SUDHAKAR G. SARODE., THANE V. ACIT WD 26(1), MUMBAI

ITA 4470/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3680 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 24-11-2010
• Assessment Year: misc
• Appeal Filed On: 28-07-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D SONGATE
• Keywords: Unexplained investment; Source of fund; Additional evidence
• Section: 131

Judgement Text

1 ITA4468 TO 4470/MUM/09, SHRI SUDHAKAR G. SARODE IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E BEFORE SHRI P.M. JAGTAP, A.M. AND SHRI V. DURGA RAO , JM ITA NO. 4468 TO 4470/MUM/09 ASSESSMENT YEARS 1999-2000, 2002-03 & 2003-04 SHRI SUDHAKAR G. SARODE, 102/103, PARMANAND, BEHIND ASHOK NAGAR, AMBADI ROAD, VASAI ROAD (W), THANE. PAN ACPPS2981R VS. A.C.I.T. WARD 26(1), MUMBAI. APPELLANT RESPONDENT APPELLANT BY SHRI PRAMOD SHINGTE RESPONDENT BY SHRI D. SONGATE ORDER PER P.M. JAGTAP, A.M. THESE THREE APPEALS FILED BY THE ASSESSEE AGAINST THREE SEPARATE ORDERS PASSED BY THE LD. CIT(A)- 25, MUMBAI FOR A.Y. 1999-2000, 2002 -03 AND 2003-04 INVOLVE SOME COMMON ISSUES AND THE SAME THEREFORE HAVE BEEN HEAR D TOGETHER AND ARE BEING DISPOSED OF BY A SINGLE CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE FOR A.Y. 1999-2000 BEING ITA NO. 4468/MUM/09 WHICH IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) -25 MUMBAI DATED 14.5.09. 3. GROUND NO. 1 OF THIS APPEAL RELATES TO T HE ADDITION OF ` 1,25,000/- MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF CASH FOUND AND SEIZED FROM THE LOCKERS BELONGING TO FATHER-IN-LAW OF THE ASSESSEE TREATING THE SAME AS UNEXPLAINED MONEY OF THE ASSESSEE. 2 ITA4468 TO 4470/MUM/09, SHRI SUDHAKAR G. SARODE 4. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL WHO WAS IN GOVERNMENT SERVICE AS DY. SECRETARY IN MAHARASHTRA PUBLIC SERVICE COMM ISSION (MPSC). WHEN THE MPSC SCAM BROKE OUT, THE ASSESSEE WAS SEARCHED BY ANTI C ORRUPTION BUREAU (ACB) ON 28.6.02. THE RESIDENCE OF THE FATHERIN-LAW OF THE ASSESSEE WAS ALSO SIMULTANEOUSLY SEARCHED. DURING THE COURSE OF THE SAID OPERATION, A BANK LOC KER WITH BANK OF MAHARASHTRA, CANADA CONER, NASIK WAS FOUND TO BE STANDING IN THE JOINT NAMES OF ASSESSEES FATHER-IN-LAW, MOTHER-IN-LAW AND BROTHER-IN-LAW. THE SAID LOCKER WAS ALSO SEARCHED BY ACB DURING THE COURSE OF SEARCH IN WHICH CASH OF ` 1,25,000/- AND GOLD JEWELLERY WORTH ` 2,28,264/- WERE FOUND AND SEIZED. AS NOTED BY THE A.O. IN THE ASSES SMENT ORDER, THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE TO ESTABLISH THAT THE SAID JEW ELLERY AND CASH WERE BELONGING TO HIS RELATIVES. HE, THEREFORE, CONSIDERED THE SAME AS U NEXPLAINED MONEY BELONGING TO THE ASSESSEE AND THE AMOUNT OF ` 3,53,264/- WAS ADDED BY HIM TO THE TOTAL INCOME O F THE ASSESSEE. DURING THE COURSE OF APPELLATE PROCEEDIN GS BEFORE THE LD. CIT(A), IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT HIS FATHER -IN-LAW SHRI RAMCHANDRA VAGHULADE HAD WRITTEN A LETTER TO ACB CLAIMING THE OWNERSHIP OF JEWELLERY AS WELL AS CASH FOUND FROM THE LOCKER AND EXPLAINING THE SOURCE THEREOF. AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AND