WAS FO UND DURING THE COURSE OF SEARCH AND SINCE THE AMOUNTS WERE RECORDED IN THE BOOKS OF ACCOUNT PRIOR TO THE DATE OF SEARCH AND THE A MOUNTS WERE RECEIVED BY PAY ORDERS, THEREFORE, THERE IS NO QUESTION O F MAKING THE ADDITION. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS SH OWN THE ABOVE AMOUNT AS BOOKING ADVANCE OF SHOPS AND NOT SHOWN THE SAME AS LOANS OR ADVANCE IN THE NATURE OF LOANS. THEREFORE, PROVISIONS O F SECTION 68 CANNOT BE APPLIED. HE ACCORDINGLY SUBMITTED THAT THE OR DER OF THE CIT(A) BE SET ASIDE. 17. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 18. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON 11 ITA NO.408/PN/2007 BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIO US DECISIONS CITED BEFORE US. WE FIND THE AO IN THE INSTANT CASE MADE ADDITION OF RS.3,21,000/- RECEIVED AS BOOKING ADVANCE FROM SHRI KESHAV KAWALE AND RS.2,35,000/- FROM SHRI VITTHAL AGHAM U/S.68 OF THE I.T. ACT ON THE GROUND THAT THE ABOVE 2 PERSONS IN THEIR STATEMEN TS RECORDED U/S.131 HAD DENIED TO HAVE PAID ANY SUCH ADVANCE TO TH E ASSESSEE DURING THE PERIOD FROM 01-04-1996 ONWARDS. IT IS ALSO T HE CASE OF THE REVENUE THAT THE ACCOUNTANT OF THE ASSESSEE SHRI SANJ AY M. SONAR IN HIS STATEMENT RECORDED U/S.132(4) HAS EXPLAINED THE MODUS OPERANDI OF BOOKING BOGUS EXPENDITURE IN THE BOOKS TO INFLATE THE EXP ENDITURE AND THEREBY REDUCE THE PROFIT. IT IS THE CASE OF THE LD. COU NSEL FOR THE ASSESSEE THAT SINCE THESE ENTRIES WERE RECORDED IN THE SEIZED TRIAL BALANCE AND THE DEPARTMENT HAS NOT PROVED THAT THE M ONEY HAS COME BACK TO THE ASSESSEE, THEREFORE, IN ABSENCE OF ANY INCRIMIN ATING MATERIAL FOUND DURING THE COURSE OF SEARCH NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. IT IS ALSO THE SUBMISSION OF T HE LD. COUNSEL FOR THE ASSESSEE THAT SINCE THE AMOUNT HAS NOT BEEN S HOWN AS LOAN, THEREFORE, PROVISIONS OF SECTION 68 OF THE I.T. ACT IS NOT A PPLICABLE TO THE FACTS OF THE PRESENT CASE. WE DO NOT FIND ANY SUBSTANCE IN THE ARGUMENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE . ADMITTEDLY, THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNT W HEN THE SEARCH TOOK PLACE. HE HAS PREPARED THE RECEIPT AND PA YMENT ACCOUNT ON THE BASIS OF THE SEIZED DOCUMENTS. NO DOUBT THE AS SESSEE IN HIS TRIAL BALANCE HAD SHOWN TO HAVE RECEIVED BOOKING ADVANCE OF FLA TS RECEIVED FROM SHRI KESHAVE KAWALE AND SHRI VITTHAL AGHAM. HOWEVER, DURING THE COURSE OF SEARCH THE ACCOUNTANT OF THE ASSESSEE S HRI SANJAY M. SONAR HAD EXPLAINED THE MODUS OPERANDI ADOPTED BY THE ASSESSEE FOR INFLATING THE EXPENDITURE AND REDUCING THE PROFIT. EVEN SHR I PRAKASH P. 12 ITA NO.408/PN/2007 LADDHA ALSO IN HIS STATEMENT RECORDED U/S.132(4) HAD ACCE PTED THE SAME. FURTHER, THE ABOVE 2 PERSONS IN THEIR STATEMENTS HAVE DENIED TO HAVE MADE ANY SUCH ADVANCE FOR BOOKING OF FLATS TO THE A SSESSEE. FURTHER, IN THE CASE OF M/S. PRAKASH CONSTRUWELL PVT. LTD., WE, VIDE ORDER OF EVEN DATE HAVE ESTIMATED THE BOOK RESULT AND THE THEORY O F SUB- CONTRACT HAS BEEN REJECTED. UNDER THESE CIRCUMSTANCES MERELY BECAUSE THE ASSESSEE HAD REFLECTED THE ADVANCE SO RECEIVED TO WARDS BOOKING OF FLATS IN THE TRIAL BALANCE THE PLEA OF THE ASSESSEE THAT NO INCRIMINATING EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH CANNOT B E ACCEPTED. THE MANIPULATION OF ENTRIES IN THE BOOKS BY SHOWING BOGUS EXPENDITURE AND THEREBY RECEIVING THE SAME FROM THE CONCERNED PER SONS TOWARDS BOOKING ADVANCE WAS DETECTED ONLY DURING THE COURSE OF SEARCH A FTER THE STATEMENT OF THE ASSESSEE AS WELL AS HIS ACCOUNTANT WAS RECORDED U/S.132(4). NO OTHER EVIDENCE REGARDING THE CREDIT WORTH INESS OF THE ABOVE 2 PERSONS WAS EXPLAINED BEFORE THE AO OR THE CIT(A ) OR EVEN BEFORE US. UNDER THESE CIRCUMSTANCES AND IN VIEW OF THE DETAILED REASONING GIVEN BY THE CIT(A) WE DO NOT FIND ANY INFIRMITY IN HIS ORDER SUSTAINING THE ADDITION MADE BY THE AO. THE VARIOUS DECIS IONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ARE DISTINGUISHA BLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. ACCORDINGLY, THE ABOVE GROUNDS BY THE ASSESSEE ARE DISMISSED. 19. GROUNDS OF APPEAL NO. 6 TO 6.1 RELATE TO ORDER OF CIT (A) IN SUSTAINING THE ADDITION OF RS.25 LAKHS MADE U/S.68 ON ACCO UNT OF AMOUNT RECEIVED FROM 7 PERSONS. 20. FACTS OF THE CASE, IN BRIEF, ARE THAT DURING THE COURS E OF SEARCH ON THE PREMISES OF PCPL THE LIST CONTAINING CERTAIN PERSONS A S PER PAGE 55 OF ANNEXURE A16 WAS SEIZED. THE ACCOUNTANT OF THE ASSE SSEE SHRI 13 ITA NO.408/PN/2007 SANJAY M. SONAR HAD EXPLAINED IN ANSWER TO QUESTION NO.14 THAT THE LIST CONTAINED THE NAMES OF THE PERSONS WITH THEIR BANK A CCOUNT NUMBERS WITH ORIENTAL BANK OF COMMERCE AND EXPLAINED THE MODUS OPERANDI ADOPTED BY PCPL BY SHOWING SUB CONTRACT PAYM ENTS IN THE NAMES OF SUCH PERSONS FOR THE PURPOSE OF REDUCING THE P ROFIT. THIS MODUS OPERANDI WAS ALSO CONFIRMED BY SHRI PRAKASH P. LADD HA, THE ASSESSEE, IN ANSWER TO QUESTION NO.35 OF HIS STATEMENT. T HE AO ALSO RECORDED THE STATEMENT ON OATH OF SEVERAL PERSONS ME NTIONED IN THE LIST. ON EXAMINATION OF THESE PERSONS IT WAS FOUND THAT THESE PERSONS WERE NOT HAVING ANY FINANCIAL CAPACITY TO USE THEIR FUNDS IN THE ALLEGED SUB CONTRACT WORK FOR M/S. PCPL. THE AO ACCORDINGLY HELD TH E SUB CONTRACT PAYMENT SHOWN BY M/S. PCPL IN THE NAMES OF THESE PERS ONS AS BOGUS SINCE IT WAS DONE FOR THE PURPOSE OF INFLATING THE EXPENDITU RE AND REDUCING THE PROFIT. IT WAS ALSO NOTED BY THE AO THAT HUGE CASH AMOUNTS WERE DEPOSITED IN SINGLE AMOUNT IN THE SAID BANK ACCOUNTS OF SUCH PERSONS WITH ORIENTAL BANK OF COMMERCE, NASHIK AND IMMEDIATELY THE PAY ORDERS OF EQUIVALENT AMOUNT WERE OBT AINED IN FAVOUR OF THE ASSESSEE. THE AO ASKED THE ASSESSEE TO EXPLAIN THE SOURCE, GENUINENESS AND CREDIT WORTHINESS IN RESPECT OF S UCH AMOUNTS RECEIVED BY THE ASSESSEE BY PAY ORDERS IN THIS MANNER. IT WAS SUBMITTED BY THE ASSESSEE THAT THESE PERSONS WITHDREW SALARY AND WERE ALSO WORKING AS SUB CONTRACTORS FOR A LONG TIME AND FROM THESE SOURCES THEY HAD OBTAINED PAY ORDERS IN FAVOUR OF THE ASSESSEE. 21. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE NOTED THAT THESE PERSONS WERE NOT H AVING ANY FINANCIAL CAPACITY TO MAKE SUCH CASH DEPOSITS IN BANK ACCOUNTS A ND TO PAY SUCH AMOUNTS TO THE ASSESSEE. THESE PERSONS ARE NOT ASSE SSED TO INCOME- 14 ITA NO.408/PN/2007 TAX AND IN THEIR STATEMENTS RECORDED ON OATH THEY HAD DENIED TO HAVE ADVANCED OR PAID ANY SUCH HUGE AMOUNTS TO ANYBODY. A FTER SHOWING THE BANK ENTRIES OF CASH DEPOSITS AND PURCHASE OF PAY ORDERS, THEY HAD ADMITTED TO HAVE OBTAINED PAY ORDERS IN FAVOUR OF THE AS SESSEE. HOWEVER, THEY HAVE NOT BEEN ABLE TO EXPLAIN THE SOURCE FOR SUCH CASH DEPOSITS IN THEIR ACCOUNTS. THE AO SUMMARIZED THE DETAILS OF THE SAME PERSONS AT PAGE 12 OF THE ORDER WHICH IS AS UNDER : SR.NO. NAME ACCOUNT NO. DATE CASH DEPOSITED AMOUNT OF PAY ORDER 1 KESHAV KAWLE 6104 02.02.2001 5,00,000/ - 5,00,000/- 2 SHIVAJI BORADE 6473 02.02.2001 2,50,000/ - 2,50,000/- 3 MANISHP. BANG 6105 02.02.2001 5,00,000/ - 5,00,000/- 4 UMESH KASAT 6383 02.02.2001 5,00,000/ - 5,00,000/- 5 KHANDU M. SHINDE 6475 02.02.2001 2,50,000/ - 2,50,000/- 6 POPAT R. GAWANDE 6472 02.02.2001 2,50,000/ - 2,50,000/- 7 ABHIJIT A. KOTSTHANE 6480 02.02.2001 2,50,000/ - 2,50,000/- TOTAL 25,00,000/- 22. REJECTING THE VARIOUS EXPLANATION GIVEN BY THE ASSES SEE THE AO MADE ADDITION OF RS.25 LAKHS WHICH IS THE AMOUNT OBTAINED B Y THE ASSESSEE FROM THE ABOVE 7 PERSONS BY PAY ORDER AFTER MAKING DEPOSIT IN CASH IN THEIR BANK ACCOUNTS ON THE SAME DAY. 23. IN APPEAL THE LD.CIT(A) AFTER CONSIDERING THE REMAND REPORT OF THE AO AND THE REJOINDER OF THE ASSESSEE TO THE REMAND RE PORT UPHELD THE ACTION OF THE AO BY OBSERVING AS UNDER : 9.5.1 I HAVE CAREFULLY GONE THROUGH THE RELEVANT P ORTIONS OF THE ASSESSMENT ORDER, THE SUBMISSION OF THE APPELLANT, THE RE MAND REPORTS OF THE A.O., THE REJOINDER OF THE APPELLANT, ETC. THE REASONINGS GIVEN BY THE A.O. ARE AFTER PROPER EVALUATION OF THE SEIZED DOCUM ENTS, VIZ. PAGE 53 OF 15 ITA NO.408/PN/2007 ANNEXURE A-16, THE MODUS OPERANDI ADOPTED BY THE APP ELLANT AND HIS GROUP TO REDUCE THE TAXABLE INCOME, THE IMPACT OF T HE STATEMENTS OF THE APPELLANT AND OTHER CONNECTED PERSONS RECORDED ON OA TH, STATEMENTS OF BANK ACCOUNTS OBTAINED FROM ORIENTAL BANK OF COMMERC E, NASHIK. ETC. 9.5.2 THE AGGREGATE ADDITIONS OF RS. 25,00,000/- AS C AN BE SEEN FROM WHAT HAS BEEN STATED HEREIN ABOVE IS ON ACCOUNT OF SEVEN PAY ORDERS FROM SEVEN PERSONS IN WHOSE ACCOUNTS CASH WAS DEPOSITED ON 02.02.2001 AND ON THE SAME DAY THE SAID PAY ORDERS WERE TAKEN. NE ITHER THE SAID PERSONS NOR THE APPELLANT COULD ESTABLISH AT ANY STAGE OF THE INCOME-TAX PROCEEDINGS WITH ANY CORROBORATIVE AND CONTEMPORARY EVIDENCE SUCH AS BOOKS OF ACCOUNTS, THEIR INCOME-TAX RECORDS, THIRD PAR TY CONFIRMATIONS, BANK ACCOUNTS ETC., THE AVAILABILITY OF CASH WITH THE SAID PERSONS FOR DEPOSITING AND OBTAINING THE SAID PAY ORDERS. THE CLA IM OF THE APPELLANT THAT THESE PERSONS WITHDREW SALARY AND WERE ALSO WORKING AS SUB- CONTRACTORS FOR LONG, BEAR NO FRUIT AS THE APPELLANT AND/OR THE SAID PERSONS HAVE BEEN UNABLE TO SUBSTANTIATE THE SAME WITH T HE SUPPORT OF ANY RECORDS HAVING STATUTORY BACKING. 9.5.3 THE APPELLANT'S ARGUMENT THAT THE ISSUE OF 158B D/148 AGAINST THESE PERSONS JUSTIFY THEIR FINANCIAL CAPACITY I S NOT A GROUND TO DELETE THE ADDITION MADE IN THE HANDS OF THE APPELL ANT. SUCH PROCEEDINGS ARE NECESSITATED A RESULT OF POST-SEARCH ENQUIRIES AND AS SESSMENT PROCEEDINGS AND NOT SIMPLY FOR THE REASONS THEY HAVE D EPOSITED HUGE AMOUNTS IN CASH AND OBTAINED PAY ORDERS IN FAVOUR OF T HE APPELLANT. 9.5.4 ON THE TOTALITY OF FACTS AND CIRCUMSTANCES OF T HE CASE, I SEE NO INFIRMITY IN THE ACTION OF THE A.O. THE ADDITION OF RS. 25,00,000/- STANDS CONFIRMED AND THE GROUND NO.4 DISMISSED. 24. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 25. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALLENGED THE ORDER OF THE CIT(A) IN SUSTAINING THE ADDITION MADE BY THE AO. HE SUBMITTED THAT THE ASSESSEE IS NOT RESPONSIBLE FOR NON FILING OF THE I NCOME TAX RETURNS BY THESE PERSONS. THERE IS NO DISPUTE TO THE FACT THAT THEY WERE WORKING AS LABOUR CONTRACTORS FOR THE ASSESSEE AND ARE ILLITERATE PERSONS. THEY MIGHT ALSO BE DOING JOB WORK FOR OTHERS. SIN CE THEY HAVE GIVEN THE MONEY TO THE ASSESSEE BY PAY ORDERS AND TH ERE IS NO EVIDENCE THAT THE ASSESSEE HAS GIVEN BACK THE MONEY TO THEM A ND THE SAME HAS COME BACK TO THE ASSESSEE, THEREFORE, NO ADDITION IS CALLED FOR. FURTHER, THE ASSESSEE HAS REFUNDED THE AMOUNT ADVANCED BY SHR I SHIVAJI 16 ITA NO.408/PN/2007 BORADE, SHRI KHANDU M. SHINDE, SHRI POPAT R. GAWANDE AND S HRI ABHIJIT A. KOTSTHANE, I.E. SL.NOS. 2, 5, 6 AND 7 OF THE LIST ON T HE VERY NEXT DAY WHICH WAS SUBMITTED BEFORE CIT(A) AT PAGE 30 OF HIS ORDER AND IT HAS NOT BEEN DISPUTED BY THE REVENUE. THEREFORE, WHEN THESE P ERSONS HAD SUFFICIENT SOURCE OF INCOME AND THE ACTION OF THE ASSES SEE IN RETURNING THE MONEY ON THE VERY NEXT DAY TO SOME OF T HE PARTIES IS NOT DISPUTED BY THE REVENUE, THEREFORE, THERE IS NO NEED FOR DISBELIEVING THE AMOUNT RECEIVED BY THE ASSESSEE FROM THESE PERSONS. R EFERRING TO VARIOUS DECISIONS HE SUBMITTED THAT IN ABSENCE OF ANY INCR IMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. 26. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE ASSESSEE COULD NOT PROVE WITH SATISFACTORY EVIDENCE REGARDING THE CREDIT WORTHINESS OF THESE PERSONS FOR DEPOSITING THE MONEY IN THE BANK ACCO UNT AND PURCHASING PAY ORDERS IN FAVOUR OF THE ASSESSEE. 27. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND THE LD.CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE V ARIOUS DECISIONS CITED BEFORE US. WE FIND THE AO IN THE INSTANT CA SE MADE ADDITION OF RS.25 LAKHS TO THE TOTAL INCOME OF THE ASSESSE E BEING THE AMOUNT RECEIVED IN THE SHAPE OF PAY ORDER FROM 7 PERSO NS ON THE GROUND THAT THE ABOVE 7 PERSONS COULD NOT EXPLAIN THE SOURCE OF HUGE CASH DEPOSITS IN THEIR BANK ACCOUNTS JUST BEFORE THE PA Y ORDERS WERE PURCHASED. THE SUBMISSION OF THE ASSESSEE BEFORE THE AO AND CIT(A) THAT THESE PERSONS WITHDREW SALARY AND WERE ALSO WORKIN G AS SUB CONTRACTS FOR LONG WAS NOT ACCEPTED BY THE AO OR THE CIT(A) IN ABSENCE 17 ITA NO.408/PN/2007 OF ANY SATISFACTORY DOCUMENTARY EVIDENCE TO SHOW THAT T HESE PEOPLE WERE CAPABLE OF DEPOSITING SUCH HUGE CASH DEPOSIT IN BAN K ACCOUNTS JUST BEFORE THE PAY ORDERS WERE PURCHASED. ALTHOUGH T HE ASSESSEE COULD NOT PRODUCE WITH DOCUMENTARY EVIDENCE TO THE SA TISFACTION OF THE LOWER AUTHORITIES REGARDING THE CREDIT WORTHINESS OF THESE 7 PERSONS FOR DEPOSITING HUGE CASH IN THEIR BANK ACCOUNTS PRIOR TO PUR CHASE OF THE PAY ORDERS, WE FIND FROM PAGE 30 OF THE ORDER OF THE CIT(A ) THAT THE ASSESSEE AT THE VERY NEXT DAY HAS REPAID AN AMOUNT O F RS.2,50,000/- EACH OBTAINED FROM SHRI SHIVAJI BORADE, SHRI KHANDU M. SHIND E, SHRI POPAT R. GAWANDE AND SHRI ABHIJIT A. KOTSTHANE. SINCE TH E ASSESSEE HAS REPAID THE MONEY OBTAINED FROM THE 4 PERSONS OUT O F THE 7 PERSONS MENTIONED IN THE ORDER OF THE AO, A FACT STATED BEFORE CI T(A) AND NOT DISPUTED BY THE REVENUE, THEREFORE, WE FIND MERIT IN THE SU BMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE AMOUNT OF RS.1 0 LAKHS (I.E. 2,50,000 X 4) WHICH HAS BEEN REFUNDED ON THE VERY NEXT DAY CANNOT BE SUSTAINED IN THE HANDS OF THE ASSESSEE. HOWEVER, THE A SSESSEE COULD NOT EXPLAIN THE SOURCE OF THE REMAINING PERSONS BEFORE US . UNDER THESE CIRCUMSTANCES, WE UPHOLD THE ORDER OF THE CIT(A) TO THE E XTENT OF ADDITION OF RS.15 LAKHS AND THE BALANCE RS.10 LAKHS IS DIRECT ED TO BE DELETED. GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY PARTLY A LLOWED. 28. GROUNDS OF APPEAL NO.7 TO 7.2 RELATE TO THE SUSTAINING OF ADDITION OF RS.6 LAKHS IN RESPECT OF AMOUNT PAID TO M/S. MUNDADA AG ENCIES BY VCPL. 29. FACTS OF THE CASE, IN BRIEF, ARE THAT DURING THE COUR SE OF BLOCK ASSESSMENT PROCEEDINGS IN THE CASE OF M/S. VASTUKRUPA CONSTRUCTION PVT. LTD. (VCPL IN SHORT), THE SISTER CONCERN OF LADDHA GR OUP, UNRECORDED CASH DEPOSIT OF RS.6 LAKHS WAS FOUND IN THE BA NK ACCOUNT 18 ITA NO.408/PN/2007 ON 26-12-2010. IT WAS FOUND THAT IMMEDIATELY AFTER THE DEPOSIT OF THE CASH THE PAY ORDER OF RS.6 LAKHS WAS OBTAINED IN FAVOUR O F M/S. MUNDADA AGENCIES. THE SCRUTINY OF THE BOOKS OF ACCOU NT OF THE ASSESSEE SHOWED THAT THE ASSESSEE WAS HAVING FINANCIAL T RANSACTION WITH M/S. MUNDADA AGENCIES OF KOPARGAON AND THE BALANCE PAYABLE BY THE ASSESSEE TO M/S. MUNDADA AGENCIES ON 01-04-2000 WAS RS.12 LAKHS. WHILE EXPLAINING THE SOURCE OF CASH DEPOSIT OF RS.6 L AKHS IN THE HANDS OF VCPL IT WAS ARGUED THAT SAID CASH DEPOSIT WAS MADE BY SHRI PRAKASH P. LADDHA. IT WAS FURTHER ARGUED THAT SHRI PR AKASH P. LADDHA (HUF) HAD RECEIVED ADVANCE OF RS.6 LAKHS ON 26-12-2000 AG AINST THE AGREEMENT DATED 05-08-1996 MADE BY SHRI PRAKASH P. LA DDHA (HUF) FOR SALE OF LAND BEARING SURVEY NO.84 OF WADALA TO GAUTAM TERRACE CO- OP HOUSING SOCIETY. PHOTOCOPY OF RELEVANT AGREEMENT DATE D 05-08-1996 SHOWING THE ALLEGED RECEIPT OF ADVANCE BY PRAKASH P. LADD HA HUF WAS FILED. THE AO NOTED FROM THE SAID SALE AGREEMENT DATED 0 5-08-1996 THAT THE SAME WAS FOR A TOTAL CONSIDERATION OF RS.20 LAKHS IN RESPECT OF LAND ADMEASURING 6670 SQ.MTRS AND IT WAS MADE ON THE ST AMP PAPER OF RS.50. THE DOCUMENT WAS NOT REGISTERED AND THE STAMP DUTY CHARGES ARE ALSO NOT PAID. THE AGREEMENT IS ALLEGED TO HAVE BEEN MADE BY MR. SHRIKANT GAIKWAD AS CHAIRMAN ON BEHALF OF GAUTAM TERRACE CO-OP. HOUSING SOCIETY. THE AO, THEREFORE, ASKED THE ASSESSEE TO PROVE THE TRANSACTION OF RECEIPT OF RS.6 LAKHS IN CASH ON 26-12-2000 AS ADVANCE UNDER THE ALLEGED SALE AGREEMENT DATED 05-08-1996 AND WAS ASKED TO PRODUCE SHRI SHRIKANT GAIKWAD FOR THE PURPOSE. 30. THE ASSESSEE DID NOT PRODUCE ANY FURTHER EVIDENCE AND ALSO DID NOT PRODUCE SHRI SHRIKANT GAIKWAD FOR THE PURPOSE OF VER IFICATION. HE, HOWEVER, FILED THE ADDRESS OF SHRI SHRIKANT GAIKWAD. ACCORD INGLY, THE 19 ITA NO.408/PN/2007 AO ISSUED SUMMONS TO SHRI SHRIKANT GAIKWAD ASKING HIM TO PRODUCE THE ORIGINAL AGREEMENT AND TO PROVE THE SOURCE OF PAYME NT BY THE SOCIETY TO PRAKASH P. LADDHA HUF AS ALLEGED TO HAVE BEE N RECEIVED IN CASH BY MR. PRAKASH P. LADDHA. THE SAME COULD NOT BE S ERVED ON THE ADDRESS GIVEN AS IT WAS FOUND THAT NOBODY IS RESIDING AT THE GIVEN ADDRESS AND THAT THE PREMISES WAS LOCKED. THE AO, THER EFORE, ASKED THE ASSESSEE TO PRODUCE SHRI SHRIKANT GAIKWAD FOR VERIFICA TION. HOWEVER, THE ASSESSEE FAILED TO PRODUCE SHRI SHRIKANT GAIK WAD TILL THE CONCLUSION OF THE PROCEEDINGS. THE AO, THEREFORE, DISBELIEVED THE SOURCE OF AMOUNT OF RS.6 LAKHS DEPOSITED IN THE BANK ACCO UNT OF M/S.VASTUKRUPA CONSTRUCTIONS PVT. LTD. REJECTING THE V ARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE THE AO MADE ADDITION OF RS.6 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE. 31. IN APPEAL THE LD.CIT(A) UPHELD THE ADDITION MADE BY TH E AO BY OBSERVING AS UNDER : 10.4. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT OR DER, THE SUBMISSIONS OF THE APPELLANT, THE REMAND REPORT OF THE A.O., TH E REJOINDER OF THE APPELLANT AND OTHER MATERIALS ON RECORD. THE FACTS OF THE ISSUE I N BRIEF ARE (A) M/S VASTUKRUPA CONSTRUCTIONS PVT. LTD. (VCPL) IS A SISTER CON CERN OF LADDHA GROUP. (B) BANK ACCOUNT OF M/S VASTUKRUPA CONSTRUCTION S PVT. LTD. REFLECTED DEPOSIT OF CASH OF RS. 6,00,000/- ON 26.12.2000, A PAY ORDER FAVOURING M/S. MUNDADA AGENCIES, KOPARGAON WAS OBTAINED, (C) THE APP ELLANT HAS FINANCIAL DEALING WITH M/S MUNDADA AGENCIES TO WHOM THE APPELLA NT OWED RS. 12,00,000/- AS ON 01.04.2000, (D) THE DEPOSIT IS STATED TO BE MADE BY PRAKASH P. LADDHA(HUF) OUT OF RS. 6,00,000/- RECEIVED ON 26.12.2000 AGAINST UNREGISTERED AGREEMENT DT. 5.08.1996 MADE BY PRAKASH P. LADDHA(HUF) ON STAMP PAPER OF RS. 50/- WITH SHRI. SHR IKANT GAIKWAD, AS A CHAIRMAN OF GAUTAM TERRACE C.H.S., (E) THE APPELLAN T DID NOT PRODUCE SHRI. SHRIKANT GAIKWAD AND THE SUMMONS COULD NOT BE SERVED A S NOBODY RESIDED AT THE ADDRESS GIVEN BY THE APPELLANT AND THE SAID PRE MISES ARE LOCKED, (F) APPELLANT DID NOT AT ALL PRODUCE SHRI. SHRIKANT GAI KWAD, (G) PRAKASH PARSHURAM LADDHA(HUF) HAS NOT PRODUCED ANY TO INCOME- TAX RECORDS TO SUPPORT THE SOURCE, (H) RECEIPT OF RS. 6,00,000/- SHOWN BY M/S MUNDADA AGENCIES IN THEIR BOOKS OF ACCOUNTS ON 27.12.2000 IS NO T REFLECTED IN THE BOOKS OF APPELLANT AND THE BALANCE TO M/S MUNDADA AGE NCIES REMAINS THE SAME AT RS. 12,00,000/- AS ON 31.3.2001 IN THE BOOKS OF THE APPELLANT, (I) IN THE BALANCE-SHEET OF THE APPELLANT AS ON 31.03.2001, THE HUF IS NOT APPEARING AS A CREDITOR, AND (J) THE RECEIPTS AND PAY MENTS PREPARED AFTER 20 ITA NO.408/PN/2007 THE SEARCH DID NOT SHOW THE SAID TRANSACTION IN EITHER OF THE ACCOUNTS I.E. THE APPELLANT OR M/S. VASTUKRUPA CONSTRUCTIONS PVT. LTD. 10.4.2 THE AFFIDAVIT OF SHRI. SHRIKANT GAIKWAD, DAT ED 10.02.2005 IS ONLY A SELF-SERVING DOCUMENT AS THE SAME IS AFFIRMED AND PRODUC ED AFTER LAPSE OF CONSIDERABLE TIME EVEN FROM THE DATE OF COMPLETION O F BLOCK ASSESSMENT AND THE SAME IS NOT SUPPORTED WITH ANY DOCUMENTS FROM ANY S TATUTORY AUTHORITIES, SUCH AS REGISTRAR OF CO-OPERATIVE SOCIETIE S, BANK STATEMENT OF THE SOCIETY, AUDIT REPORTS FILED WITH THE REGISTRAR O F CO-OPERATIVE SOCIETIES, COPIES OF ANNUAL GENERAL MEETINGS AND/OR MANAGING COM MITTEE MEETINGS AUTHORISING THE CHAIRMAN IN THE MATTER. IN THESE CIRC UMSTANCES, I CONSIDER THE SAME IS DE VOID OF ANY EVIDENTIARY VALUE AND OF N O HELP TO THE APPELLANT. 10.4.3 IN THE LIGHT OF THE ABOVE FACTS AND KEEPING I N MIND THE FINDINGS OF THE A.O., THE VARIOUS SUBMISSIONS PUT FORWARD DURING THE APP ELLATE PROCEEDINGS WITHOUT THE SUPPORT OF CORROBORATIVE/CONTEMPORARY EV IDENCE, I DECLINE TO INTERFERE WITH THE ACTION OF THE A.O. IN THE MATTER . THE ADDITION STANDS CONFIRMED AND THE GROUND NO.5 DISMISSED. 32. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 33. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY OBJECTED TO THE ORDER OF THE CIT(A). HE SUBMITTED THAT SINCE M/S. MUNDADA AGENCIES OF KOPARGAON RECEIVED THE MONEY FROM M/S. VASTRUKRUPA CON STRUCTION PVT. LTD., THEREFORE, THERE IS NO NECESSITY OF MAKING ANY A DDITION IN THE HANDS OF THE ASSESSEE. ADDITION, IF ANY, CAN BE MADE IN THE HANDS OF M/S. VASTRUKRUPA CONSTRUCTION PVT. LTD. THE LD. COUNSE L FOR THE ASSESSEE REFERRING TO THE AFFIDAVIT OF SHRI SHRIKANT GAIKWAD, A COPY OF WHICH IS PLACED AT PAGES 167 AND 168 OF THE PAPER BOOK , SUBMITTED THAT SHRI SHRIKANT GAIKWAD HAS CONFIRMED THAT GAUTAM TERRACE CO-OP. HOUSING SOCIETY HAD GIVEN AN AMOUNT OF RS.6 LAKHS IN CASH TO PRAKASH P. LADDHA HUF ON 26-12-2000 AGAINST THE AGREEMENT TO PURCHASE OF PLOT OF LAND AT WADALA, NASHIK. AS PER AGREEMENT DATED 05 -08-1996 THE PURCHASE PRICE WAS FIXED AT RS.21 LAKHS. HE HAD ALSO CON FIRMED THAT THIS AMOUNT IS DULY REFLECTED IN THE BOOKS OF ACCOUNT OF T HE SAID COOPERATIVE SOCIETY AND THE SAME HAS BEEN AUDITED AS O N 31-03-2001. HE ACCORDINGLY SUBMITTED THAT NO ADDITION CAN BE MADE IN THE HANDS OF 21 ITA NO.408/PN/2007 THE ASSESSEE FOR THE MONEY RECEIVED BY M/S. MUNDADA GR OUP FROM M/S. VASTRUKRUPA CONSTRUCTION PVT. LTD. 34. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 35. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE AO MADE THE ADDITION O N THE GROUND THAT THERE IS DEPOSIT OF CASH IN THE BANK ACCOUNT OF M/S . VCPL WHICH COULD NOT BE EXPLAINED. FURTHER, IMMEDIATELY AFTER THE DE POSIT OF CASH TO THE EXTENT OF RS.6 LAKHS PAY ORDER WAS OBTAINED IN FA VOUR OF M/S. MUNDADA AGENCIES. ON BEING CONFRONTED THE ASSESSEE SUB MITTED THAT THE SOURCE OF DEPOSIT OF CASH IN THE HANDS OF M/S. VCPL WAS MADE BY PRAKASH P. LADDHA HUF. THE AO DISBELIEVED THE SOURCE OF CASH IN THE HANDS OF THE HUF FOR EXPLAINING THE SOURCE OF DEPOSIT IN T HE CASE OF M/S. VCPL. SINCE THE PAYMENT OF RS. 6 LAKHS TO M/S. MUN DADA AGENCIES MADE BY PAY ORDER ON 26-12-2000 IS NOT APPEA RING IN THE BOOKS OF PRAKASH P. LADDHA THE AO MADE ADDITION OF RS.6 LAKHS IN THE HANDS OF THE ASSESSEE WHICH HAS BEEN CONFIRMED BY THE CIT(A). 36. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSES SEE THAT WHEN M/S. MUNDADA AGENCIES RECEIVED AN AMOUNT OF RS.6 LAKHS FRO M M/S. VCPL WHICH IS A SEPARATE ENTITY, THEN THERE IS NO QUESTIO N OF MAKING ANY ADDITION IN THE HANDS OF THE ASSESSEE. WE FIND MERIT I N THE ABOVE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE. UNDOUBTE DLY, THE AO PROCEEDED TO MAKE THE ADDITION IN THE HANDS OF THE ASSE SSEE ON THE GROUND THAT THE DEPOSIT OF RS.6 LAKHS IN CASH IN THE BANK ACCOUNT OF M/S. VCPL ON 26-12-2000 COULD NOT BE EXPLAINED PROPERLY . PAY ORDER AMOUNTING TO RS.6 LAKHS WAS PURCHASED IN FAVOUR OF M/S. MU NDADA 22 ITA NO.408/PN/2007 AGENCIES OF KOPARGAON. THE ASSESSEE IN HIS SUBMISSIONS BE FORE THE AO HAD STATED THAT THE SOURCE OF DEPOSIT IN THE HANDS OF M/S . VCPL WAS OUT OF THE ADVANCE RECEIVED BY PRAKASH P. LADDHA HUF ON AC COUNT OF SALE OF LAND TO GAUTAM TERRACE CO-OP. HOUSING SOCIETY ON 05-08- 1996 FOR A CONSIDERATION OF RS.21 LAKHS. AS PER THE SAID AGREEMENT, T HE ASSESSEE HAD RECEIVED RS.6 LAKHS IN CASH ON 26-12-2000 AS ADVANC E. ALTHOUGH THE AO DID NOT ACCEPT THE ABOVE CONTENTION, IN OUR OPINIO N, THERE IS NO NEED TO MAKE ANY ADDITION IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF PAYMENT BY M/S. VCPL TO M/S. MUNDADA AGENCIES. ADDITION, IF ANY, CAN BE MADE IN THE HANDS OF M/S. VCPL EITHER ON ACCOUNT OF PAYMENT TO M/S. MUNDADA AGENCIES OR ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT IN THE BANK ACCOUNT OF M/S. VCPL. THERE IS NO NECESSITY FO R MAKING ANY ADDITION IN THE HANDS OF THE ASSESSEE UNDER THE FACTS AN D CIRCUMSTANCES OF THE CASE. WE, THEREFORE, SET ASIDE THE ORDER OF THE C IT(A) AND DIRECT THE AO TO DELETE THE ADDITION. THE ABOVE GROUNDS BY TH E ASSESSEE ARE ACCORDINGLY ALLOWED. 37. GROUNDS OF APPEAL NO.8 TO 8.2 RELATED TO ADDITION OF RS .49 LAKHS IN RESPECT OF AMOUNT ADVANCED BY THE ASSESSEE AS PER THE SEIZED PA PER. 38. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO ON THE B ASIS OF THE SEIZED MATERIAL, I.E. PAGE 26 OF ANNEXURE A1 TO THE PANCHAN AMA SEIZED FROM THE PREMISES OF THE ASSESSEE MADE ADDITION OF RS.49 LA KHS. IN APPEAL THE LD.CIT(A) UPHELD THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER : 11.5.1 I HAVE CAREFULLY CONSIDERED ALL THE MATERIAL S ALONG WITH THE FINDINGS OF THE A.O. AND THE SUBMISSIONS OF THE APPELLAN T IN THE MATTER. THE ADDITION OF RS. 49,00,000/- AND RS. 2,96,444/- IS BASED ON THE SEIZED MATERIALS I.E. PAGE 126, ANNEXURE A-I SEIZED FROM THE PREMISES OF THE APPELLANT. THE FACT THAT THESE ADDITIONS ARE BASED ON THE SAID SEIZED DOCUMENTS IS NOT DISPUTED BY THE APPELLANT. THE FACT T HAT THE SAID DOCUMENT I.E. PAGE 126, ANNEXURE-I HAS BEEN SEIZED FROM THE PR EMISES OF THE APPELLANT 23 ITA NO.408/PN/2007 IS ALSO NOT DISPUTED BY THE APPELLANT. IT IS ALSO SEEN TH AT THE EXHIBIT '0' ANNEXED BY THE APPELLANT ALONG WITH ITS SUBMISSIONS DATE D 15.02.2005 FOUND TO BE A DIFFERENT ONE THAN THAT OF THE ORIGIN AL PAGE 126 OF ANNEXURE A- I. THE APPELLANT SUBSEQUENTLY ADMITTED THE MISTAKE. HO WEVER, IT REQUIRES A MENTION HERE THAT HAD THE REMAND REPORT NOT BEEN CA LLED FOR AND THE SEIZED MATERIAL ANNEXED BY THE APPELLANT IS NOT PROPERLY VE RIFIED, THE RESULTANT OUTPUT WOULD HAVE BEEN A DISTORTED ONE. ON THE TOTAL ITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM SATISFIED WITH THE FINDI NG AND REASONING THAT THE APPELLANT FAILED TO SUBSTANTIATE THE SOURCE OF RS. 49 LAKHS AS APPEARING IN THE SAID SEIZED MATERIAL. HENCE, THE ACTION OF A.O. R EQUIRES NO INTERFERENCE. THE ADDITION OF RS. 49 LAKHS STANDS CONFIRMED. 39. THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEAR ING COULD NOT CONTROVERT THE FINDINGS GIVEN BY THE CIT(A). IN VIEW OF THE DETAILED FINDING GIVEN BY THE LD.CIT(A) AND IN ABSENCE OF ANY CONTRAR Y MATERIAL BROUGHT TO OUR NOTICE BY THE LD. COUNSEL FOR THE ASSES SEE, THE ORDER OF THE CIT(A) ON THIS ISSUE IS UPHELD. GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY DISMISSED. 40. GROUNDS OF APPEAL NO.9 TO 9.1 RELATE TO ADDITION OF RS.4 1.10 LAKHS IN RESPECT OF UNEXPLAINED PAYMENT MADE TO SHRI J.R. KAPSE. 41. FACTS IN BRIEF ARE THAT DURING THE COURSE OF SEARCH AT THE PREMISES OF M/S.PCPL CERTAIN DOCUMENTS WERE SEIZED. THE PAGE NO.12 OF FILE A-25 IS THE ACCOUNT OF SHRI. JANARDAN R. KAPSE FOR THE PERIOD FRO M 01.04.2000 TO 10.3.2001 FROM THE BOOKS OF M/S. PRACHI ASSO CIATES WHICH IS THE PROPRIETARY CONCERN OF THE ASSESSEE. THE S AID ACCOUNT SHOWED THE OPENING DEBIT BALANCE OF RS.32,50,000/- AS ON 0 1.04.2000 AND AFTER CONSIDERING THE PAYMENTS OF RS.8,60,000/- MADE IN CASH ON SEVERAL DATES FROM 07.04.2000 TO 05.10.2000 AND AFTER CONS IDERING THE PAYMENT BY CHEQUE OF RS.40,000/- DTD.30.12.2000 THE CLOSIN G DEBIT BALANCE WAS DRAWN AT RS.41,50,000/-. 42. DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS THE AO ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF PAYMENT OF RS.41,50 ,000/- MADE 24 ITA NO.408/PN/2007 BY HIM TO SHRI JANARDHAN R. KAPSE AS PER THE SEIZED DOC UMENTS. PART OF THE SUMS PAID TO SHRI JANARDHAN R. KAPSE WAS EXPLAINED FROM THE ENTRIES IN THE REGULAR BOOKS OF ACCOUNT AND THE REMAINING PART WAS DULY EXPLAINED IN THE RECEIPT AND PAYMENT ACCOUNT OF UNDISCLOS ED TRANSACTIONS PREPARED FOR THE BLOCK PERIOD. REJECTING TH E VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE THE AO TREATED AN A MOUNT OF RS.40,000/- PAID BY CHEQUE AS EXPLAINED AND TREATED THE BALANCE AMOUNT OF RS.41,10,000/- AS UNEXPLAINED AND ACCORDINGLY M ADE ADDITION OF THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 43. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE AO B Y OBSERVING AS UNDER : 12.5 I HAVE CAREFULLY GONE THROUGH THE FINDINGS OF THE A.O. IN THE ASSESSMENT ORDER AS WELL AS THE REMAND REPORT, AND THE VA RIOUS SUBMISSIONS ADVANCED BY THE APPELLANT DURING THE APPELLATE PROC EEDINGS, ON AN ANALYSIS OF THE MATERIALS ON RECORDS, I AM INCLINED TO ACCEDE TO THE FINDINGS OF THE ASSESSING OFFICER AND COME TO THE FACTUAL AND LOGICAL C ONCLUSION THAT THE APPELLANT COULD NOT ESTABLISH THAT THIS UNDISCLOSED INC OME OF RS. 41,10,000/- PAID TO SHRI J.R.KAPSE HAS ANY NEXUS WITH THE FUNDS GEN ERATED BY M/S. PRAKASH CONSTRUWELL PVT. LTD. IT IS ALSO SEEN FROM THE ASSESSMENT ORDER THAT THE APPELLANT HAS ALREADY BEEN GIVEN THE TELESCOPIC B ENEFIT AS REQUESTED BY THE APPELLANT VIDE LETTER DATED 18.10.2004. IN SHORT WHAT THE APPELLANT DESIRES TO HAVE IS TO EAT THE CAKE AND HAVE THE CAKE. KEEPING IN MIND THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE ISSUE, I SEE NO REASON TO INTERFERE WITH THE ACTION OF THE A.O. IN THE RESULT, THE GROUND NO.7 STANDS DISMISSED. 44. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 45. AFTER HEARING BOTH THE SIDES, WE FIND THE ORDER PASSE D BY THE CIT(A) ON THIS ISSUE IS A REASONED ONE. THE LD. COUNSEL FOR THE ASSESSEE COULD NOT CONTROVERT THE FACTUAL FINDINGS GIVEN BY THE LD.C IT(A). FURTHER, THE AO HAS ALREADY GIVEN TELESCOPIC BENEFIT OF THIS AMOUNT TO THE ASSESSEE. THEREFORE, WE FIND NO REASON TO INTERFERE IN THE ORDER OF 25 ITA NO.408/PN/2007 THE CIT(A) ON THIS ISSUE. ACCORDINGLY, THE SAME IS UPHELD. GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY DISMISSED. 46. GROUNDS OF APPEAL NO.10 TO 10.2 RELATES TO VARIOUS AD DITIONS MADE BY THE AO ON ACCOUNT OF VARIOUS UNEXPLAINED PAYMENTS AN D DEPOSITS IN BANK ACCOUNT. 47. FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO DURING TH E COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE CREDIT ENTRIES IN RECEIPTS SHOWN IN THE RECEIPT AND PAYMENT ACCOUNT MADE ARE NOT BASED ON ANY ENTRIES IN THE SEIZED DOCUMENTS. IN THE RECEIPT AND PAYMENT AC COUNT THE ASSESSEE HAS SHOWN ACCUMULATION OF CASH BALANCE ON ACCO UNT SALE OF FLATS AND SHOPS OF HIS VARIOUS PROJECTS FOR WHICH NO EVID ENCE WAS FOUND IN THE SEIZED DOCUMENTS FOR WHICH NO ENTRIES ARE MADE IN THE REGULAR BOOKS OF ACCOUNT. HE, THEREFORE, HELD THAT THE ACCUMULAT ED CASH BALANCE SHOWN BY THE ASSESSEE IN THIS RECEIPT AND PAYME NT ACCOUNT AS NOT PROVED. HE ACCORDINGLY PROCEEDED TO MAKE VARIOUS ADDITIONS. 48. HE NOTED THAT ANNEXURE MARKED A-1/7 PAGE NO.16 A ND 83 WERE SEIZED FROM OFFICE PREMISES OF M/S. PRAKASH CONSTRUWELL PVT. L TD. IT IS SEEN FROM PAGE NO.16 AND 83 THAT THESE RELATE TO PAYME NT OF INTEREST TO SHRI H.B.BOOB. PAYMENTS WERE SHOWN ON 07.01.1998 AND 09.06 .1998 OF RS.10,000/- AND RS.16,000/- RESPECTIVELY. IT IS SEEN FROM R ECEIPT & PAYMENT ACCOUNT FOR THE F.Y.1998-1999 ENCLOSED WITH HIS LE TTER DTD.15.04.2004 THAT HE HAS SHOWN TOTAL PAYMENT OF RS.30,000 /- AS CASH EXPENSES INCURRED ON PAYMENT OF INTEREST TO SHRI.H.B.BOOB. 49. AS PER ANNEXURE A-17 PAGE NO.54 SEIZED FROM THE OFFIC E PREMISES OF M/S. PCPL DURING THE COURSE OF SEARCH IT WAS SEEN THA T ASSESSEE HAS MADE PAYMENT TO SHRI.Y.R.BANSODE ON ACCOUNT OF PAYMENT TO SUB- 26 ITA NO.408/PN/2007 CONTRACTOR. IT WAS SEEN FROM RECEIPT & PAYMENT ACCOUNT FOR THE F.Y.2001-2002 ENCLOSED WITH HIS LETTER DTD.15.04.2004 THAT H E HAS SHOWN TOTAL PAYMENT OF RS.10,12,111/-AS CASH EXPENSES INC URRED WITHOUT CORRESPONDING SOURCES AT PAGODA SITE. 50. DURING THE COURSE OF SEARCH ANNEXURE MARKED A I TEM NO. 1 PAGE NO.2 TO 26 WERE SEIZED FROM THE RESIDENTIAL PR EMISES OF ASSESSEE. IT WAS SEEN FROM PAGE NO.2 TO 26 THAT THE SE RELATE TO GENERAL POWER OF ATTORNY AND DEVELOPMENT AGREEMENT DATED 14-03-2002 OF LAND BEARING SURVEY NO.44 AND 53 OF N ASHIK. AS PER THIS AGREEMENT PAYMENT TO MRS.SAKINA B.NOOR MOHAMMA D MULLA OF NASHIK WAS MADE AT RS.3,05,000/-. THE PAYMENT OF RS.3,05,000/- WAS SHOWN IN THE F.Y.2001-2002 BY THE ASSESSEE IN H IS RECEIPT & PAYMENT ACCOUNT ENCLOSED WITH HIS LETTER DATED 15-0 4-2004 AS CASH EXPENSES INCURRED ON PAYMENT TO SMT.MUMTAZ MOHMMAD YUSUF NAGINEWALA. 51. DURING THE COURSE OF SEARCH AS PER ANNEXURE MARK ED A ITEM NO.1 PAGE NO.148 AND 149 WERE SEIZED FROM RESIDENTIAL PREMISES OF ASSESSEE. IT WAS SEEN FROM PAGE NO.148 TO 149 THAT THESE RELATE TO THE PURCHASE OF RUBY RING FROM MYANMAR GEMS ENTERPRISE OF MYANMAR. IN THE STATEMENT ON OATH OF SHRI.PRAKASH P.LADDHA RECORDED U /S.132 (4) IN REPLY TO QUESTION NO.7 THE ASSESSEE HAS STATED THAT T HESE PAPERS ARE CASH MEMOS OF PURCHASE OF RUBY RINGS AT MYANMAR. THE TO UR EXPENSES OF RS.1 , 00,000/- WAS SHOWN IN THE F.Y.1999-2000 BY THE ASSESSEE IN HIS RECEIPT & PAYMENT ACCOUNT ENCLOSED WITH HIS LETTER DATED15-0 4-2004 AS CASH EXPENSES INCURRED ON MYANMAR TOUR. 27 ITA NO.408/PN/2007 52. IT WAS SEEN FROM RECEIPT & PAYMENT ACCOUNT FOR THE F.Y.1999-2000 FILED DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS TH AT THE ASSESSEE HAS SHOWN TOTAL PAYMENT OF RS.25,00,000/- AS D EPOSIT IN ORIENTAL BANK OF COMMERCE, NASHIK AND IT WAS CLAIMED THAT S UCH AMOUNT OF RS.25,00,000/- WAS DEPOSITED BY THE ASSESSEE O UT OF BLENDING / GIFTING OF THE AMOUNT FROM HIS HUF. 53. IT WAS SEEN FROM BANK ACCOUNT OF SHRI PRAKASH P. LA DDHA (HUF) VIDE ACCOUNT NO.6198 MAINTAINED WITH ORIENTAL BANK OF COMME RCE, NASHIK THAT THE ASSESSEE HAS DEPOSITED FOLLOWING AMOUNTS IN CASH : SR.NO. DATE AMOUNT 1 23 - 07 - 1999 3,35,000/ - 2 15 - 02 - 2000 15,25,000/ - 3 16 - 03 - 2000 6,00,000/ - 4 31 - 03 - 2000 