PERUSING THE REL EVANT MATERIAL ON RECORD INCLUDING THE LETTER WRITTEN BY THE FATHER-IN-LAW OF THE ASSESSEE TO THE ACB DTD. 6.8.02, THE LD. CIT(A) DELETED THE ADDITION OF ` 2,28 ,264/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED JEWELLERY FOUND FROM THE BANK LOCKER BUT SUSTAINED THE ADDITION OF ` 1,25,000/- MADE ON ACCOUNT OF UNEXPLAINED CASH FOR THE FOLLOWING REASO NS GIVEN IN PARA NO. 5.3 OF HIS IMPUGNED ORDER:- I HAVE GONE THROUGH THE SUBMISSIONS AND FIND THAT P ANCHANAMA DRAWN BY THE ACB SHOWS JEWELLERY WORTH ` 2,28,264/- AND CASH OF ` 1,25,000/- WHICH IS FOUND AND SEIZED FROM THE LOCKER AT THE BANK OF MAH ARASHTRA, NASIK. A.O> ADDED BOTH THE AMOUNTS. I HAVE GONE THROUGH THE LETTER G IVEN BY FATHER-IN-LAW OF THE APPELLANT TO ACB ON 6.8.2002 IN WHICH HE EXPLAINED JEWELLERY RECEIVED BY HIM IN HIS MARRIAGE AND HIS SONS DURING THEIR MARRIAGES. HE IS NOT ABLE TO EXPLAIN PROPERLY IN THE LETTER ABOUT THE CASH. IT IS WORTHWHILE TO MENTION THAT THE APPELLANT KEPT CASH OF ` 8,94,500/- AND FIXED DEPOSIT OF ` 24 LAKHS IN THE LOCKER NO. 2114 WITH KAVITA 3 ITA4468 TO 4470/MUM/09, SHRI SUDHAKAR G. SARODE VALUT WHICH WAS IN THE NAME OF THE APPELLANTS MOTH ER-IN-LAW AND BROTHER-IN-LAW. THIS LOCKER IS USED BY THE APPELLANT FOR KEEPING HI S THINGS AS IS CONFIRMED BY THE APPELLANTS FATHER-IN-LAW IN HIS LETTER ADDRESSED T O ACB ON 6.8.2002. THIS SHOWS THAT THE APPELLANT IS OPENING LOCKERS IN THE NAME O F FAMILY MEMBERS BELONGING TO HIS WIFES PARENT SIDE AND THEN KEEPING HIS UNACCOUNTED INVESTMENTS THERE. AS THE CASH OF ` 1,25,000/- FOUND IN THE LOCKER WITH BANK OF MAHARA SHTRA , NASIK IS NOT EXPLAINED FROM THE SOURCE OF HIS IN-LAWS, CASH FOUN D THERE IS TREATED AS UNEXPLAINED INCOME OF THE APPELLANT AND HENCE ADDITION TO THE E XTENT OF ` 1,25,000/- IS CONFIRMED. ADDITION OF JEWELLERY OF RS. 2,28,264/- IS DELETED AS THE JEWELLERY IS EXPECTED TO BE BELONGING TO SHRI RRAMCHANDRA VAGHUL ADE, HIS WIFE AND THREE DAUGHTER-IN-LAWS. NO OTHER JEWELLERY WAS FOUND IN THE SEARCH FROM THE RESIDENCE OF SHRI RAMCHANDRA VAGHULADE. THUS THIS GROUND OF APP EAL STANDS ALLOWED PARTLY. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SID ES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE JEWELLE RY WORTH ` 2,28,264/- FOUND FROM THE BANK LOCKER OF ASSESSEES FATHER-IN-LAW AND OTHER R ELATIVES WAS TREATED AS EXPLAINED BY THE LD. CIT(A) ON THE BASIS OF EXPLANATION OFFERED BY T HE SAID FATHER-IN-LAW IN HIS LETTER DTD. 6.8.02 SENT TO ACB. HE, HOWEVER, TREATED THE CASH OF ` 1,25,000/- FOUND FROM THE SAID LOCKER AS UNEXPLAINED OBSERVING THAT THE SAME WAS N OT PROPERLY EXPLAINED IN THE SAID LETTER. AT THE TIME OF HEARING BEFORE US, THE LEAR NED COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO A COPY OF THE SAID LETTER (TRANSLA TED IN ENGLISH) AT PAGE NO. 29 TO 33 OF HIS PAPER BOOK AND A PERUSAL OF THE SAME SHOWS THAT THE EXPLANATION IN RESPECT OF CASH OF ` 1,25,000/- FOUND FROM THE BANK LOCKER WAS ALSO SPEC IFICALLY OFFERED BY THE FATHER-IN-LAW OF THE ASSESSEE BY STATING THAT A SUM OF ` 1 LAC WAS