7,80,000/ - TOTAL 32,40,000/ - THE AO OBSERVED THAT THE CREDIT ENTRIES AND RECEIPTS S HOWN IN THE RECEIPT & PAYMENT ACCOUNT ARE NOT BASED ON ANY ENTRIE S IN THE SEIZED DOCUMENTS. IN THIS RECEIPT & PAYMENT ACCOUNT THE ASSES SEE HAS SHOWN ACCUMULATION OF CASH BALANCE ON ACCOUNT OF RECEIPTS FROM S ALE OF FLATS & SHOPS OF HIS VARIOUS PROJECTS FOR WHICH NO EVIDENCE WAS FO UND IN THE SEIZED DOCUMENT FOR WHICH NO ENTRIES ARE MADE IN THE REG ULAR BOOKS OF ACCOUNT. HE, THEREFORE, HELD THAT THE ACCUMULATED CASH BA LANCE SHOWN BY THE ASSESSEE IN THIS RECEIPT & PAYMENT ACCOUNT ARE NOT PROVED. HENCE THE ASSESSEE'S CLAIM THAT THE AMOUNT OF RS.25,00,0 00/- WAS DEPOSITED IN THE HUF ACCOUNT BY GIFTS / BLENDING OUT OF T HE AMOUNT OF HIS OWN SOURCES AS ALLEGED TO BE EXPLAINED BY SUCH RECE IPT & PAYMENT ACCOUNT WAS NOT ACCEPTED BY THE AO. HE NOTED THAT SH RI. PRAKASH P. LADDHA IN HIS RECEIPT & PAYMENT ACCOUNT HAS SHOWN RS.25 ,00,000/- AS DEPOSIT IN PRAKASH P.LADDHA (HUF) ORIENTAL BANK OF COMMERCE , NASHIK ACCOUNT IN THE F .Y.1999-2000. THE AGGREGATE TOTAL OF BA NK DEPOSITS IS 28 ITA NO.408/PN/2007 AT RS.24,60,000/-. SHRI PRAKASH P.LADDHA (HUF) HAS DEPOSIT ED RS.7,80,000/- IN ORIENTAL BANK OF COMMERCE, NASHIK ON 31-03- 2000. THE ASSESSEE IN HIS SUBMISSION DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS CLAIMED THAT THE DEPOSIT OF RS.7,80,000/- AND DEPOSIT OF RS.40,000/- INCLUDED IN RS.25,00,000/- SHOWN IN RECEIPT & PAYMENT ACCOUNT AND THE REMAINING AMOUNT OF RS.7,40,000/- WAS OUT OF AGRICULTURAL INCOME AND OTHER RECEIPTS OF HIS HUF. HOWEVER, THE AO HELD THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE TO PROVE AGRICULTURAL INCOME AND OTHER RECEIPTS OF HIS HUF. THEREFORE THE SOURCES FOR THE ABOVE CASH DEPOSITS IN THE BANK ACCOUN T AGGREGATING TO RS.32,40,000/- WAS TREATED BY THE AO AS UNEXPLAINED AND ACCORDINGLY HE MADE ADDITION OF THE AMOUNT OF RS.32,40,000/- AS UNDISC LOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD. 54. THE AO SIMILARLY NOTED THAT THE ASSESSEE HAS SHOWN THE ABOVE DISCUSSED 5 AMOUNTS NAMELY, THE AMOUNT OF RS.30,000/- ON ACCOUNT OF INTEREST PAID TO SHRI.H.B.BOOB, RS.10,12,111/- IN RESPECT OF EX PENSES INCURRED ON PAGODA SITE, THE AMOUNT OF RS.3,05,000/- FOR PA YMENT TO MRS.MUMTAZ MOHAMMAD YUSUF NAGINEWALA, RS.1,00,000/- FOR MYANMAR TOUR EXPENSES, AND RS.32,40,000/- DEPOSITS IN THE ACCOUNT OF SHRI.PRAKASH P. LADDHA HUF'S ORIENTAL BANK OF COMMERCE, NA SHIK, IN HIS RECEIPT AND PAYMENT ACCOUNTS FILED DURING BLOCK ASSES SMENT PROCEEDINGS. HOWEVER, AS DISCUSSED BY HIM EARLIER, THE CRED IT ENTRIES AND RECEIPTS SHOWN IN THE RECEIPT & PAYMENT ACCOUNT ARE NOT BASED ON ANY ENTRIES IN THE SEIZED DOCUMENTS. IN THIS RECEIPT & PA YMENT ACCOUNT THE ASSESSEE HAS SHOWN ACCUMULATION OF CASH BALANCE ON ACCOUNT OF RECEIPTS FROM SALE OF FLATS AND SHOPS OF HIS VARIOUS PROJECT S FOR WHICH NO EVIDENCE WAS FOUND IN THE SEIZED DOCUMENTS AND FOR WHICH NO ENTRIES 29 ITA NO.408/PN/2007 ARE MADE IN THE REGULAR BOOKS OF ACCOUNT. HENCE THE ACCUMULATED CASH BALANCE SHOWN BY ASSESSEE IN THESE RECEIPT & PAYMENT A CCOUNT WAS TREATED AS NOT PROVED. THEREFORE HE TREATED THE AGGRE GATE AMOUNT OF ALL THE 5 ABOVE FIGURES AMOUNTING TO RS.46,87,111/- (I.E. 30,000 +10,12,111 + 3,05,000 + 1,00,000 + 32,40,000) AS UNDISCLOSED EXPENDITURE AND UNDISCLOSED INVESTMENT OF THE ASSESSEE. 55. THE ASSESSEE HAS CLAIMED TELESCOPING BENEFIT IN HIS LET TER DATED 18-10-2004. THE AO NOTED THAT OUT OF THE FUNDS AVAILABLE OF RS.51,96,944/- THE BENEFIT IN RESPECT OF RS.41,10,000/- HAS A LREADY BEEN CONSIDERED IN RESPECT OF PAYMENT TO SHRI. JANARDAN R.KAPSE. THE REMAINING FUNDS OF RS.10,86,944/- ARE STILL AVAILABLE FOR SUCH INVESTMENTS AND EXPENSES. SINCE THE ABOVE 5 FIGURES OF EX PENDITURE AND INVESTMENTS ARE IN THE SUBSEQUENT PERIOD THE BENEFIT OF A VAILABILITY OF SUCH FUNDS OF RS.10,86,944/- WAS ALLOWED TO THE ASSESSEE FROM THE TOTAL AMOUNT OF RS.46,87,111/-. THE REMAINING AMOUNT OF RS.36,00,167 /- IN RESPECT OF SUCH UNDISCLOSED EXPENDITURES AND INVESTMENTS WAS TREATED BY HIM AS UNEXPLAINED AND WAS TAXED AS UNDISCLOSED INCOM E OF THE ASSESSEE FOR THE BLOCK PERIOD. 56. BEFORE CIT(A) THE ASSESSEE CHALLENGED VARIOUS ADDITIONS MADE BY THE AO BY STATING AS UNDER : 'AS ALREADY EXPLAINED AT PARA 5 AND 9 ABOVE, APPELLA NT HAD PREPARED RECEIPTS AND PAYMENTS ALES OF UNDISCLOSED TRANSACTIONS FOR THE ENTIRE BLOCK PERIOD AND RETURNED THE UNDISCLOSED INCOME ACCORDINGL Y. THE RECEIPTS CLAIMED IN THE RECEIPTS & PAYMENTS ALES HAVE BEEN CON FIRMED BY THE AO. BY SUMMONING THE VARIOUS UNIT HOLDERS OF THE RESIDENTIAL C UM COMMERCIAL PROJECTS FLOATED BY THE APPELLANT, EITHER AS HIS BUILD ERSHIP PROJECT OR CONTRACTING PROJECT. THE A. O. HAS ALSO CONFIRMED THE RECEIPTS SHOWN IN THE RECEIPTS & PAYMENTS ALES BY CALLING RELEVANT INFORMAT ION FROM THE CONCERNED CO-OPERATIVE SOCIETIES. FROM THESE AND OTH ER RECEIPTS, APPELLANT HAS CLAIMED CERTAIN PAYMENTS MADE. HOWEVER, THE AO. H AS NOT ACCEPTED THE SOURCES OF FUNDS, AS SHOWN IN THE RECEIPTS & PAYMENTS A/CS. , BY TREATING THEM AS NOT PROVED AND THEREFORE, HAS ASSESSED FOLLOWING PAYMENTS AS UDI OF APPELLANT 30 ITA NO.408/PN/2007 I. PAYMENTS TO SHREE H.B. BOOB RS.30,000/- II. PAYMENTS WITHOUT CORRESPONDING SOURCES AT PAGODA SITE RS.10,12,111/- III. PAYMENT TO MRS. SAKINABEE NOOR MOHAMMAD MULLA AGAINST PROPERTY AT S.NO.44 & 53 OF NASHIK RS.3,05,000/- IV. MYANMAR TOUR EXPENSES RS.1,00,000/- V. DEPOSITS IN HUFS ORIENTAL BANK OF COMMERCE A/C.(ACTUAL ADDITION OF RS.32,40,000/-) AGAINST THE TOTAL UNEXPLAINED PAYMENTS/INVESTMENT LISTE D ABOVE OF RS.46, 87,111/-, THE A.O. HAS ALLOWED CREDIT FOR BALANCE OF FUNDS OF RS.10,86,944/- RELEASED FROM INVESTMENT OF RS.49,00, 000/- AS PER PAG E NO. 12 OF ANNEXURE A-25 AND TREATED THE BALANCE AMOUNT OF RS.36,00,167/ - AS UDI IN THE HANDS OF APPELLANT ' 57. HOWEVER, THE CIT(A) WAS NOT SATISFIED WITH THE EXPLANAT ION GIVEN BY THE ASSESSEE. HE CALLED FOR A REMAND REPORT FROM THE AO WHO VIDE HIS REMAND REPORT DATED 05-08-2005 HAS SUBMITTED AS UNDER : 'THE CLAIM OF THE APPELLANT THAT THE A. O. HAS CONFI RMED RECEIPTS CLAIMED BY ASSESSEE IN HIS RECEIPT & PAYMENT ACCOUNT ENCLOSED WITH HIS BLOCK RETURN IS NOT CORRECT. THE A. O. HAS NOT CONFIRMED THE RECEIPT S SHOWN BY THE ASSESSEE IN HIS RECEIPTS & PAYMENTS ACCOUNTS. IN THE BLOCK ASSESSMEN T. THE A. O. HAS NOT ACCEPTED THE RECEIPT & PAYMENT ACCOUNT SUBMITTED BY THE ASSESSEE ALONG WITH THE BLOCK RETURN. THIS IS SPECIFICALLY MEN TIONED IN PARA 8. 3 OF THE BLOCK ASSESSMENT ORDER. THEREFORE, THE ARGUMENT OF' THE APPELLANT THAT THE A.O. HAS NOT CONFIRMED THE CLAIM OF THE APPELLANT REGARDING THE AVAILABILITY OF FUNDS FROM PROJECTS & RENT INCOME IS NOT CORRECT. IT IS MENTIONED IN BLOCK ASSESSMENT ORDER IN PARA 8.3 THAT THE VARIOUS AMOUNTS AND RECEIPTS CREDITED IN THE SAID RECEIPT & PAYMENT ACCOUNT ARE NOT SUPPORTED BY ANY ENTRIES IN THE SEIZED MATERIAL AND HENCE THEY ARE IMAGINARY. TH E A.O . HAS CONFIRMED FROM THE MEMBERS OF VIJAYRAJ CO-OP HOUSING SOCIETY, GAUTAM PARK CO-OP HOUSING SOCIETY & VIJAYGOPAL CO-OP HOUSING SOCIETY THE PAYMENTS TO THE SOCIETY AND NOT TO THE APPELLANT. THE SAY OF THE ASSESSEE THAT THE A.O HAS TREATED THE AMOUNT OF RS.36,00,167/- AS UDI OF THE AP PELLANT AFTER GIVING SET-OFF OF AMOUNT OF RS.10,86,944/- WHICH WAS REMAINE D BALANCE OUT OF THE FOLLOWING ADDITION TO HIS UDI (AFTER CONSIDERING THE UNEXPLAINE D INVESTMENT OF RS.49 LAKHS IS CORRECT : I. PAYMENTS TO SHREE H.B. BOOB RS.30,000/- II. PAYMENTS WITHOUT CORRESPONDING SOURCES AT PAGODA SITE RS.10,12,111/- III. PAYMENT TO MRS. SAKINABEE NOOR MOHAMMAD MULLA AGAINST PROPERTY AT S.NO.44 & 53 OF NASHIK RS.3,05,000/- IV. MYANMAR TOUR EXPENSES RS.1,00,000/- 31 ITA NO.408/PN/2007 V. DEPOSITS IN HUFS ORIENTAL BANK OF COMMERCE ACCOUNT RS.32,40,000/- -------------------- TOTAL RS.46,87,111/- LESS RS.10,86,944/- ------------------- BALANCE RS.36,00,167/- ------------------- 58. SUBSEQUENTLY, IN RESPONSE TO THE COMMENTS OF THE A O, THE ASSESSEE ALSO MADE SUBMISSIONS FROM TIME TO TIME ON VARIOU S ISSUES. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE A ND THE REMAND REPORT OF THE AO THE CIT(A) UPHELD THE ADDITION MADE BY THE AO TO THE EXTENT OF RS.36,00,167/- BY OBSERVING AS UNDER : 1 3.6 I HAVE CAREFULLY PERUSED THE RELEVANT PARAS OF T HE ASSESSMENT ORDER, THE SUBMISSIONS OF THE APPELLANT, THE REMAND REPORT, TH E REJOINDER FILED BY THE APPELLANT, THE EXHIBITS, ANNEXURES IN SUPPORT THEREOF , ETC. IT IS SEEN THAT THE A.O. HAS METICULOUSLY EXAMINED THE ISSUES AND THE ITEMS COMPRI SED IN THE TOTAL ADDITION OF RS. 36,00,167/-. THE EXISTENCE OF HUF OF THE APPELLANT DURING A.Y. 1994-95 AND FILING OF WEALTH-TAX RETURN FOR A.Y. 19 97-98 CANNOT SIMPLY SUBSTANTIATE THE SUBSEQUENT INCOME EARNED, ITS NATURE, EXPENSES, INVESTMENTS MADE, THE GENUINENESS OF THE TRANSACTIONS ETC., EFFEC TED BY THE APPELLANT AND/OR HIS HUF, 7/12 EXTRACTS ARE ONLY DOCUMENTS RELAT ED TO THE LAND HOLDINGS AND NOT THE QUANTUM OF INCOME GENERATED FROM SUCH LA ND HOLDINGS. IT IS FOR THE APPELLANT TO SUBSTANTIATE ITS CLAIM WITH THE SUPPORT OF BANK ACCOUNTS, DOCUMENTS HAVING STATUTORY BACKING, REGISTERED AND/OR OTHER DOCUMENTS SUBMITTED TO VARIOUS STATUTORY AUTHORITIES, ETC. THE A .O. HAS ALREADY ALLOWED TO THE APPELLANT THE TELESCOPIC BENEFIT TO THE EXTENT O F RS. 41,10,000/-. THE APPELLANT'S ARGUMENT THAT FOR EACH AND EVERY ADDITIO N, A TELESCOPIC BENEFIT MAY BE ALLOWED IS NOT BASED ON ANY CONCRETE WORKING WITH FIGURES IN RESPECT OF THE GROUP CASES, INTER ALIA THE INTER-RELATION OF THE GEN ERATION OF FUND AND ITS UTILIZATION. THE ONUS IS ON THE APPELLANT TO SUBSTANTI ATE HIS CLAIM FOR TELESCOPIC BENEFIT WITH THE SUPPORT OF TRANSPARENT DATA RELATED TO THE GROUP OF CASES, THE QUANTUM OF UNDISCLOSED INCOME DECLARED IN THE GROUP C ASES, AS TO HOW AND IN RESPECT OF WHICH ISSUE THE TELESCOPIC BENEFIT IS WARRANT ED, ETC. I AM SATISFIED THAT ON THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THERE WARRANTS NO INTERFERENCE WITH THE ACTION OF THE A.O. IN THE RESULT, THE ADDITION STANDS CONFIRMED AND GROUND NO.8 DISMISSED. 59. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 60. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY OPPOSED THE ORDER OF THE CIT(A). HE SUBMITTED THAT SINCE THE ASSESSEE WAS ENGAGED IN REAL E STATE 32 ITA NO.408/PN/2007 BUSINESS ACTIVITIES PRIOR TO THE DATE OF SEARCH AND PRIOR TO THE BEGINNING OF THE BLOCK PERIOD, ATLEAST SOME CREDIT SHOULD BE GIVEN T O THE ASSESSEE ON ACCOUNT OF OPENING CASH BALANCE. HE FURTHER SUBMITTED THAT WHEN THE CASH DEPOSITS WERE MADE IN THE ORIENTAL BANK OF COM MERCE WHICH BELONGS TO HUF, THE AO WAS NOT JUSTIFIED IN MAKING ADDITION IN THE HANDS OF THE INDIVIDUAL. HE ACCORDINGLY SUBMITTED THAT SUIT ABLE DIRECTION MAY BE GIVEN. 61. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 62. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE AO IN THE INSTANT CASE MADE ADDITION OF RS.36,00,167/- OUT OF THE TOTAL AMOUNT OF RS.46,87 ,111/- ON THE GROUND THAT THE ASSESSEE COULD NOT EXPLAIN THE SOU RCE FOR THE EXPENDITURE/INVESTMENTS. WE FIND THE LD.CIT(A) CONFIRMED THE ADDITION THE DETAILS OF WHICH HAS ALREADY BEEN GIVEN IN THE PRECED ING PARAGRAPH. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE T HAT ATLEAST SOME FURTHER BENEFIT SHOULD BE GIVEN ON ACCOUNT OF OPENIN G CASH BALANCE SINCE THE ASSESSEE WAS ENGAGED IN BUSINESS AND SAME AMOUNT MUST HAVE BEEN SAVED BY HIM. HOWEVER, WE DO NOT FIND AN Y MERIT IN THE ABOVE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE. HE WAS NOT IN A POSITION TO EXPLAIN AS TO HOW THE ORDER OF THE CIT(A) IS ER RONEOUS ESPECIALLY WHEN HE HAS CONSIDERED EVERY ASPECT ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE. SINCE THE ORDER OF THE CIT(A) IN THE INSTANT CASE IS A REASONED ONE, THEREFORE, IN THE ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE WE DO NOT FIND ANY INFIRMITY IN THE ORDER 33 ITA NO.408/PN/2007 OF THE CIT(A) ON THIS ISSUE. ACCORDINGLY, THE SAME IS UPHELD AND THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE IS DISMISSED. 63. GROUND OF APPEAL NO.11 THE ASSESSEE HAS CHALLENGED T HE ADDITION OF RS.21,000/- ON ACCOUNT OF UNEXPLAINED PAYMENT TO SHRI D .C. DHONGADE AND OTHERS. 64. FACTS OF THE CASE IN BRIEF ARE THAT DURING THE COUR SE OF SEARCH ANNEXURE MARKED A-15 WAS SEIZED FROM OFFICE PREMISES OF M/ S. PRAKASH CONSTRUWELL PVT. LTD. AS PER PAGE NO.26 TO 28 WHICH IS S AUDA PAVATI DATED 27-03-1997 BETWEEN THE ASSESSEE AND SHRI DATTA TRAYA G. DHONGADE AND OTHERS OF DINDORI, THE ASSESSEE HAS PAID C ASH OF RS.21,000/- ON 27-02-1997 FOR THE PURCHASE OF AGRICULTURA L LAND AT MOKHADA DISTRICT, THANE. THE ASSESSEE HAS REFLECTED THE AMOUNT OF RS.21,000/- IN HIS RECEIPT AND PAYMENT ACCOUNT ENCLOSED W ITH BLOCK RETURN. HOWEVER, AS DISCUSSED EARLIER THE CREDIT ENTRIES AND RECEIPTS SHOWN IN THE RECEIPT & PAYMENT ACCOUNT ARE NOT BASED ON ANY ENTRIES IN THE SEIZED DOCUMENTS. IN THIS RECEIPT & PAYMENT ACCOUN T THE ASSESSEE HAS SHOWN ACCUMULATION OF CASH BALANCE ON ACCOUNT OF RE CEIPTS FROM SALE OF FLATS AND SHOPS OF HIS VARIOUS PROJECTS FOR WHICH NO EVIDENCE WAS FOUND IN THE SEIZED DOCUMENTS AND FOR WHICH NO ENTRIES AR E MADE IN THE REGULAR BOOKS OF ACCOUNTS. HENCE THE ACCUMULATED CASH BALANCE SHOWN BY ASSESSEE