RECEIVED IN CASH AGAINST THE SALE OF HIS PLOT AND THE BALANCE AMOUNT OF ` 25,000/- WAS RECEIVED ON ACCOUNT OF ENCASHMENT OF FIXED DEPOSIT WITH BANK. SINCE THE SAID EXPLANATIO N SPECIFICALLY OFFERED IN RESPECT OF CASH OF ` 1,25,000/- FOUND FROM THE BANK LOCKER OF THE FATHE R IN-LAW OF THE ASSESSEE HAS NOT BEEN CONSIDERED AND EXAMINED EITHER BY THE A.O. OR BY THE LD. CIT(A), WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE A.O. FOR DECIDING THE SAME AFRESH AFTER TAKING INTO CONSIDERATION THE EXPLANATION OFFERED BY THE FATHER-IN-LAW OF THE ASSESSEE IN HIS LETTER DATED 6.8.02 WRITTEN TO ACB. GROUND NO. 1 OF THE APPEAL OF THE ASSESSEE IS ACCORDINGLY TREA TED AS ALLOWED FOR STATISTICAL PURPOSE. 4 ITA4468 TO 4470/MUM/09, SHRI SUDHAKAR G. SARODE 7. GROUND NO. 2 RELATES TO THE ADDITION OF RS . 65,000/- MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF UNEXPLAIN ED INVESTMENT FOUND TO BE MADE BY THE ASSESSEE IN CERTAIN HOUSE-HOLD ARTICLES. 8. DURING THE COURSE OF SEARCH CONDUCTED BY TH E ACB, VARIOUS HOUSE-HOLD ARTICLES WERE FOUND AT THE RESIDENCE OF THE ASSESSEE. AS PE R THE INVENTORY OF THE SAID ITEMS PREPARED BY ACB, THE TOTAL VALUE WAS ARRIVED AT RS. 2,91,000/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE A.O., THE ASSESSE E EXPLAINED THAT THE SAID HOUSE-HOLD ITEMS WERE PURCHASED BY HIM OVER THE LAST 25 YEARS. NO DOCUMENTARY EVIDENCE IN SUPPORT OF THE SAID EXPLANATION, HOWEVER, WAS PRODUCED BY T HE ASSESSEE. THE A.O., THEREFORE, TREATED THE SAID HOUSE-HOLD ITEMS AS UNEXPLAINED IN VESTMENT OF THE ASSESSEE AND MADE ADDITION OF RS. 2,91,000/- TO THE TOTAL INCOME OF T HE ASSESSEE ON THIS ISSUE. BEFORE THE LD. CIT(A), THE ASSESEE FILED PURCHASE BILLS OF SEVERAL HOUSE-HOLD ITEMS AND ALSO FURNISHED THE CASH FLOW STATEMENT OF HIMSELF AND HIS WIFE FOR THE EARLIER YEARS TO SHOW THE SOURCE OF FUNDS UTILIZED TO PURCHASE THE SAID ITEMS. THE SAI D DOCUMENTS FILED BY THE ASSESSEE FOR THE FIRST TIME BEFORE HIM AS ADDITIONAL EVIDENCE WE RE FORWARDED BY THE LD. CIT(A) TO THE A.O. FOR VERIFICATION AND COMMENTS. THE A.O. , HOW EVER, DID NOT OFFER ANY COMMENTS TO THE LD. CIT(A) DESPITE SUFFICIENT OPPORTUNITY. THE LD. CIT(A), THEREFORE, PROCEEDED TO EXAMINE THE EXPLANATION OF THE ASSESSEE IN RESPECT OF EACH AND EVERY HOUSE-HOLD ITEMS WITH REFERENCE TO RELEVANT PURCHASE BILLS AND CASH FLOW STATEMENTS OF THE ASSESSEE AND HIS WIFE. ON SUCH EXAMINATION, HE HELD THAT THE INVEST MENTS MADE BY THE ASSESSEE IN HOUSE- HOLD ITEMS TO THE EXTENT OF RS. 65,000/- WAS NOT PR OPERLY EXPLAINED. HE, THEREFORE, SUSTAINED THE ADDITION OF RS. 2,91,300/- MADE BY TH E A.O. ON THIS ISSUE TO THE EXTENT OF RS. 65,000/-. 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SI DES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE CASH F LOW STATEMENTS OF THE ASSESSEE AND HIS WIFE WERE PREPARED AND FURNISHED BEFORE THE LD. CIT (A) IN ORDER TO EXPLAIN THE SOURCE OF FUNDS UTILIZED FOR MAKING THE INVESTMENT IN VARIOUS HOUSE-HOLD ITEMS FOUND DURING THE 5 ITA4468 TO 4470/MUM/09, SHRI SUDHAKAR G. SARODE COURSE OF SEARCH CONDUCTED BY THE ACB. ALTHOUGH AN OPPORTUNITY WAS GIVEN BY THE LD. CIT(A) TO THE A.O. TO VERIFY THE SAID DOCUMENTS, TH E LATER DID NOT AVAIL THE SAME. THE LD. CIT(A), THEREFORE, PROCEEDED TO EXAMINE THE EXPLANA TION OF THE ASSESSEE IN RESPECT OF HOUSE-HOLD ITEMS WITH REFERENCE TO THE PURCHASE BIL LS FILED BY THE ASSESSEE AND CASH FLOW STATEMENTS PREPARED AND FURNISHED BEFORE HIM AND FO UND ON SUCH EXAMINATION THAT THE INVESTMENT MADE BY THE ASSESSEE IN HOUSE-HOLD ITEMS ATLEAST TO THE EXTENT OF RS. 65,000/- WAS NOT PROPERLY EXPLAINED. AT THE TIME OF HEARING BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO NOT BEEN ABLE TO OFFER ANY CONVIN CING EXPLANATION IN RESPECT OF THE SAID HOUSE-HOLD ITEMS AND THIS BEING SO AND TAKING INTO CONSIDERATION THAT THE LD. CIT(A) HAS PASSED A WELL REASONED AND WELL DISCUSSED ORDER ON THIS ISSUE EXAMINING THE EXPLANATION OF THE ASSESSEE IN RESPECT OF EACH AND EVERY HOUSE- HOLD ITEMS, WE ARE OF THE VIEW THAT ADDITION MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED INVESTMENT FOUND TO BE MADE BY THE ASSESSEE IN HOUSE-HOLD ITEMS HAS BEEN RIGHTLY S USTAINED BY THE LD. CIT(A) TO THE EXTENT OF RS. 65,000/-. IN THAT VIEW OF THE MATTER, WE DI SMISS GROUND NO. 2 OF THE ASSESSEES APPEAL. 10. NOW WE SHALL TAKE UP THE APPEAL OF THE ASSE SSEE FOR A.Y. 2002-03 BEING ITA NO. 4469/MUM/09 WHICH IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) -25 MUMBAI DATED 16.6.09. 11. THE ISSUE RAISED BY THE ASSESSEE IN GROUND NO. 1 RELATES TO THE ADDITION OF RS. 4,85,000/- MADE BY THE A.O. AND CONFIRMED BY THE LD . CIT(A) ON ACCOUNT OF INVESTMENT ALLEGEDLY MADE BY THE ASSESSEE IN PURCHASE OF PLOT AT NASIK. 12. ACCORDING TO THE A.O., THE INFORMATION RECEIVED FROM ACB REVEAL THAT THE ASSESSEE HAS MADE INVESTMENT OF ` . 4,85,000/- ON 3.7.01 IN PURCHASE OF OPEN PLOT OF LAND AT HISS NO. 38 AT VILLAGE GANGAPUR, NASIK. IN A LE TTER DTD. 19.1.05 FILED BEFORE THE A.O., 6 ITA4468 TO 4470/MUM/09, SHRI SUDHAKAR G. SARODE THE ASSESSEE EXPLAINED THAT THE SAID PLOT OF LAND W AS THE SAME PLOT FOR WHICH DETAILS HAVE ALREADY BEEN PROVIDED BY HIM AT POINT NO. 6 I.E. LA ND AT SURVEY NO. 193 BEARING PLOT NO. 33 & 34. THE ASSESSEE EXPLAINED THAT THE VALUE OF THE SAID PLOT WAS ` . 24,144/- AS PER THE AGREEMENT DATED 19.8.92. SINCE THERE WAS A VAST DI FFERENCE IN THE DESCRIPTION GIVEN BY THE ACB AND THE DETAILS FILED BY THE ASSESSEE IN RE SPECT OF PLOT OF LAND AT SURVEY NO. 193, THE EXPLANATION OF THE ASSESSEE ON THIS ISSUE WAS N OT ACCEPTED BY THE A.O. AND HE PROCEEDED TO MAKE AN ADDITION OF ` . 4,85,000/- TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF UNEXPLAINED INVESTMENT MADE IN PURCHASE OF PLOT OF LAND AT HISS NO. 38 AT VILLAGE GANGAPUR, NASIK. DURING THE COURSE OF APPE LLATE PROCEEDINGS BEFORE THE LD. CIT(A), THE ASSESSEE TOOK A DIFFERENT STAND ON THIS ISSUE BY SUBMITTING THAT THE INVESTMENT OF ` . 2,81,000/- WAS MADE BY HIM FOR PURCHASE OF PLOT A T HISS NO. 38 AT VILLAGE GANGAPUR, NASIK AND THE SAID INVESTMENT WAS DULY RE FLECTED IN HIS CASH FLOW STATEMENT. IT WAS SUBMITTED THAT THE A.O., HOWEVER, ADOPTED TH E COST OF SAID LAND AT ` . 4,85,000/- ON THE BASIS OF CERTAIN INFORMATION STATED TO BE RECEI VED FROM ACB WHICH WAS NOT BASED ON ANY DOCUMENTARY EVIDENCE. THE ASSESSEE, HOWEVER, C OULD NOT PRODUCE THE COPY OF ANY AGREEMENT SHOWING COST OF PLOT PURCHASED BY HIM AT ` . 2,81,000/-. KEEPING IN VIEW THIS FAILURE OF THE ASSESSEE AND RELYING ON THE INFORMAT ION RECEIVED BY THE A.O. FROM ACB, THE LD. CIT(A) CONFIRMED THE ADDITION OF ` . 4,85,000/- MADE BY THE A.O. ON THIS ISSUE OBSERVING THAT THE ASSESSEE COULD NOT BE ABLE TO EX PLAIN THE SOURCE OF FUNDS INVESTED IN PURCHASE OF PLOT. 12. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AT THE TIME OF HEARING BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS TAKEN AN ALTOGETHER DIFFERENT STAND ON THIS ISS UE BY SUBMITTING THAT NO SUCH PLOT OF LAND AT HISS NO. 38 AT VILLAGE GANGAPUR, NASIK WAS EVER OWNED BY THE ASSESSEE. HE HAS SUBMITTED THAT THE INFORMATION STATED TO BE RECEIVE D BY THE A.O. FROM ACB ABOUT THE INVESTMENT ALLEGEDLY MADE BY THE ASSESSEE IN THE SA ID PLOT WAS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. HE HAS CONTENDED THAT AFFIDA VIT TO THIS EFFECT WAS ALSO FILED BY 7 ITA4468 TO 4470/MUM/09, SHRI SUDHAKAR G. SARODE THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEED INGS BEFORE THE LD. CIT(A). A PERUSAL OF THE IMPUGNED ORDER OF THE LD. CIT(A), HOWEVER, S HOWS THAT THERE IS NO REFERENCE TO ANY SUCH AFFIDAVIT FILED BY THE ASSESSEE AND ADMITTED B Y HIM AS ADDITIONAL EVIDENCE. IT IS ALSO OBSERVED THAT THE ASSESSEE HAS TAKEN DIFFERENT STAN D AT DIFFERENT STAGES WHILE OFFERING EXPLANATION IN RESPECT OF INVESTMENT OF ` . 4,85,000/- ALLEGEDLY MADE BY HIM IN PURCHASE OF PLOT AT HISS NO. 38 AT VILLAGE GANGAPUR, NASIK. HOWEVER, IN ORDER TO MAKE ADDITION TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF UNEX PLAINED INVESTMENT U/S 69, THE FACTUM OF SUCH INVESTMENT MADE BY THE ASSESSEE AND THE QUA NTUM THEREOF IS REQUIRED TO BE ESTABLISHED BY THE A.O. ON EVIDENCE. IN THIS REGAR D, IT IS OBSERVED THAT THE A.O. AS WELL AS THE LD. CIT(A) HAS MERELY RELIED ON THE INFORMATION RECEIVED FROM ACB TO INFER THE INVESTMENT ALLEGEDLY MADE BY THE ASSESSEE IN PURCHA SE OF PLOT AT HISS NO. 38 AT VIILAGE GANGAPUR, NASIK WITHOUT BRINGING ANY DOCUMENTARY EV IDENCE TO CORROBORATE THE SAME. WE, THEREFORE, DEEM IT FAIR AND PROPER AND IN THE I NTEREST OF JUSTICE TO SET ASIDE THE IMPUGNED ORDERS OF AUTHORITIES BELOW ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE A.O. WITH A DIRECTION TO DECIDE THE SAME KEEPING IN VIEW THE REQUIREMENTS OF THE PROVISIONS OF SECTION 69. GROUND NO.1 OF THIS APPEA L OF THE ASSESSEE IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 13. IN GROUND NO. 2, THE ASSESSEE HAS CHALLENGED TH E ADDITION OF ` . 2 LACS MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF UNEXPLAINED INVESTMENT ALLEGEDLY MADE IN GIVING CASH LOAN TO ONE MR. NITIN THAKUR. 14. THE ASSESSEE WAS FOUND TO HAVE GIVEN LOANS OF ` 15,000/-, ` 15,000/- AND ` 20,000/- TO ONE OF MR. NITIN THAKUR IN A.Y. 1997-98 , 1998-99 & 2000-01 RESPECTIVELY. IT WAS STATED BY THE ASSESSEE THAT THE SAID LOAN A MOUNTS HAVE ALREADY BEEN REPAID BY MR. NITIN THAKUR TO THE FORMERS WIFE IN F/Y 2001-02. IN ORDER TO VERIFY THIS STAND OF THE ASSESSEE, THE STATEMENT OF SHRI NITIN THAKUR WAS RE CORDED BY THE A.O. U/S 131 ON 13.2.06. 8 ITA4468 TO 4470/MUM/09, SHRI SUDHAKAR G. SARODE IN THE SAID STATEMENT, SHRI NITIN THAKUR STATED THA T HE HAD RECEIVED A LOAN OF ` 2 LACS FROM THE ASSESSEE IN THE MONTH OF SEPT. 2001 IN CASH AND THE SAME WAS SUBSEQUENTLY REPAID BY CHEQUE TO THE WIFE OF THE ASSESSEE AS PER THE INSTR UCTION OF THE ASSESSEE. SINCE THE ASSESSEE COULD NOT OFFER ANY SATISFACTORY EXPLANATI ON ABOUT THE SOURCE OF FUNDS UTILIZED FOR GIVING CASH LOAN OF ` 2 LACS TO SHRI NITIN THAKUR, AN ADDITION OF ` 2 LACS WAS MADE BY THE A.O. TO THE TOTAL INCOME OF THE ASSESSEE TREATI NG THE SAID LOAN AMOUNT AS UNEXPLAINED INVESTMENT OF THE ASSESSEE. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED THAT HE AND HIS WIFE, BOTH GOVERNMENT SERVANTS, HAD JOINTLY GIVEN T HE LOAN OF ` . 2 LACS TO SHRI NITIN THAKUR FROM TIME TO TIME AND THE CHEQUE RECEIVED FR OM THE SAID PERSON FOR REFUND OF THE LOAN AMOUNT WAS DEPOSITED IN THE BANK ACCOUNT OF AS SESSEES WIFE. IT WAS CONTENDED THAT THE A.O. SHOULD HAVE RELIED ON THE STATEMENT MADE B Y THE ASSESSEE IN RESPECT OF THIS TRANSACTION INSTEAD OF RELYING ON THE STATEMENT OF SHRI NITIN THAKUR WHO WAS A THIRD PARTY. THE LD. CIT(A),HOWEVER, FOUND THAT THE LOAN AMOUNT CLAIMED TO BE GIVEN BY THE ASSESSEE AND HIS WIFE TO MR. NITIN THAKUR IN THE EA RLIER YEARS WAS NOT REFLECTED IN THEIR RETURNS OF INCOME. HE ALSO FOUND THAT THE ASSESSEE AND HIS WIFE HAD NOT GIVEN ANY INTIMATION TO THE GOVERNMENT RELATING TO THE SAID L OAN TRANSACTION AS REQUIRED BY THE RELEVANT RULES. THE LD. CIT(A) HELD THAT THERE WAS NO RELIABLE EVIDENCE AVAILABLE ON RECORD EXCEPT THE STATEMENT OF SHRI NITIN THAKUR AN D THERE WAS THUS NO REASON TO DISBELIEVE THE SAID STATEMENT WHICH WAS GIVEN BY A PERSON WHO WAS PARTY TO THE LOAN TRANSACTION. RELYING ON THE SAID STATEMENT, HE THU S CONFIRMED THE ADDITION OF ` . 2 LACS MADE BY THE A.O. 15. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS SUBMITTED BY THE LEARNED CO UNSEL FOR THE ASSESSEE, THE LOAN AMOUNT GIVEN TO SHRI NITIN THAKUR WAS DULY REFLECTE D ATLEAST TO THE EXTENT OF ` . 1.5 LACS IN THE CASH FLOW STATEMENTS OF THE ASSESSEE AND HIS WI FE. HE HAS CONTENDED THAT THERE WAS NO REASON TO TREAT THE SAID LOAN ATLEST TO THE EXTENT OF ` . 1.5 LACS AS UNEXPLAINED. A PERUSAL OF THE ORDERS OF A.O. AS WELL AS LD. CIT(A) SHOWS THAT THERE IS A REFERENCE TO THE CASH FLOW STATEMENT PREPARED AND FURNISHED BY THE ASSESSEE. THERE IS, HOWEVER, NOTHING IN THE SAID 9 ITA4468 TO 4470/MUM/09, SHRI SUDHAKAR G. SARODE ORDERS TO SHOW THAT THAT THE EXPLANATION OF THE ASS ESSEE OF HAVING GIVEN CASH LOAN OF ` . 1,50,000/- TO SHRI NITIN THAKUR HAS BEEN EXAMINED W ITH REFERENCE TO THE SAID CASH FLOW STATEMENT. WE, THEREFORE, MODIFY THE IMPUGNED ORDE R OF THE LD. CIT(A) ON THIS ISSUE AND SUSTAINING THE ADDITION MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED LOAN GIVEN BY THE ASSESSEE TO SHRI NITIN THAKUR TO THE EXTENT OF ` . 50,000/-, WE RESTORE THE ISSUE RELATING TO THE BALANCE ADDITION OF ` 1,50,000/- TO THE FILE OF THE A.O. WITH A DIRECTIO N TO DECIDE THE SAME AFRESH AFTER CONSIDERING THE EXPLANATION OF TH E ASSESSEE WITH REFERENCE TO THE CASH FLOW STATEMENT. GROUND NO2 OF THE ASSESSEES APPEA L IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 16. IN GROUND NO. 3, THE ASSESSEE HAS CHALLENGED TH E ADDITION OF ` . 1,76,000/- MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF INTEREST ACCRUED ON FIXED DEPOSIT. 17. DURING THE COURSE OF SEARCH CONDUCTED BY THE AC B, FIXED DEPOSITS OF ` . 24 LACS MADE IN THE NAME OF THE ASSESSEE WITH MANTRALAYA CO -OPERATIVE BANK WERE FOUND FROM THE LOCKER STANDING IN THE NAME OF ASSESSEES MOTHE R-IN-LAW AND BROTHER-IN-LAW. THE SOURCE OF THE SAID INVESTMENT MADE IN THE BANK AS F IXED DEPOSIT WAS EXPLAINED BY THE ASSESSEE AS THE AMOUNT HANDED OVER TO HIM BY SIX PE RSONS FOR PURCHASE OF LAND AT NASIK. THE ASSESSEE SUBMITTED THAT THE SAID AMOUNT WAS HEL D BY HIM IN FIDUCIARY CAPACITY AND IN ORDER TO ENSURE SAFETY, THE SAME WAS KEPT IN THE FO RM OF FIXED DEPOSIT WITH MANTRALAYA CO-OPERATIVE BANK. THE CONCERNED SIX PERSONS WERE ALSO PRODUCED BY THE ASSESSEE BEFORE THE A.O. FOR EXAMINATION AND IN THEIR STATEM ENTS RECORDED BY THE A.O. U/S 131, THEY CONFIRMED THE TRANSACTIONS AND ALSO EXPLAINED THE SOURCE OF MONEY WHICH WAS HANDED OVER BY THEM TO THE ASSESSEE FOR PURCHASE OF LAND AT NASIK. THE A.O. FOUND THEIR EXPLANATION TO BE SATISFACTORY AND DID NOT MAKE ANY ADDITION ON ACCOUNT OF FIXED DEPOSIT STANDING IN THE NAME OF THE ASSESSEE WITH MANTRALYA CO-OPERATIVE BANK. HOWEVER, INTEREST EARNED ON THE SAID DEPOSIT IN THE YEAR UND ER CONSIDERATION AMOUNTING TO ` 1,76,000/- WAS ADDED BY HIM IN THE HANDS OF THE AS SESSEE TREATING THE SAME AS THE INCOME 10 ITA4468 TO 4470/MUM/09, SHRI SUDHAKAR G. SARODE OF THE ASSESSEE. BEFORE THE LD. CIT(A), THE ASSESS EE SUBMITTED THAT THE AMOUNT OF ` . 24 LACS WAS HELD BY THE ASSESSEE IN FIDUCIARY CAPACITY AND SINCE THE FIXED DEPOSIT MADE FROM THE SAID AMOUNT DID NOT REPRESENT HIS OWN INVESTMEN T, INTEREST THEREON COULD NOT BE TREATED AS HIS INCOME. THE LD. CIT(A), HOWEVER, FO UND THAT THE CONCERNED SIX PERSONS WERE NOT EVEN AWARE OF THE INVESTMENT MADE BY THE A SSESSEE IN FIXED DEPOSITS OUT OF THEIR MONEY LYING WITH HIM. HE ALSO FOUND FROM THE STATE MENT OF THE SAID SIX PERSONS RECORDED BY THE A.O. THAT THERE WAS NO MENTION OF ANY INTERE ST RECEIVED BY THEM ON FIXED DEPOSITS STANDING IN THE NAME OF THE ASSESSEE. HE ALSO NOTE D THAT NONE OF THESE SIX PERSONS HAD OFFERED THE SAID INTEREST INCOME IN THEIR RETURNS O F INCOME. HE, THEREFORE, CONFIRMED THE ADDITION MADE BY THE A.O. ON ACCOUNT OF INTEREST IN COME IN THE HANDS OF THE ASSESSEE ON FIXED DEPOSITS WHICH WERE STANDING IN HIS OWN NAME. 18. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS RIGHTLY CONTENDED BY THE LE ARNED COUNSEL FOR THE ASSESSEE BEFORE US, THE AMOUNT OF ` . 24 LACS FOUND TO BE INVESTED BY THE ASSESSEE IN T HE BANK FIXED DEPOSIT IN HIS OWN NAME WAS NOT BELONGING TO HIM AND THE S AME WAS BELONGING TO OTHER SIX PARTIES. AS A MATTER OF FACT THIS POSITION HAS BEE N ACCEPTED EVEN BY THE A.O. AND NO ADDITION ON ACCOUNT OF THE INVESTMENT FOUND TO BE M ADE BY THE ASSESSEE IN THE SAID BANK DEPOSIT HAS BEEN MADE TO THE TOTAL INCOME OF THE AS SESSEE. HOWEVER, IN SO FAR AS INTEREST INCOME ON THE SAID DEPOSITS IS CONCERNED, THE LD. C IT(A) HAS FOUND FROM THE STATEMENT OF SIX PERSONS THAT THEY WERE NOT EVEN AWARE OF ANY IN VESTMENT MADE BY THE ASSESSEE IN THE BANK DEPOSITS FROM THE AMOUNT HANDED OVER BY THEM T O THE ASSESSEE. AS FURTHER FOUND BY THE LD. CIT(A) THE SAID SIX PERSONS IN THEIR STATEM ENT DID NOT MENTION ANYTHING ABOUT THEIR INTEREST INCOME ON FIXED DEPOSITS AND IN THEIR RETU RNS OF INCOMEALSO , NO SUCH INTEREST WAS OFFERED TO TAX. AT THE TIME OF HEARING BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO REBUT/CONTROVERT THESE FINDING S OF FACTS RECORDED BY THE A.O. ON THE CONTRARY, HE HAS ADMITTED IN REPLY TO A QUERY RAISE D BY THE BENCH THAT THERE IS NOTHING ON RECORD TO SHOW THAT THE SAID SIX PERSONS HAVE CLAIM ED INTEREST RECEIVED ON BANK DEPOSITS 11 ITA4468 TO 4470/MUM/09, SHRI SUDHAKAR G. SARODE FROM THE ASSESSEE. HAVING REGARD TO ALL THESE FACT S AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ADDITION MADE BY THE A.O. ON A CCOUNT OF INTEREST ON FIXED DEPOSITS TREATING THE SAME AS INCOME OF THE ASSESSEE IS SUST AINABLE AND THE LD. CIT(A) IS FULLY JUSTIFIED IN CONFIRMING THE SAME. THE IMPUGNED ORD ER OF THE LD. CIT(A) ON THIS ISSUE IS UPHELD DISMISSING GROUND NO. 3 OF ASSESSEE;S APPEAL . 19. NOW, WE SHALL TAKE UP THE APPEAL OF THE ASSESSE E FOR A.Y. 2003-04 BEING ITA NO. 4470/MUM/09. 20. IN THIS APPEAL THE SOLITARY ISSUE REGARDING THE ADDITION OF ` . 2,64,000/- MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF INTEREST ACCRUED ON FIXED DEPOSIT IS SIMILAR TO THE ONE WHICH IS ALREADY DECIDED BY US I N THE FOREGOING PORTION OF THIS ORDER. FOLLOWING THE SAME, WE DISMISS THIS GROUND RAISED B Y THE ASSESSEE. 21. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE FOR AY 1999-2000 & 2002-03 AND APPEAL FOR A.Y. 2003-04 IS DISMISSED.. ORDER PRONOUNCED ON 10 TH DECEMBER, 2010. SD/- SD/- (V. DURGA RAO) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTAN T MEMBER MUMBAI, DATED 10 TH DECEMBER , 2010. RK 12 ITA4468 TO 4470/MUM/09, SHRI SUDHAKAR G. SARODE COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XIX - MUMBAI 4. THE CIT- 19 MUMBAI 5. THE DR BENCH, E 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI 13 ITA4468 TO 4470/MUM/09, SHRI SUDHAKAR G. SARODE ` DATE INITIALS 1. DRAFT DICTATED 1.12.10,3.12.10 SR.P.S./P.S. 2. DRAFT PLACED BEFORE AUTHOR 2.12.10, 3.10.12 SR.P.S./P.S. 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER. - J.M./A.M. 4.DRAFT DISCUSSED/ APPROVED BY SECOND MEMBER. J.M./A.M. 5. APPROVED DRAFT COMES TO THE SR.P.S./P.S. SR.P.S./P.S. 6. KEPT FOR PRONOUNCEMENT ON SR.P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S. 8. DATE OF WHICH FILE GOES TO THE HEAD CLERK. 9. DATE OF DISPATCH OF ORDER.