IN THIS RECEIPT & PAYMENT ACCOUNT WAS TREA TED BY THE AO AS NOT PROVED. THEREFORE, THE CASH PAYMENT OF RS.21,000/- PAID TO SHRI D.G. DHONGADE AND OTHERS IN THE F.Y. 1997-98 WAS TREATED BY HIM AS UNEXPLAINED AND TREATED THE AMOUNT OF RS.21,000/- AS UND ISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD. 34 ITA NO.408/PN/2007 65. BEFORE CIT(A) THE ASSESSEE SUBMITTED AS UNDER : AS PER SEIZED PAPERS PAGE NOS. 26 TO 28 OF ANNEXURE A- 15, RS.21,000/- WERE PAID TO SHRI D.G. DHONGADE ON 27-03-1997 AGAIN ST THE TRANSACTION OF AGRICULTURAL LAND AT DANDWAL, TAL. MOKHADA, DIST. TH ANE. THIS PAYMENT IS NOT RECORDED IN THE REGULARLY MAINTAINED BOOKS OF ACCOUN T OF APPELLANT. HOWEVER, THE SAME IS DULY CONSIDERED IN THE RECEIPTS & PAYMENTS A/C. OF UNDISCLOSED TRANSACTIONS FOR F.Y. 1996-97. THE AO HAS H OWEVER, FOR THE REASONS ALREADY STATED, REJECTED THE SOURCE OF FUNDS STAT ED IN THE RECEIPTS & PAYMENTS A/C OF UNDISCLOSED TRANSACTIONS. HOWEVER, AS A LREADY STATED, THE AOS THIS ACTION IS NOT CORRECT AND THEREFORE, IT IS PR AYED THAT THE SAID PAYMENT OF RS.21,000/- MAY PLEASE NOT BE CONSIDERED A S SEPARATE UDI IN THE HANDS OF APPELLANT. 66. BASED ON THE ARGUMENTS OF THE ASSESSEE THE LD.CIT (A) CALLED FOR A REMAND REPORT FROM THE AO WHO STATED AS UNDER : THE AO HAS MADE AN ADDITION OF RS.21,000/- TO THE UD I OF THE ASSESSEE ON ACCOUNT OF UNEXPLAINED PAYMENT OF RS.21,000/- TO SHR I D.G. DHONGADE & OTHERS DONDORI, FOR THE PURCHASE OF LAND ON 27-03-199 7 AS PER PAGE NO.26 TO 28 OF SEIZED ANNEXURE A-15. THE AMOUNT OF RS.21,000/ - WAS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT OF THE APPELLANT. AS D ISCUSSED IN PARA 6 ABOVE AND PARA 10 OF THE BLOCK ASSESSMENT ORDER, THE AO HAS R IGHTLY TREATED THE AMOUNT OF RS.21,000/- AS UDI OF THE ASSESSEE. THEREFORE , THE ARGUMENT OF THE ASSESSEE MAY PLEASE BE REJECTED. 67. AFTER CONSIDERING THE REMAND REPORT OF THE AO AND T HE REJOINDER OF THE ASSESSEE TO SUCH REMAND REPORT AS WELL AS SUBMISSIONS MADE BY HIM FROM TIME TO TIME, THE LD.CIT(A) CONFIRMED THE ADDITION MADE B Y THE AO BY OBSERVING AS UNDER : 16.4 I HAVE CAREFULLY GONE THROUGH THE FINDINGS OF THE A.O. AND THE ARGUMENTS OF THE APPELLANT. THERE IS NO DISPUTE THAT THIS CASH PAYMENT IS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. THIS P AYMENT HAS COME TO LIGHT FROM THE CONTENTS OF PAGES 26 TO 28 OF ANNEXURE A-15 AND THE CREDIT ENTRIES AND RECEIPTS SHOWN IN THE RECEIPTS AND PAYMENT ACCOUNT ARE NOT BASED ON ANY ENTRIES IN THE SEIZED DOCUMENTS. THE SOURC ES OF FUNDS APPEARING IN THE RECEIPTS & PAYMENTS A/C. OF UNDISCLOSE D TRANSACTIONS ARE REMAINED UNSUBSTANTIATED. ON THE FACTS AND CIRCUMSTANC ES OF THE CASE AS STATED, I DECLINE TO INTERFERE WITH THE ACTION OF TH E A.O. THIS ADDITIONAL GROUND STANDS REJECTED. 68. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 35 ITA NO.408/PN/2007 69. AFTER HEARING BOTH THE SIDES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). HE HAS GIVEN A CATEGORICAL FINDING THAT THIS CASH PAYMENT OF RS.21,000/- IS NOT RECORDED IN THE REGULAR BO OKS OF ACCOUNT. THIS PAYMENT HAS COME TO LIGHT FROM THE SEIZED DOCUMENTS . THE CREDIT ENTRIES AND RECEIPTS SHOWN IN THE RECEIPT AND PAYMENT A CCOUNT ARE NOT BASED ON ANY ENTRY IN THE SEIZED DOCUMENT. SINCE THE A SSESSEE COULD NOT SUBSTANTIATE WITH ANY DOCUMENTARY EVIDENCE REGARDIN G THE SOURCE OF THE FUNDS APPEARING IN THE RECEIPT AND PAYMENT ACCOU NT OF UNDISCLOSED TRANSACTIONS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 70. GROUND OF APPEAL NO.L2 BY THE ASSESSEE READS AS UNDER : 12. THE LEARNED CIT (A) ERRED IN NOT ALLOWING ASSESSE E'S ALTERNATE PLEA FOR THE SETOFF AGAINST SUBSEQUENT UTILISATION OF RS 10,00 ,000/-. RELEASED FROM THE PAYMENTS MADE TO THE CREDITORS FOR RS 25,00,000/- (CONTESTED AT GROUND NO.6 ABOVE), AFTER UPHOLDING THE ASSESSMENT OF RS. 25,0 0,000/- AS UDI IN THE HANDS OF ASSESSEE THEREFORE. IF THE GROUND NO.6 IS NOT AL LOWED, THEN IT IS ALTERNATIVELY PRAYED TO ALLOW THE SETOFF OF RS 10,00, 000/- RELEASED ON PAYMENTS TO THE CREDITORS, AGAINST THE SUBSEQUENT UTILIZ ATION. 71. AFTER HEARING BOTH THE SIDES, WE FIND WE HAVE ALREADY G RANTED RELIEF OF THE ABOVE AMOUNT WHILE ADJUDICATING GROUNDS OF APP EAL NO.6 TO 6.1. THEREFORE, THIS GROUND BY THE ASSESSEE BECOMES INFRU CTUOUS AND ACCORDINGLY THE SAME IS DISMISSED. 72. GROUND OF APPEAL NO.13 BY THE ASSESSEE READS AS UNDER : 13. THE LEARNED CIT(A) ERRED IN NOT ALLOWING THE SET-OFF/TELESCOPING BENEFIT PROPERLY IN RESPECT OF THE VARIOUS ADDITIONS C ONFIRMED BY HIM. 73. AFTER HEARING BOTH THE SIDES WE FIND NO MERIT IN THE AB OVE GROUND BY THE LD. COUNSEL FOR THE ASSESSEE. HE COULD NOT EXPLA IN AS TO HOW THE CIT(A) HAS NOT ALLOWED PROPER SET OFF/TELESCOPING BENEFIT ON ACCOUNT OF VARIOUS ADDITIONS CONFIRMED BY HIM. THEREFORE, THIS GROUND B Y THE 36 ITA NO.408/PN/2007 ASSESSEE IS DISMISSED BEING DEVOID OF ANY MERIT. 74. GROUND OF APPEAL NO.14 BY THE ASSESSEE READS AS UNDER : 14. THE LEARNED CIT(A) ERRED IN NOT ALLOWING THE S ET-OFF OF THE BENEFIT OF THE ADDITION OF RS.6,24,000/- MADE IN THE HANDS OF M/ S. PRAKASH CONSTROWELL PVT. LTD. FOR PAYMENTS TO ASSESSEE. IT IS PRAYED THAT I F THE ADDITION IS RETAINED IN THE HANDS OF M/S. PRAKASH CONSTROWELL PVT. LTD., THEN THE BENEFIT OF SET-OFF OF THE SAME IN THE HANDS OF THE ASSESSEE BE AL LOWED FOR SUBSEQUENT UTILIZATION. 75. AFTER HEARING BOTH THE SIDES, WE FIND THE LD.CIT(A) VIDE P ARA 17 OF HIS ORDER REFUSED TO ENTERTAIN THE ABOVE GROUND BY THE ASSESSEE BY OBSERVING AS UNDER : 17. IN THE REJOINDER DT.30-08-2005, THE APPELLANT RAISED A PLEA THAT IF IN THE CASE OF M/S. PRAKASH CONSTROWELL PVT. LTD., AN ADD ITION OF RS.6,24,000/- MADE FOR PAYMENTS MADE TO APPELLANT IS RETAINED THEN THE SAID AMOUNT BE CONSIDERED AS AVAILABLE FOR SUBSEQUENT UNRECORDED UTILI ZATION/INVESTMENT IN THE HANDS OF APPELLANT. THIS IS ONLY A CONTINGENCY , WHICH IS AT PRESENT NOT APPELLABLE. THE SAME IS HEREBY REFUSED TO BE ENTERTA INED. 76. VIDE ORDER OF EVEN DATE WE HAVE ALREADY DECIDED THE APPEAL OF M/S. PRAKASH CONSTRUWELL PVT. LTD. WHEREIN THE PROFIT HAS BEEN ESTIMATED. THEREFORE, THIS GROUND BY THE ASSESSEE BECOM ES INFRUCTUOUS AND ACCORDINGLY THE SAME IS DISMISSED. 77. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27-06-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED : 27 TH JUNE, 2016. 37 ITA NO.408/PN/2007 & '#)! *! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A ) - I, NASHIK 4. 5. 6. THE CIT CENTRAL, NAGPUR $ ''(, (, / DR, ITAT, B PUNE; - / GUARD FILE. / BY ORDER , // TRUE COPY // // TRUE COPY // // $ ' //TRUE C // /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE