OM PRAKASH CHOUDHARY, Jaipur V. DCIT, Jaipur

ITA 466/JPR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5118 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2004-2005
• Appeal Filed On: 13-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEENA CIT DHK
• Assessee Lawyers: O P AGARWAL CAS
• Keywords: Unexplained investment; Search and seizure; Loose papers; Valuation report; Retraction; Bogus loan; Documents seized
• Section: 153A; 131; 132

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI LALIET KUMAR, J M VK;DJ VIHY LA-@ ITA NO. 466, 467 & 468/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2004-05, 08-09 & 10-11. SHRI OM PRAKASH CHOUDHARY, 1626, CHAURA RASTA, JAIPUR. CUKE VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CC-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAOPC 7332 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL & SHRI O.P. AGARWAL (C.AS) JKTLO DH VKSJ LS@ REVENUE BY : SHRI M.S. MEENA (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 05.08.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 14/09/2016. VKNS'K@ ORDER PER SHRI LALIET KUMAR, JM. THESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST THE SEPARATE ORDERS OF LD. CIT (A), ALWAR DATED 02.03.2015 PERTAINING T O A.YS. 2004-05, 08-09 & 10-11. FIRST, WE TAKE UP APPEAL IN ITA NO. 466/JP/2015. TH E GROUNDS RAISED IN THIS APPEAL ARE AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS GROSSLY ERRED IN UPHOLDING AN ADDITION OF RS. 7 0,000/- MADE BY ALLEGING THE SAME AS UNACCOUNTED CASH AS ON THE FIR ST DAY OF THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER APP EAL WITHOUT CONSIDERING THE SUBMISSION, THUS THE ACTION OF THE LD. CIT (A) DESERVES TO BE HOLD BAD IN LAW AND THE ADDITION UPH ELD DESERVES TO BE DELETED. 1.1. THAT THE LD. CIT (A) HAS FURTHER ERRED IN IGNORING THE FACT THAT THE AMOUNT AS CLAIMED WAS THE ACCUMULATION OF THE F UNDS OUT OF THE INCOME DECLARED BY THE ASSESSEE IN VARIOUS ASSE SSMENT 2 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY YEARS PRIOR TO 01.04.2003. HENCE THE ADDITION OF RS . 70,000/- MADE DESERVES TO BE DELETED. 1.2. THAT THE LD. CIT (A) HAS FURTHER ERRED IN CONFIRMIN G THE ACTION OF LD. AO OF HOLDING THAT 20% COULD AT MOST BE SAVED O UT OF THE INCOME WITHOUT THERE BEING ANY BASIS, THUS THE CONS EQUENT ADDITION SUSTAINED TO BE DELETED. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL AND WAS ENGAGED IN THE BUSINESS OF MONEY LENDING, BESIDES TRADING I N PRECIOUS AND SEMI-PRECIOUS STONES. A SEARCH AND SEIZURE ACTION U/S 132 OF THE I.T. ACT, 1961 WAS CARRIED OUT ON 08.09.2009 AT VARIOUS PRIVATE VAULTS WHICH INCLUDES TWO VAULTS I.E. BIRANI SAFE VAULTS, JOHARI BAZAR AND CHORADIA SAFE DEPOSIT, CHAURA RAST A, JAIPUR WHEREIN THE APPELLANT HAD LOCKERS BEARING NO. 347 AND 202 RESPECTIVELY. D URING THE COURSE OF SEARCH, THE LOCKERS WERE BREAK OPEN AS THE ASSESSEE WAS NOT AVA ILABLE AND LOCKER NO. 202 OF CHORADIA SAFE DEPOSIT WAS FOUND EMPTY. CERTAIN LOOS E PAPERS AND GOODS WERE FOUND IN LOCKER NO. 347 OF BIRANI SAFE VAULTS WHICH WERE INVENTORIED, VALUED AND SEIZED BY THE DEPARTMENT. NOTICE U/S 153A WAS ISSUED. IN RESP ONSE TO WHICH ASSESSEE FILED HIS RETURN OF INCOME DECLARING INCOME AT RS. 1,14,670/- INCLUDING ADDITIONAL INCOME OF RS. 64,177/- TO THE INCOME DECLARED IN THE RETURN O F INCOME FILED U/S 139(1). 2.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, I T WAS OBSERVED BY THE AO THAT THE ASSESSEE HAD PREPARED A CASH FLOW STATEMENT FOR COMPUTING UNDISCLOSED INCOME WHEREIN CASH OF RS. 3.00 LAC WAS CLAIMED AS OPENING BALANCE AS ON 01.04.2003 THOUGH UNACCOUNTED AND WAS NOT OFFERED FOR TAX. THE ASSESSEE CONTENDED BEFORE THE AO THAT HE WAS ASSESSED TO TAX SINCE PAST LONG AND THIS AMOUNT IS THE ACCUMULATION OF THE PAST SAVINGS WHICH THE AO ACCEP TED IN PART AND BY TREATING 3 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY RS.2,30,000/- AS EXPLAINED BEING 20% OF THE INCOME DECLARED DURING LAST 10 YEARS, MADE THE ADDITION OF BALANCE OF RS.70,000/- AS UNEX PLAINED AND UNACCOUNTED CASH. AGGRIEVED OF THE ORDER OF AO, ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A), WHO HAS REJECTED THE APPEAL. 3. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 4. IN SUPPORT OF GROUNDS OF APPEAL NO.1 TO 1.2, THE LD. A/R OF THE ASSESSEE HAS SUBMITTED THAT ASSESSEE IS BEING REGULARLY FILING H IS RETURN OF INCOME FOR MORE THAN PAST 21 YEARS AND LOOKING TO THE SMALL SIZE AND MOD ERATE STANDARD OF LIVING OF HIS FAMILY, CLAIM OF SAVINGS OF RS.3.00 LACS IS MOST RE ASONABLE. LD. COUNSEL FURTHER STATED THAT THE AO HAS GIVEN NO JUSTIFIABLE BASIS F OR HOLDING 20% OF THE INCOME AS SAVINGS WITHOUT APPRECIATING THE FACTS THAT GENERAL LY 1/3 RD OF THE INCOME IS PRESUMED AS SAVINGS BY A NORMAL PERSON. HE, THEREFORE, CONT ENDED THAT THE ADDITION MADE BY THE AO IS MERELY ON ASSUMPTIONS AND PRESUMPTIONS WI THOUT APPRECIATING THE FACT THAT DURING THE YEAR UNDER APPEAL THERE WAS NO SHOR TAGE OF FUNDS IN THE CASH FLOW STATEMENT, EVEN IF THE OPENING BALANCE IS REDUCED T O RS.2,30,000/-. THUS, THE LD. COUNSEL SUBMITTED THAT NO ADDITION COULD BE MADE IN THE YEAR UNDER APPEAL, AND PRAYED THAT THE ADDITION OF RS. 70,000/- BE DELETED . 4.1. ON THE OTHER HAND, THE LD. CIT D/R HAS SUPPORT ED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE H AS NOT GIVEN ANY SUPPORTING DOCUMENTS FOR CLAIMING SUCH SAVINGS. THE LD. D/R S UBMITTED THAT THE AO WAS REASONABLE ENOUGH IN TREATING RS.2,30,000/- AS PAST SAVINGS, THEREFORE, THE AO HAS 4 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY RIGHTLY TREATED THE AMOUNT OF RS.70,000/- AS UNEXPL AINED AND UNACCOUNTED CASH OF THE ASSESSEE. 4.2. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD AS WELL AS GONE TH ROUGH THE ORDERS PASSED BY THE AUTHORITIES BELOW. IN OUR OPINION, THE AUTHORITIES BELOW HAVE FAILED TO APPRECIATE THE FACT THAT THE APPELLANT IS A REGULAR INCOME TAX ASS ESSEE FOR PAST MORE THAN 21 YEARS AND LOOKING TO INCOME DECLARED IN PRECEDING ASSESSM ENT YEARS, THE SAVINGS SHOWN BY THE ASSESSEE IS REASONABLE. IT IS NOT THE CASE W HERE IT COULD BE ESTABLISHED THAT THE ASSESSEE IS LEADING A LAVISH LIFE STYLE NOR ANY SUCH DOCUMENT WAS FOUND DURING THE COURSE OF SEARCH LEADING TO BELIEF THAT ASSESSE ES HOUSEHOLD WITHDRAWALS WERE OSTENSIBLY HIGH. THE QUANTUM OF SAVINGS DEPENDS UP ON THE HABITS OF A PARTICULAR INDIVIDUAL AND HAS TO BE JUDGED ACCORDING TO THE FA CTS AND PAST HISTORY OF THE INDIVIDUAL. FROM THE PERUSAL OF THE CASH FLOW STAT EMENT AVAILABLE IN THE PAPER BOOK, WE ARE IN AGREEMENT WITH THE SUBMISSIONS MADE BY TH E LD. COUNSEL FOR THE ASSESSEE THAT EVEN AFTER TREATING THE AMOUNT OF OPENING BALA NCE AT RS.2,30,000/-, THERE WAS NO SHORTAGE OF FUNDS IN THE YEAR UNDER CONSIDERATI ON. WE ARE OF THE VIEW THAT THE ADDITION MADE BY THE AUTHORITIES BELOW WAS WITHOUT ANY JUSTIFICATION AND NOT IN ACCORDANCE WITH LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY, THE ADDITION OF RS.70,000/- IS DELETED. IN LIGHT OF AB OVE, THE APPEAL OF THE ASSESSEE IS ALLOWED. 5. NOW WE TAKE UP APPEAL IN ITA NO. 467/JP/2015. T HE GROUNDS RAISED IN THIS APPEAL ARE AS UNDER - 5 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD.CIT (A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS. 10,5 0,000/- ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN ACQUIS ITION OF IMMOVABLE PROPERTY WITHOUT CONSIDERING THE SUBMISSI ON, THUS THE ACTION OF THE LD. CIT (A) DESERVES TO BE BAD IN LAW AND THE ADDITION SUSTAINED DESERVES TO BE DELETED. 1.1. THAT THE LD. CIT (A) HAS GROSSLY ERRED IN IGNORING THE FACT THAT THE AMOUNT OF RS. 10,50,000/- WAS WORKED OUT AS INT EREST, THAT WOULD HAVE BEEN PAYABLE BY THE BUILDER TO THE ASSES SEE IN CASE CANCELLATION OF BOOKING DUE TO THE DELAY IN POSSESS ION OF FLAT, HOWEVER AS THE POSSESSION OF FLAT WAS TAKEN BY ASSE SSEE THEREFORE, THE QUESTION OF PAYMENT OF ANY INTEREST DOES NOT ARISE, HENCE THE ADDITION OF RS. 10,50,000/- SUSTAI NED DESERVE TO BE DELETED IN TOTO. 1.2. THAT THE LD. CIT (A) HAS FURTHER ERRED IN CONFIRMIN G THE ACTION OF LD. AO OF RELYING UPON THE STATEMENTS RECORDED DURI NG THE SEARCH BY GROSSLY IGNORED THE EVIDENCES FILED AND F URTHER IGNORED THE SPECIFIC ACCEPTANCE OF OPPOSITE PARTY D ULY CONFIRMING THE CONTENTION RAISED BY ASSESSEE THUS T HE ADDITION SO UPHELD DESERVES TO BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT (A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS. 6,90,614/- MADE ON ACCOUNT OF UNACCOUNTED STOCK WITHOUT APPRECIATIN G THE FACT THAT THE SAME BELONGS TO THE PERIOD PRIOR TO THE BLOCK O F THE ASSESSMENT YEARS UNDER CONSIDERATION, HOWEVER TO BUY THE PEACE OF MIND AND TO AVOID LITIGATION ASSESSEE HAS ADMITTED A SUM OF RS. 2,50,000/- ON ACCOUNT OF UNEXPLAINED STOCK IN THE RETURN OF INCOM E FILED FOR A.Y. 2010-11, THUS THE ACTION OF THE LD. CIT (A) DESERVE S TO BE HOLD BAD IN LAW AND THE ADDITION SUSTAINED DESERVES TO BE DE LETED. 2.1. THAT THE LD. CIT (A) HAS GROSSLY ERRED IN CONFIRMIN G THE ACTION OF LD. AO OF MAKING ADDITION OF RS. 6,90,614/- ON ACCO UNT OF UNACCOUNTED STOCK WITHOUT CONSIDERING THE FACT THE STOCK IS NOT HAVING VALUE MORE THAN RS. 2,50,000/- ALSO WITHOUT ENTERTAINING THE REQUEST OF THE APPELLANT OF REVALUATION OF GOOD S AS THE SAME WAS LYING SEIZED WITH THE DEPARTMENT, THUS THE RESU LTANT ADDITION SUSTAINED TO BE DELETED. 2.2. THAT THE LD. CIT (A) HAS FURTHER IGNORED THE FACT T HAT LD.AO HAS ERRED IN NOT ACCEPTING THE COST DECLARED BY ASSESSE E AND FURTHER ERRED IN MAKING ADDITION ON THE BASIS OF VALUATION DONE BY DVO ON THE DATE OF SEARCH WHICH REPRESENTS THE MARKET V ALUE AND 6 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY NOT THE COST PRICE, THUS THE COST DECLARED BY ASSES SEE AT RS. 2.50 LACS IN A.Y. 2010-11 DESERVES TO BE ACCEPTED A ND ADDITION SUSTAINED AT RS. 6,90,614/- DESERVES TO BE DELETED. 2.3. THAT THE LD. CIT (A) HAS FURTHER ERRED IN SUSTAININ G THE ADDITION MADE BY LD. AO ON ACCOUNT OF ALLEGED STOCK IN A.Y. 2008-09 WITHOUT HAVING ANY EVIDENCE IN HIS POSSESSION TO HO LD THAT THESE STOCK WERE KEPT IN LOCKER IN PREVIOUS YEAR RELEVANT TO A.Y. 2008- 09, THUS THE ACTION OF LD. AO OF HOLDING THE SAME A S PERTAINING TO A.Y. 2008-09 WAS TOTALLY MISPLACED AND ACCORDING LY THE ADDITION SUSTAINED DESERVES TO BE DELETED. 6. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL AND WAS ENGAGED IN THE BUSINESS OF MONEY LENDING, BESIDES TRADING I N PRECIOUS AND SEMI-PRECIOUS STONES. A SEARCH AND SEIZURE ACTION U/S 132 OF THE I.T. ACT, 1961 WAS CARRIED OUT ON 08.09.2009 AT VARIOUS PRIVATE VAULTS WHICH INCLUDES TWO VAULTS I.E. BIRANI SAFE VAULTS, JOHARI BAZAR AND CHORADIA SAFE DEPOSIT, CHAURA RAST A, JAIPUR WHEREIN THE APPELLANT HAD LOCKERS BEARING NO. 347 AND 202 RESPECTIVELY. D URING THE COURSE OF SEARCH THE LOCKERS WERE BREAK OPEN AS THE ASSESSEE WAS NOT AVA ILABLE AND LOCKER NO. 202 OF CHORADIA SAFE DEPOSIT WAS FOUND EMPTY. CERTAIN LOOS E PAPERS AND GOODS WERE FOUND IN LOCKER NO. 347 OF BIRANI SAFE VAULTS WHICH WERE INVENTORIED, VALUED AND SEIZED BY THE DEPARTMENT. NOTICE U/S 153A WAS ISSUED. IN RESP ONSE TO WHICH ASSESSEE FILED HIS RETURN DECLARING INCOME AT RS. 1,02,57,400/- BY INC LUDING ADDITIONAL INCOME OF RS. 7,35,732/- TO THE INCOME DECLARED IN THE RETURN FIL ED U/S 139(1). DURING THE COURSE OF SEARCH, IN THE BANK LOCKER CERTAIN CHEQUES WERE FOUND AND ON THE BASIS OF STATEMENT OF THE ASSESSEE RECORDED, THE ASSESSEE SU RRENDERED RS.10,50,000/- ON ACCOUNT OF INVESTMENT IN THE ACQUISITION OF HOUSE P ROPERTY. HOWEVER, IN THE RETURN NO SUCH INCOME WAS OFFERED THEREFORE, AN ADDITION O F RS.10,50,000/- WAS MADE BY THE AO. FURTHER, DURING THE COURSE OF SEARCH TOTAL STOCK OF RS.8,63,267/- WAS FOUND 7 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY AGAINST WHICH ASSESSEE HAS DECLARED A SUM OF RS.2,5 0,000/- IN THE RETURN OF INCOME FOR A.Y. 2010-11. THE AO HOLDING THAT THE SAID STOC K PERTAINED TO THE YEAR UNDER APPEAL, MADE THE ADDITION BY GIVING A CONCESSION OF 20% ON THE VALUATION MADE AT THE TIME OF SEARCH TO GIVE ADJUSTMENT FOR ARRIVING AT THE VALUATION AS ON 31.03.2008 I.E. FOR A.Y. 2008-09 MADE AN ADDITION OF RS.6,90, 614/- U/S 69A OF THE ACT. AGGRIEVED BY THE ORDER, ASSESSEE PREFERRED AN APPEA L BEFORE LD. CIT (A), WHO HAS DISMISSED THE APPEAL OF THE ASSESSEE. 7. REGARDING GROUNDS OF NO. 1 TO 1.2, THE LD. COUNS EL OF THE ASSESSEE SUBMITTED AS UNDER: BRIEF FACTS ARE THAT, DURING THE YEAR UNDER APPEAL , THE ASSESSEE HAD BOOKED A RESIDENTIAL FLAT WITH M/S SUNRISE BUILDERS IN ITS ONGOING RESIDENTIAL HOUSE PROJECT I.E. MARRY HOME, MOTI DOONGRI ROAD, JAIPUR. AT THE TIME OF BOOKING, THE ASSESSEE MADE ADVANCE PAYMENT OF RS. 30,85,700/- THROUGH PAYEES ACCOUNT CHEQUE NO. 35145 DATED 25-04-2007 DRAWN ON UNITED BANK OF INDIA. FUR THER CONFIRMATION OF THE RECEIPT OF BOOKING AMOUNT OF RS. 30,85,700/- WAS ALSO FILED DURING THE ASSESSMENT PROCEEDINGS. AT THE TIME OF BOOKING IT WAS MUTUALLY DECIDED BETW EEN THE BUILDER AND ASSESSEE THAT PHYSICAL POSSESSION OF THE FLAT SHOUL D BE GIVEN ON OR BEFORE 15.12.2008 AND IN CASE OF DELAY ON PART OF THE BUIL DER IN HANDING OVER THE POSSESSION, THE BUILDER SHALL REPAY THE BOOKING AMO UNT ALONGWITH INTEREST @ 24% PER ANNUM. AS THE BUILDER COULD NOT GIVE PHYSICAL P OSSESSION BEFORE THE DEADLINE I.E. 15.12.2008, AND THEREFORE, AS MUTUALLY DECIDED BETW EEN PARTIES, BUILDER WAS OBLIGED TO REFUND THE ADVANCE BOOKING AMOUNT ALONGWITH DUE INTEREST. YOUR HONOUR WOULD APPRECIATE THAT THE INTEREST WAS PAYABLE DUE TO NEG ATION OF PRE CONDITION OF AGREEMENT, I.E. SELLER BEING NOT ABLE TO HANDOVER P OSSESSION BEFORE THE DUE DATE AGREED UPON. THESE FACTS WERE DULY BROUGHT TO THE N OTICE OF LD. AO VIDE LETTER DATED 06-05-2001, HOWEVER WAS NOT ACCEPTED BY HIM. ACCORDINGLY, HONOURING THE COMMITMENT MADE, THE AMO UNT PAYABLE ALONGWITH DUE INTEREST TILL DATE WAS WORKED OUT AT RS. 40,49, 981/- AND CHEQUES OF DIFFERENT AMOUNTS TOTALING TO RS. 40.50 LACS WERE ISSUED AS D ETAILED BELOW: 8 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY S.NO . C HEQUE NO. AMOUNT 1 242812 10,00,000.0 0 2 242813 5,00,000.00 3 242814 5,00,000.00 4 242815 3,00,000.00 5 242816 3,50,000.00 6 242817 2,00,000.00 7 242821 3,00,000.00 8 242833 4,00,000.00 9 242839 5,00,000.00 TOTAL 40,50,000. 00 THIS INTEREST OF RS. 10.50 LACS, AS AGREED, WAS CAL CULATED AS UNDER: S.NO . PERIOD MONTHS RATE TOTAL INTEREST TOTAL INTEREST 1. 24/04/2007 TO 31/12/2007 8.25 MONTHS 1% 8.25% 2,54,570.00 2. 01/01/2008 TO 15/12/2008 11.50 MONTHS 2% 23 % 7,09,711.00 INTEREST 09,64,281. 00 PRINCIPAL 30,85,700. 00 TOTAL 40,49,981. 00 9 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY SUBSEQUENT TO THE RECEIPT OF CHEQUES TOWARDS REPAYM ENT OF BOOKING AMOUNT AND INTEREST THEREON, THE PARTIES REACHED TO A SETT LEMENT, WHEREIN THE BUILDER HAD AGREED TO GIVE THE POSSESSION OF FLAT TO ASSESSEE I N JANUARY 2009, THEREFORE, ASSESSEE DID NOT ENCASH THE CHEQUES AVAILABLE WITH HIM AND KEPT THE SAME FOR SAFE CUSTODY IN THE LOCKER BEARING NO. 347 MAINTAINED WI TH BIRANI SAFE, JAIPUR WHICH STOOD FOUND AND SEIZED BY THE DEPARTMENT ON 09.09.2 009 WHEN THE DEPARTMENT BRAKE OPEN THE LOCKER AND SEIZED THE DOCUMENT / LOO SE PAPERS / VALUABLES ETC. INCLUDING THESE CHEQUES. THEREAFTER COMING TO NOTICE OF FACT OF BREAKING OPE N OF LOCKER, ASSESSEE APPEARED BEFORE THE INVESTIGATION WING AND CLAIMED THE SAID LOCKER AS BELONGING TO HIM AND HIS STATEMENTS WERE RECORDED WHEREIN WITHOU T PROPERLY UNDERSTANDING THE NATURE OF QUESTIONS AND UNDER WRONG BELIEF AND DUE TO DISTRESS AND PERSECUTION MANIA ASSESSEE ADMITTED THE DIFFERENCE BETWEEN THE TOTAL VALUE OF CHEQUES AND ADVANCE PAYMENTS MADE AT THE TIME OF BOOKING AS HIS UNDISCLOSED INCOME BEING THE CASH GIVEN TO BUILDER WHICH ACTUALLY WAS ON ACCOUNT OF INTEREST. SINCE THE ASSESSEE HAD NEVER PAID SUCH AMOUNT TO TH E BUILDERS THEREFORE, THE QUESTION OF REC RECEIPTS BACK OF THE SAME DOES NOT ARISE AND ACCORDINGLY NO INCOME IN THIS RESPECT WAS DECLARED IN THE RETURN OF INCOM E FILED. HOWEVER LD. AO HAS NOT ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND REJECT ED THE SAME BY OBSERVING AT PAGE 7 IN PARA 2 OF THE ORDER AS UNDER: THIS SUBMISSION IS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE AND ON THE CONTRARY IT IS MENTIONED IN THE SALE DEED DATED 08/02/2011 I N ITEM NUMBER 27 PAGE 18 THAT IF PARTY OF THE SECOND PART (SH. OM PRAKASH CHOUDHARY, THE ASSESSEE) FAILS FOR ANY REASON WHATSOEVER TO PAY TH E PARTIES OF THE FIRST PART (THE SELLER) ANY AMOUNT DUE ANY PAYABLE BY PARTY OF THE SECOND PART SHALL BE LIABLE TO PAY INTEREST @ 24% PER ANNUM AFTER DUE DA TE TILL SUCH PERIOD THE AMOUNT IS DUE. THE CALCULATION OF THE INTEREST OF R S. 2,54,570/- AND RS. 7,09,711/- IS HYPOTHETICAL AND AN ATTEMPT TO JUSTIF Y THE ON MONEY PAYMENT OF RS. 10,50,000/- ORIGINALLY ADMITTED IN THE STATEMEN T RECORDED U/S 131 OF THE IT ACT. SINCE YOU HAVE FAILED TO SUBSTANTIATE YOUR CONTENTION BY FILING DOCUMENTARY EVIDENCE THE SAME IS LIABLE TO BE REJEC TED. IN RESPONSE TO THE ABOVE OBSERVATIONS, VIDE LETTER DT. 20.05.2011, IT WAS SUBMITTED BEFORE LD. AO AS UNDER: IT IS SUBMITTED THAT THE ASSESSEE HAS MADE THE P AYMENT OF RS. 30,85,700/- WHICH IS AROUND 90% OF THE TOTAL COST OF THE FLAT. THE CLAUSE 27 AT PAGE 18 OF THE SALE DEED AS REFERRED BY YOU WAS A GENERAL CLAU SE WHEREIN THE INTEREST WAS PAYABLE BY THE ASSESSEE IF HE FAILS TO PAY THE COST OF THE FLAT AS PER THE INSTALLMENTS DECIDED, HOWEVER, AS SUBMITTED ABOVE S INCE THE ASSESSEE HAS MADE ALMOST COMPLETE PAYMENT TOWARDS THE COST OF TH E FLAT, THEREFORE, THE SAID CLAUSE REMAINED GENERAL IN NATURE AND THEREFOR E NOT APPLICABLE. FURTHER 10 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY THE TERMS OF PAYMENT OF INTEREST IN THE EVENT OF FA ILURE TO GIVE POSSESSION ON OR BEFORE 15.12.2008 WAS DECIDED MUTUALLY BETWEEN T HE PARTIES THEREFORE, NO WRITTEN DOCUMENT WAS PREPARED TO THIS EFFECT AND WH EN THE OTHER PARTY I.E. THE BUILDER HAS FAILED TO COMPLY THE TERMS HE ISSUE D CHEQUES TOWARDS THE INTEREST AMOUNT ALONGWITH THE PRINCIPAL TO THE ASSE SSEE WHICH ACT OF THE BUILDER ITSELF SUBSTANTIATES THE CLAIM OF THE ASSES SEE. (SUBMISSION DATED 20.05.2011, COPY ENCLOSED APB 16-20 ) (REPRODUCED AT PAGES 07-08, PARA 7.5) BESIDES THIS DURING THE COURSE OF ASSESSMENT PROCEE DINGS, LD. AO PROCEEDED TO EXAMINE THE SAID BUILDER AND STATEMENTS OF SH. S .C. JAIN, PROPRIETOR OF M/S SUNRISE BUILDERS WERE RECORDED U/S 131 OF THE ACT O N 26.04.2011, WHO IN REPLY TO Q. NOS. 11, 15 & 16 (APB 27-29) HAS CATEGORICALLY ACCEPTED THAT THE AMOUNT REPAID TO THE ASSESSEE IS INCLUSIVE OF THE INTEREST AMOUNT. T HE RELEVANT PORTION OF THE STATEMENTS IS REPRODUCED BELOW FOR THE SAKE OF CONV ENIENCE: IZU 11 VKIUS ORIGINAL BOOKING AMOUNT RS. 30,85,700/- FO:) 40,50,000/- DS PSD FN;S FTLESA VFRFJDR JDE DKS C;KT ISVS NSUS CRK;K GS \ MKJ 'KQ: ESA 1% C;KT NSUK R; GQVK FKK RFKK CKN DH VOF/K ESA 2 IZFRKR DH NJ LS NSUK R; GQVK FKKA IZFKE O'K Z ESA 1 IZFRKR NSUK R; GQVK RFKK NWLJS O'KZ EAS 2 IZ FRKR NSUK R; GQVK FKKA BLDH X.KUK FUEU IZDKJ LS GS & 25.04.2007 LS 31.12.2007 @ 1% 2,54,570/- 01.01.2008 LS 15.12.2008 @ 2% 7,09,711/- 9,64,281/- IZU 15 ESA JH VKSE IZDKK PKS/KJH DK C;KU FN[KK JG K GSA BLESA MUGKSUS LOHDKJ FD;K GS FD CQFDAX DS LE; 30 YK[K :I;S FN;S FKS TKS CHEQUE LS FKS RFKK 10.50 YK[ K :I;S UDN ESA FN;S FKS ;G JKFK VKI }KJK JH VKSE IZDKK PKS/KJH DKS FN;S X;S CHEQUES DH JDE LS GWCGW ESY [KKRH GSA BL CKJS ES VKIDKS D;K DGUK GS \ MKJ ESUS DKSBZ UDN :I;K UGHA FY;KA IZU 16 VKIUS JH VKSE IZDKK PKS/KJH DKS 964281/- : I;S C;KT DS ,OT ESA PSD NSUK CRK;K GS \ MKJ ESUS LR; CKR DH GSA FURTHER, THE QUESTION NOS. 04 TO 10 (APB 25-27) WHEREIN SHRI SURESH CHAND JAIN HAS EXPLAINED THE TRANSACTION ARE ALSO RELEVAN T WHICH ARE ALSO REPRODUCED HEREIN BELOW FOR SAKE OF CONVENIENCE. IZ'U 4 VKI JH VKSE IZDKK PKS/KJH FUOKLH 1626, PKSM +K JKLRK DKS TKURS GS \ MKJ ESAUS JH VKSE IZDKK PKS/KJH DKS ,D YSV CSPK GS RC LS TKURK GWA IZ'U 5 VKILS JH VKSE IZDKK PKS/KJH US FDL COMPLEX ESA FLAT [KJHNK GS MLDK UECJ D;K GS \ 11 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY MKJ JH VKSE IZDKK PKS/KJH DKS ESUS MERRY HOMES 3B /1 EKSRH MAXWJH JKSM+ ESA 603 UECJ DK YSV CSPK GSA IZU 6 BL YSV DKS [KJHNUS FD;S JH VKSE IZDKK PKS/ KJH US DC&DC HKQXRKU FD;K FKK \ MKJ BL YSV DKS [KJHNUS DS FY;SS FUEU IZDKJ LS HKQ XRKU FD;K GS & FNUKAD 25.04.2007 RS. 30,85,700/- PSD UA- 35145 ;WUKBVSM CSAD VKWQ BF.M;K] T;IQJ DK FNUKAD 18.012.2010 RS. 60,000/- PSD UA- 070360 ;WUKBVSM CSAD VKWQ BF.M;K] T;IQJ FNUKAD 04.02.2011 RS. 3,00,000/- PSD UA- 079208 ;WUKBVSM CSAD VKWQ BF.M;K] T;IQJ DQY JDE 34,45,700/- IZU 7 VKIUS YSV DH JFTLVH DC DJOKBZ GS \ MKJ BL YSV DH JFTLVH 08.02.2011 DKS RS. 34,45,70 0//- DS EWY; IJ GQBZ GSA IZU 8 ESA JH VKSE IZDKK PKS/KJH DS IKL LS VK;DJ V F/KFU;E DS IZKO/KKUKSA DS VURXZR TIR DQN PSD FN[KK JGK GW FTUDK FOOJ.K FUEU IZDKJ GS & S.NO. CHEQUE NO. DATE AMOUNT 1. 242839 11.05.2007 5,00,000/ - 2. 242833 02.05.2007 4,00,000/ - 3. 242821 25.04.2009 3,00,000/ - 4. 242817 2,00,000/ - 5. 242816 3,50,000/ - 6. 242815 3,00,000/ - 7. 242814 5,00,000/ - 8 242813 5,00,000/ - ;S PSD ES- LUJKBT FCYMLZ US TKJH FD;S GS D;K VKI BL S LR; LOHDKJRS GS\ MKJ ESA LOHDKJ DJRK GW FD ;S PSD ES- LUJKBT FCYML Z US GH JH VKSE IZDKK PKS/KJH DKS FN;S GSA ES- LUJ KBT FCYMLZ DK IZKSIZKBVJ GWA IZU 9 VKIUS JH VKSE IZDKK PKS/KJH DKS FDL MS; L S ;S PSD FN;S FKS \ MKJ JH VKSE IZDKK PKS/KJH DKS LE; IJ YSV CUK DJ NSUK FKK RKS OG ESA NS UGHA LDK RKS BUGKSAUS C;KT D S LKFK :I;S EKAX FY;SA IZU 10 VKIUS VKSE IZDKK PKS/KJH DKS FDRUS :I;S D S PSD FN;S FKS \ 12 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY MKJ ESAUS JH VKSE IZDKK PKS/KJH DKS 40,50,000/- DS PSD FN;S FKS VKIUS IZU 8 MKJ PSD UA- 242812 F NUKAD _____ RS. 10,000,00/- DK MYYS[K UGHA FD;K GSA BL PSD DH JDE TKSM+US IJ D QY RS. 40,50,000/- DK HKQXRKU FD;K FKKA THUS, IT CAN CLEARLY BE SEEN THAT THE BUILDER HAS A LSO CATEGORICALLY RE- CONFIRMED THE REFUND OF BOOKING AMOUNT ALONGWITH IN TEREST THROUGH CHEQUES TO THE ASSESSEE AND FURTHER IN REPLY TO SPECIFIC QUERY IN QUESTION NO. 15, HE HAS CATEGORICALLY DENIED HAVING RECEIVED ANY AMOUNT IN CASH FROM ASSESSEE WHICH FACT WAS COMPLETELY IGNORED BY LD. AO & LD. CIT(A) WHO D ESPITE OF THIS CATEGORICAL CONFIRMATION OF FACTS BY THE BUILDER, STILL WANT AN Y EVIDENCE. IT IS ALSO A MATTER OF FACT THAT THE BUILDER IS INDEPENDENT PARTY AND NOT RELAT ED TO ASSESSEE IN ANY MANNER. THE HONBLE SUPREME COURT IN THE CASE OF PULLANGODE RUBBER INDUSTRIES REPORTED AT 91 ITR 18 HAS HELD THAT CONFESSION IS IMPORTANT PIECE OF EVIDENCE UNLESS CONTROVERTED BY SOME EVIDENCE IN OUR CASE, THE ASS ESSEE UNDER WRONGFUL BELIEF THOUGH HAD ADMITTED RS. 10.50 LACS AS HIS UNDISCLOS ED INVESTMENT IN PRELIMINARY STATEMENTS HOWEVER, LATER-ON, HAS BEEN ABLE TO SUBS TANTIATE THE SAME IN EVERY POSSIBLE MANNER SUCH AS THE STATEMENT OF THE BUILDE R WHO MADE CATEGORICAL ADMISSION OF PAYMENT OF INTEREST. IT IS ALSO A MATT ER OF FACT THAT ASSESSEE IS HAVING INCOME FROM MONEY LENDING BUSINESS AND IN SUCH A SI TUATION ANY PERSON ENGAGED IN MONEY LENDING ALWAYS DESIRES TO RECOVER THE LOSS OF INTEREST ON THE PRINCIPAL AMOUNT OF BOOKING OCCURRED DUE TO FAILURE ON THE PART OF B UILDER IN GIVING POSSESSION IN TIME. FURTHER, THE STATEMENTS MADE BY THE BUILDER U/S 131 AND THE SUBMISSIONS MADE BY ASSESSEE REMAINED UNCONTROVERTED. ADDITION OF RS. 10.50 LACS AS UNEXPLAINED MONEY WAS MADE SOLELY FOR THE REASON TH AT ASSESSEE IN THE STATEMENTS RECORDED U/S 132(4) ADMITTED THE SAME AS HIS INCOME BY IGNORING THE AMPLE EVIDENCES AVAILABLE ON RECORD. THE ABOVE SUBMISSIONS ARE SUMMARIZED AS UNDER: (I) THAT THE ASSESSEE HAS NEVER PAID ANY AMOUNT IN CASH TO THE BUILDER. THE AMOUNT OF RS. 10.50 LACS REPRESENTS THE INTEREST PAID BY THE BUILDER TO ASSESSEE AND THERE IS NO EVIDENCE OF ANY CASH PAYMENT TO BUILDER. ALL THESE FACTS WERE ALSO ADMITTED BY THE BUILDER IN HIS STATEMENTS RECORDED U/S 131 WHICH RE MAINED UNCONTROVERTED BY LD. AO. (II) FURTHER, IF AT ALL IT IS PRESUMED THAT, ANY AMOUNT WAS GIVEN IN CASH, THEN WHY THE BUILDER SHALL RETURN THE SAME THROUGH PAYEE S ACCOUNT CHEQUE AS NO PRUDENT BUSINESSMAN ON THIS EARTH SHALL ACT IN S UCH MANNER . IT IS A PRACTICAL REALITY THAT, IF A PERSON RECEIVES AN AMO UNT IN CASH, HE SHALL NEVER RETURN THE SAME THROUGH BANKING CHANNEL. 13 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY (III) NO ACTION WHATSOEVER WAS TAKEN IN THE CASE OF BUILD ER REGARDING THIS ALLEGED CASH RECEIPT BY THE DEPARTMENT FURTHER STRENGTHEN ASSESS EES CONTENTION. (IV) THE LD. AO SOLELY ON THE BASIS OF STATEMENTS OF ASS ESSEE RECORDED U/S 132(4) PRESUMED THAT THE ASSESSEE HAS MADE CASH PAYMENT TO THE BUILDER WITHOUT BRINGING ON RECORD ANY CORROBORATIVE MATERIAL TO SU PPORT HIS ALLEGATION. THE ALLEGED ADMISSION MADE IN THE PRELIMINARY STATEMENT WAS RET RACTED BY ASSESSEE LATER ON WITH PLAUSIBLE EVIDENCE IN THE SHAPE OF INDEPENDENT ADMISSION OF BUILDER. HOWEVER, THE SAID RETRACTION WAS NOT ACCEPTED BY THE LD. AO ON THE GROUND THAT THE RETRACTION WAS MADE AFTER A GAP OF 10 MONTHS. IT IS FURTHER SUBMITTED THAT THE SURRENDER WAS OBTAINED BY THE INVESTIGATION WING FR OM THE ASSESSEE WITHOUT PERMITTING HIM TO REFER THE BOOKS OF ACCOUNTS AND O THER DOCUMENTS AND WHEN THE ASSESSEE AFTER RECEIVING THE COPIES OF THE STATEMEN TS AND THE OTHER PAPERS FOUND AND SEIZED FROM THE LOCKER BY THE DEPARTMENT HAS FI LED HIS RETURN OF INCOME AFTER MAKING DUE RECONCILIATION WITH THE BOOKS OF ACCOUNT S AND OTHER RECORDS MAINTAINED AND SINCE THE COPIES OF THE STATEMENTS AND DOCUMENT S WERE PROVIDED TO THE ASSESSEE AFTER THE LAPSE OF ALMOST 9 MONTHS OF THE SEIZURE, IT CANNOT BE SAID THAT THE ASSESSEE HAS RETRACTED AFTER A SUBSTANTIAL PERI OD OF TIME OF MORE THAN 10 MONTHS WHEN ALMOST 9 MONTHS HAVE BEEN TAKEN BY THE DEPARTMENT FOR THE SUPPLY OF PHOTOCOPIES OF THE DOCUMENTS SEIZED AND THE REAS ONS FOR DELAY IN SUPPLYING COPIES IS BEST KNOWN TO THE DEPARTMENT. (V) THEREFORE, IT IS HUMBLY SUBMITTED THAT IN THE PRESE NT CASE THIS STATEMENT OF ASSESSEE WAS NOT BASED UPON ANY CREDIBLE EVIDENCE A ND THE SAME HAS BEEN RETRACTED AS SOON AS IT BECAME POSSIBLE FOR ASSESSE E TO DO SO. THERE IS NO EVIDENCE FOUND AND SEIZED SHOWING THAT THAT ASSESSEE HAS MAD E ANY CASH PAYMENT TO THE BUILDER. NO DOCUMENT IN THIS REGARD WAS SEIZED FROM THE PREMISES OF THE ASSESSEE. THEREFORE, SUCH ADDITION MADE ONLY ON THE BASIS OF A STATEMENT WHICH HAS BEEN RETRACTED THEREAFTER AND IS NOT SUPPORTED BY ANY CO RROBORATIVE MATERIAL ARE NOT SUSTAINABLE. (VI) THE BUILDER WAS THE WITNESS OF THE DEPARTMENT WHOSE STATEMENTS WERE RECORDED BY LD. AO BY ISSUING SUMMONS U/S 131 WITHOUT THE RE QUEST OF ASSESSEE AND WHEN HE CONCUR WITH THE VERSION OF THE ASSESSEE, LD. AO HAS IGNORED / DISBELIEVED THE SAME WITHOUT BRINGING ON RECORD ANY CONTRARY EVIDEN CE. IN THIS REGARD, RELIANCE IS PLACED ON THE FOLLOWING CASE LAWS: 1. KAILASHBEN MANGARLAL CHOKSHI VS CIT (2008) 174 TAXMANN 466 (GUJ.) / (2008) 14 DTR 257 (GUJ.) 2. ARUN KUMAR BHANSALI VS DCIT (2006) 10 SOT 46 (BANG) (URO)BLOCK PERIOD 1990-91 TO 1999-2000 3. SHREE CHAND SONI VS DCIT (2006) 101 TTJ (JD) 1028 4. RAJESH JAIN VS DCIT (2006) 100 TTJ (DEL) 929 5. INDIA SEED HOUSE V S ASSTT. CIT (2000) 69 TT J (DELHI) (TM) 241 14 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY 6. PRANAV CONSTRUCTION CO. VS ASSTT. CIT (1998) 3 DTC 719 (MUM-TRIB) (1998) 61 TTJ (MUM.-TRIB) 145 7. GANGA SARAN & SONS (P) LTD. VS ITO (1981) 130 ITR 1 (SC) : ITO VS NAWAB MIR BARKAT AU KHAN BAHADUR (1974) 97 ITR 239 (SC) 7.1. ON THE OTHER HAND, THE LD. D/R OPPOSED THE SUB MISSIONS AND SUBMITTED THAT THE ADDITION WAS MADE ON THE SPECIFIC ADMISSION MAD E BY THE ASSESSEE IN THE STATEMENTS RECORDED DURING THE COURSE OF SEARCH. H E FURTHER SUBMITTED THAT THE STORY COOKED UP BY THE ASSESSEE THAT THE DIFFERENCE OF BOOKING AMOUNT AND CHEQUES FOUND IN THE LOCKER OF RS.10,50,000/- IS TOWARDS TH E INTEREST PAYABLE AT THE TIME OF CANCELLATION OF BOOKING IS AN AFTERTHOUGHT AS REFL ECTED FROM THE STATEMENTS RECORDED DURING THE SEARCH. THEREFORE, THE AUTHORITIES BELOW HAVE RIGHTLY TREATED THE SAME AS UNEXPLAINED INCOME OF ASSESSEE U/S 69A OF THE ACT. 7.2. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS PAS SED BY THE AUTHORITIES BELOW. WE ARE OF THE VIEW THAT THE AUTHORITIES BELOW HAVE FAILED TO APPRECIATE THE FACTS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE STA TEMENTS OF THE BUILDER WERE ALSO RECORDED U/S 131 BY THE ASSESSING OFFICER WHER EIN HE CATEGORICALLY EXPLAINED THE CIRCUMSTANCES UNDER WHICH THE CHEQUE FOR THE AD DITIONAL AMOUNT OF RS. 10,50,000/- WAS GIVEN TO THE ASSESSEE. FURTHER, WE ARE IN AGREEMENT WITH THE CONTENTION OF THE LD. AR THAT IN NORMAL COURSE NO B UILDER WOULD GIVE THE CHEQUE AGAINST THE AMOUNT RECEIVED IN CASH AND WOULD NOT R ECORD IN THE BOOKS OF ACCOUNTS. EXCEPT THE SO CALLED ADMISSION OF THE ASSESSEE DURI NG THE COURSE OF SEARCH OF THE LOCKER WHICH STOOD REBUTTED BY MAKING A PROPER EXPL ANATION OF THE EVENTS WITH THE 15 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY NECESSARY SUPPORTING AND CIRCUMSTANTIAL EVIDENCES A S WELL AS THE INFERENTIAL VALUE AND ALSO CONFIRMED BY THE OTHER PARTY I.E. THE BUIL DER, THE ASSESSING OFFICER HAS FAILED TO BROUGHT ON RECORD ANY MATERIAL TO ESTABLI SH THAT THE ASSESSEE HAS MADE THE PAYMENT OF RS. 10,50,000/- IN CASH FOR THE ACQUISIT ION OF THE HOUSE PROPERTY OUT OF HIS UNDISCLOSED INCOME. UNDER THESE CIRCUMSTANCES, WE HAVE NO DOUBT THAT THE ADDITION MADE BY THE AUTHORITIES BELOW WERE WITHOUT ANY JUSTIFICATION AND COGENT REASONS THUS THE SAME IS NOT IN ACCORDANCE WITH LAW . ACCORDINGLY THE ADDITION OF RS. 10,50,000/- IN THE HANDS OF THE ASSESSEE IS DELETED . IN LIGHT OF ABOVE, THE GROUNDS OF APPEAL NOS. 1 TO 1.2 OF ASSESSEE ARE ALLOWED. 8. REGARDING GROUNDS NOS. 2 TO 2.3, THE AR OF THE A SSESSEE SUBMITTED AS UNDER: BRIEF FACTS PERTAINING TO THESE GROUNDS OF APPEAL ARE THAT DURING THE COURSE OF SEARCH ON LOCKER NO. 347, BIRANI SAFE VAU LTS, JOHARI BAZAR, JAIPUR, CERTAIN ITEMS OF JEWELLERY / PRECIOUS / SEMI PRECIO US STONES WERE FOUND AND SEIZED. THESE ITEMS WERE VALUED AT RS. 8,63,267/- B Y THE REGISTERED VALUER WHICH IS ALWAYS AT THE PREVAILING MARKET PRICE AS O N THE DATE OF VALUATION. IN THIS REGARD, IT IS SUBMITTED THAT THE VALUATION WAS CARRIED OUT IN THE ABSENCE OF ASSESSEE, WHICH IS EVIDENT FROM THE FACT THAT SE ARCH ON LOCKER NO. 347 (FROM WHICH STOCK WAS FOUND) WAS CARRIED OUT AFTER BREAKING IT OPEN. HOWEVER, SUBSEQUENTLY REQUESTS WERE MADE ON VARIOUS OCCASIONS SINCE 16- 11-2009 TO PROVIDE COPY OF STATEMENTS RECORDED, SEI ZED DOCUMENTS, ANNEXURES ATTACHED TO STATEMENTS ETC. COPY OF STATE MENTS WAS PROVIDED TO ASSESSEE ON 07-12-2009, HOWEVER ANNEXURES TO STATEM ENTS WHICH INCLUDED VALUATION REPORT ALSO WERE NOT PROVIDED AND FINALLY WERE PROVIDED AT A LATER STAGE. ON PERUSAL OF THE SAME APPELLANT LEARNT ABOU T SUCH OVERVALUATION AND THEREFORE VIDE LETTER DATED 16.09.2011 (APB 21-22) REQUESTED TO LD. AO TO GET IT REVALUED AS THE STOCK WAS LYING WITH DEPARTM ENT ONLY, HOWEVER NO ACTION WAS TAKEN BY LD. AO. THAT, AS A MATTER OF FACT, UPTO THE A.Y. 1997-98 AS SESSEE WAS ENGAGED IN THE BUSINESS OF TRADING OF PRECIOUS & SEMI PRECI OUS STONES IN PARTNERSHIP 16 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY UNDER THE NAME & STYLE AS M/S A.U. GEMS AND AT THE TIME OF CLOSURE OF BUSINESS, FIRM WAS HAVING STOCK OF GOODS WHICH WAS DEAD STOCK I.E. THE REJECTED STOCK PILED UP OVER A PERIOD OF YEARS WHIC H IS A COMMON FEATURE IN THE TRADE OF GEMS & JEWELLERY WHERE GOOD AND BETTER QUALITY GOODS STOOD SOLD AND THE REJECTED / SORTED OUT PIECES HAVING VE RY LOW OR NO VALUE REMAINED IN STOCK. THIS STOCK WAS TAKEN OVER BY THE ASSESSEE, THE COST OF THE SAID GOODS WAS OF RS. 14,381/- (COPY OF RELEVANT BI LL AT APB 23) WHICH WAS FILED BEFORE LD. AO. FOR SAFE CUSTODY OF THE SAID S TOCK, ASSESSEE KEPT THE SAME IN LOCKER WHICH WAS FOUND DURING THE COURSE OF SEARCH. THE GOODS AS FOUND IN THE LOCKER OF THE ASSESSEE WAS ACQUIRED IN A.Y. 1997-98 AND WHICH PERIOD IS BEYOND THE PERIOD FALLING U/S 153A/153C H OWEVER, TO BUY THE PEACE OF MIND AND TO AVOID LITIGATION ASSESSEE HAS DECLAR ED A SUM OF RS. 2,50,000/- AS UNEXPLAINED INVESTMENT IN THE ACQUISITION OF SAI D GOODS IN THE RETURN OF INCOME FILED FOR A.Y. 2010-11 (APB 39-44) . IT IS AN ESTABLISHED FACT THAT THE VALUATION AS DON E AT THE TIME OF SEARCH WAS BASED ON MARKET PRICE PREVAILING AS ON T HE DATE OF SEARCH AND SINCE THE GOODS UNDER QUESTION WERE ACQUIRED BY THE ASSESSEE SINCE LONG BACK (IN F.Y. 1996-97) THUS, THE COST OF THE SAME W OULD ALWAYS BE LOWER AND CANNOT BE PUT AT PAR WITH PRESENT MARKET VALUE AND SINCE THE VALUATION WAS MADE BEHIND THE BACK OF THE ASSESSEE, HE HAS OBJECT ED TO THE VALUATION SO DONE. IT WAS FURTHER SUBMITTED BEFORE THE LD. AO TH AT IN THE EVENT HE INTENDS TO STILL PROCEED TO CONSIDER THE VALUE OF THE SAID GOODS AS VALUED BY THE DEPARTMENTAL VALUER, HE WAS REQUESTED TO GET REVALU ED THE ENTIRE GOODS WHICH IS STILL IN POSSESSION OF THE DEPARTMENT VIDE LETTER DATED 16.09.2011 (APB 21-22) , (REPRODUCED IN ASSESSMENT ORDER AT PAGE NO. 16-17 , PARA 8.2). IN THE SAME LETTER IT WAS FURTHER PROPOSED TH AT THE SAID GOODS BE APPROPRIATED AT THE VALUE DETERMINED BY DEPARTMENTA L VALUER AT RS. 8,63,267/- AGAINST THE DEMAND, IF ANY, CREATED AND IN THAT SITUATION ASSESSEE WAS READY TO GIVE THE ENTIRE GOODS TO THE DEPARTMEN T ON THE PRICE VALUED BY VALUER DURING SEARCH (APB 21-22). EVEN THE ASSESSEE COMMUNICATED HIS WILLINGNESS TO OFFER THE ENTIRE STOCK AT RS. 2.50 L ACS AS ADMITTED BY HIM AS THE COST OF THE SAID GOODS. HOWEVER, NONE OF THE CONTEN TIONS SUBMITTED BY ASSESSEE AND PROPOSALS SO MADE WERE ACCEPTED BY LD. AO AND MERELY ON THE BASIS OF ASSUMPTIONS AND PRESUMPTIONS, DIFFERENCE A MOUNT OF RS. 6,90,614/- WAS ADDED TO THE INCOME OF ASSESSEE, WHICH WERE SUB SEQUENTLY CONFIRMED BY LD. CIT(A) ON THE SAME FOOTING. WITH THE ABOVE BACKGROUND, IT IS HUMBLY SUBMITTED T HAT THE LOWER AUTHORITIES HAVE GROSSLY ERRED IN NOT CONSIDERING T HE FACT THAT, THE JEWELLERY / 17 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY STONES SO FOUND AND SEIZED PERTAINED TO A PERIOD PR IOR TO THE BLOCK OF THE ASSESSMENT YEARS UNDER CONSIDERATION, AND THEREFORE , THE SAME COULD NOT HAVE BEEN CONSIDERED IN ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER APPEAL. FURTHER, IT WAS NOT ACCEPTED THAT THE JEWELLERY / S TONES DID NOT HAVE ANY VALUE MORE THAN RS. 2,50,000/- AT THE MOST WHIC H HAS ALREADY BEEN OFFERED TO TAX IN THE A.Y. 2010-11. IN SPITE OF THE SPECIFIC REQUESTS MADE, THE SAME WERE NOT GOT REVALUED BY THE LD. AO EVEN THOUG H THE GOODS HAD BEEN LYING IN THE POSSESSION OF DEPARTMENT WHICH PROVES THE WEAKNESS OF THE ALLEGATION OF LD. AO. ALSO, THE OFFER OF ASSESSEE T HAT THE JEWELLERY / STONES MAY BE APPROPRIATED AGAINST THE DEMAND IF CREATED C ONSIDERING THE VALUE THEREOF AT RS. 08,63,267/- WAS NOT ACCEDED BY LD. C IT(A), WHICH FURTHER PROVES THAT THE ALLEGATION OF LD. AO REGARDING THE VALUE OF THE JEWELLERY IS BASELESS AND UNSUPPORTED. IT IS FURTHER SUBMITTED THAT SINCE SEARCH AND SEIZU RE ACTION IN THE CASE OF ASSESSEE TOOK PLACE ON 08.09.2009 WHICH FALLS IN THE F.Y. 2009-10 RELEVANT TO A.Y. 2010-11, THEREFORE, THE VALUE OF STOCK SO F OUND COULD AT THE MOST COULD BE CONSIDERED AND IF EXPLANATION IS NOT FOUND SATISFACTORY BE ADDED TO THE INCOME OF A.Y. 2010-11 ONLY AND NOT THE INCOME OF A.Y. 2008-09 WHEN THE LOCKER WAS OPERATED ON MANY OCCASION THEREAFTER . THERE WAS NO EVIDENCE ON RECORD WITH THE LD. AO TO INDICATE THAT THE STOC K SO FOUND AND SEIZED PERTAINED TO THE ASSESSMENT YEAR UNDER APPEAL I.E. A.Y. 2008-09. THEREFORE, IN THE ABSENCE OF ANY SUCH MATERIAL ON RECORD, IT I S TO BE PRESUMED THAT THE SAME PERTAINED TO THE ASSESSMENT YEAR RELEVANT TO T HE PREVIOUS YEAR IN WHICH SEARCH WAS CONDUCTED. THE LD. AO WHILE TREATING THE SAME OF YEAR UNDER CONSIDERATION HAD TRIED TO BASED HIS CONCLUSION ON THE UNRECORDED SALES MADE WHICH ACTUALLY WAS UPTO F.Y. 2009-10 RELEVANT TO A. Y. 2010-11 AS IS EVIDENT FROM FUND FLOW STATEMENT PREPARED TO WORK OUT UNDIS CLOSED INCOME BASED ON SEIZED MATERIAL. FURTHER LD. AO HAS NOT BROUGHT ON RECORD ANY EVIDENCE THAT THE SAID GOODS WERE PUT IN LOCKER IN F.Y. 2007-08 R ELEVANT TO ASSESSMENT YEAR UNDER APPEAL WHERE IN THE SAME LOCKER VARIOUS HUNDI S ISSUED AFTER 31.03.2008 WERE FOUND INCLUDING A HUNDI DATED 03.08 .2009 WERE FOUND AS ON THE DATE OF SEARCH MEANING THEREBY THAT THE LOCKER WAS LASTLY OPERATED BETWEEN 03.08.2009 TO 08.09.2009 WHEN IT WAS BREAK OPEN BY DEPARTMENT. ACCORDINGLY, THE ACTION OF LD. AO IN MAKING THE CON CERNED ADDITIONS TO THE INCOME OF THE YEAR UNDER APPEAL WITHOUT ESTABLISHIN G ANY NEXUS BETWEEN THE STOCK SEIZED AND THE ASSESSMENT YEAR UNDER APPEAL W AS BAD IN LAW AND DESERVES TO BE STRUCK DOWN. 18 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY FURTHER THE SURRENDER MADE AT RS. 2.50 LACS AN AMOU NT OF SUCH GOODS WAS IN A.Y. 2010-11 WITHOUT GIVING CREDIT IN THE YE AR UNDER APPEAL WHICH TANTAMOUNT TO DOUBLE ADDITION THOUGH ADMITTEDLY A D EDUCTION TO THE TOTAL INCOME COMPUTED FOR A.Y. 2010-11 WAS MADE. THEREFORE, IT IS PRAYED THAT THE ADDITION OF RS. 06 ,90,614/- MAY PLEASE BE DIRECTED TO BE DELETED. 8.1. ON THE OTHER HAND, THE LD. CIT DR SUPPORTED TH E ORDERS OF THE AUTHORITIES BELOW AND CONTENDED THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER WAS IN ACCORDANCE WITH THE LAW AND PRAYED FOR CONFIRMATION OF THE ADDITION SO MADE. 8.2. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED T HE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS PASSED BY THE AUTHORITI ES BELOW. IN OUR OPINION, THE AUTHORITIES BELOW HAS FAILED TO APPRECIATE THE FACT THAT THE SUBJECT GOODS WERE FOUND IN THE LOCKER AT THE TIME OF SEARCH ALONGWITH THE O THER PAPERS WHICH INCLUDES THE DOCUMENTS PERTAINING TO A.Y. 2010-11, THEREFORE, IN NO CIRCUMSTANCES THE STOCK SO FOUND COULD BE CONSIDERED FOR THE YEAR UNDER APPEAL . FURTHER THE LD. AR HAS DEMONSTRATED BEFORE US THAT THERE WERE SALES WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS PERTAINING TO THE PERIOD SUBSEQUENT TO THIS ASSESSMENT YEAR. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, NO A DDITIONS ARE WARRANTED AS THE PRESUMPTION PERMITTED TO BE DRAWN U/S 132 OF THE I. T. ACT ONLY TAKES INTO ITS SCOPE THE ADDITION ON ACCOUNT OF ANY VALUABLE FOR WHICH N O COGENT EVIDENCE IS AVAILABLE COULD BE MADE IN THE FINANCIAL YEAR IN WHICH IT IS FOUND. THEREFORE, CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, TH E ADDITION MADE IS UNCALLED FOR. THEREFORE, THE AO IS DIRECTED TO DELETE THE ADDITIO N. 19 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY 9. NOW WE TAKE UP APPEAL IN ITA NO. 468/JP/2015. TH E ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT (A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS. 3,00,000/- MADE ON ACCOUNT OF UNACCOUNTED ADVANCE WITHOUT CONSIDERI NG THE FACT THAT THE ASSESSEE HAS RECEIVED THESE CHEQUES FROM H IS RELATIVE TO HAND OVER THE SAME TO THIRD PARTY AS LOAN HOWEVER, THE SAME COULD NOT BE HANDED OVER AND THE CIT (A) WITHOUT CONSIDER ING THE SUBMISSION MADE HAS UPHELD IT TO BE UNACCOUNTED MON EY OF THE ASSESSEE ARBITRARILY, THUS THE ACTION OF THE LD. CI T (A) DESERVES TO BE HOLD BAD IN LAW AND THE ADDITION SUSTAINED DESER VES TO BE DELETED. 1.1. THAT THE LD. CIT (A) HAS FURTHER ERRED IN UPHOLDING THE ADDITION OF RS. 36,000/- AS INTEREST INCOME ON AMOUNT OF RS. 3,00,000/- ARBITRARILY WITHOUT CONSIDERING THE FACT THAT THE A MOUNT WAS NEVER ADVANCED, THUS THE ADDITION OF RS. 36,000/- O N ACCOUNT OF ACCRUED INTEREST DESERVE TO BE DELETED TOTO. 10. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE, AN INDIVIDUAL, WAS ENGAGED IN THE BUSINESS OF MONEY LENDING, BESIDES TRADING I N PRECIOUS AND SEMI-PRECIOUS STONES. DURING SEARCH AND SEIZURE ACTION U/S 132 AC T, 1961 CARRIED OUT ON 08.09.2009 AT VARIOUS PRIVATE VAULTS INCLUDING TWO VAULTS I.E. BIRANI SAFE VAULTS, JOHARI BAZAR AND CHORADIA SAFE DEPOSIT, CHAURA RAST A, JAIPUR IT WAS FOUND THAT THE APPELLANT HAD LOCKERS BEARING NO. 347 AND 202 RESPE CTIVELY. DURING THE COURSE OF SEARCH, THE LOCKERS WERE BREAK OPEN AS THE ASSESSEE WAS NOT AVAILABLE AND LOCKER NO. 202 OF CHORADIA SAFE DEPOSIT WAS FOUND EMPTY. C ERTAIN LOOSE PAPERS AND GOODS WERE FOUND IN LOCKER NO. 347 OF BIRANI SAFE VAULTS WHICH WERE INVENTORIED, VALUED AND SEIZED BY THE DEPARTMENT. ASSESSEE FILED THE RE TURN OF INCOME AT RS. 39,13,060/-. DURING THE COURSE OF SEARCH IN THE LOC KER, TWO CHEQUES OF RS. 1.00 AND 20 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY RS. 2.00 LACS RESPECTIVELY ISSUED BY SHRI A.K. KALA WERE FOUND. THE AO BY HOLDING THAT THE SAME HAVE BEEN OBTAINED AS SECURITY AGAINS T THE UNDISCLOSED CASH LOAN ADVANCED, MADE THE ADDITION OF RS. 3,00,000/- TO TH E INCOME OF THE ASSESSEE. FURTHER AN ADDITION OF RS. 36,000/- WAS MADE BY HOL DING THE SAME AS INTEREST @ 1% RECEIVED ON SUCH ADVANCE DURING THE PREVIOUS YEAR R ELEVANT TO ASSESSMENT YEAR BEFORE US. 11. REGARDING GROUNDS OF APPEAL NO. 1 TO 1.1 , THE LD. COUNSEL OF THE ASSESSEE SUBMITTED AS UNDER: BRIEF FACTS PERTAINING TO THESE GROUNDS OF APPEAL ARE THAT, DURING THE COURSE OF SEARCH CERTAIN CHEQUES WERE FOUND IN THE LOCKERS INCLUDING TWO CHEQUES WHICH WERE PLACED AT SERIAL NO. 41 & 44 OF ANNEXURE AS-1 (APB 09-10) , BEARING AMOUNTS OF RS. 1,50,000/- AND RS. 2,50,000/- RESPECTIVELY, WHICH, WERE READ BY LD. AO AS 1,00,000/- AND 2,50,000/- RESPECTIVELY, ISSUED BY O NE SHRI A.K. KALA WHO IS BROTHER- IN-LAW OF ASSESSEE. IT IS SUBMITTED THAT, SINCE THE ASSESSEE HAS BEEN I N THE BUSINESS OF MONEY LENDING, THEREFORE, SH. A.K. KALA HAD GIVEN THESE C HEQUES TO ASSESSEE FOR THE PURPOSE OF LENDING THE AMOUNT MENTIONED THEREIN IN MARKET ON INTEREST. WITH REGARD TO THE AVAILABILITY OF THESE CHEQUES WITH APPELLANT , SINCE BEGINNING FROM THE DATE OF SEARCH IN THE STATEMENTS RECORDED U/S 132(4) (APB 18-21) TO THE STAGE OF LD. CIT(A), IT WAS EXPLAINED AND CONTENDED THAT SHRI A. K. KALA IS BROTHER IN LAW OF ASSESSEE AND HAD HANDED OVER THESE CHEQUES FOR INVE STING THEM IN MONEY LENDING BUSINESS ON INTEREST AS HE IS NOT WELL VERSE OF FIN ANCIAL MARKET OF MONEY LENDING AND ASSESSEE IS USED TO LENT MONEY. HOWEVER, AS THERE W AS NO DEMAND IN MARKET, ASSESSEE COULD NOT GIVE THESE CHEQUES AND FOR SAFE CUSTODY HAS KEPT THEM IN LOCKER WHICH STOOD SEIZED WHEN THE LOCKER WAS BREAK OPEN. IN THIS REGARD, ATTENTION OF THE HONBLE BENCH IS INVITED TO REPLY TO Q.NO. 11 OF TH E STATEMENTS OF ASSESSEE RECORDED U/S 132(4) DURING THE COURSE OF SEARCH (APB 18-21) WHEREIN ASSESSEE AT FIRST INSTANCE HAS CATEGORICALLY EXPLAINED THE REAL NATUR E OF TRANSACTION OF THESE CHEQUES, WHICH IS REPRODUCED AS UNDER FOR SAKE OF READY REFE RENCE (APB 19 BACK SIDE LAST PAPER) : 21 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY IZ011 ESA VKIDKS VKIDS YKWDJ LA- 347] FCJKUH LSQ LS TCR LKEKU @ NLRKOST FN[KK JGK GWW D`I;K BUGS NS[K DJ CRK;S FD ;S D;K GS RFKK FDU LS LACAF/KR GSA MKJ%& ESA BU NLRKOSTKS DKS E LA- NS[K DJ FUEU IZD KJ CRK JGK GWW%& 1. ANNEXURE K-1, 2. ANNEXURE K, 3. ANNEXURE AS-1 ESAUS ;G ,USDLJ NS[K FY;K GS ;S LHKH YWT ISIJ] PSD VKFN GS BU ISILZ ESA DJHC 50]00]000@& IPKL YK[K :- UDN ESA C;KT IJ PYK;S GQ , GS BUESA LS DQN IKFVZT LS GEUS LSD;QFJFV DS RKSJ IJ PSD HKH FY;S GQ , GS IST UA IST UA IST UA IST UA- -- - 41 RFKK 44 IJ NKS 41 RFKK 44 IJ NKS 41 RFKK 44 IJ NKS 41 RFKK 44 IJ NKS PSD GS FTUDK VEKMUV : PSD GS FTUDK VEKMUV : PSD GS FTUDK VEKMUV : PSD GS FTUDK VEKMUV :- -- - E LA E LA E LA E LA- -- - 1 11 1- -- -50 RFKK 2 50 RFKK 2 50 RFKK 2 50 RFKK 2- -- -50 YK[K GS ESA PSD ESJS LKYS JH 50 YK[K GS ESA PSD ESJS LKYS JH 50 YK[K GS ESA PSD ESJS LKYS JH 50 YK[K GS ESA PSD ESJS LKYS JH VKKSD DKYKTH US EQ>S C;KT IJ :I;K EKDSZV ESA PYKUS DS FY, FN;S GS VKKSD DKYKTH US EQ>S C;KT IJ :I;K EKDSZV ESA PYKUS DS FY, FN;S GS VKKSD DKYKTH US EQ>S C;KT IJ :I;K EKDSZV ESA PYKUS DS FY, FN;S GS VKKSD DKYKTH US EQ>S C;KT IJ :I;K EKDSZV ESA PYKUS DS FY, FN;S GS I`'B LA- 47 LS 55 --------------------------------** FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESSEE HAD DULY STATED THESE FACTS THAT THE SAID CHEQUES WERE RECEIVED BY HIM FROM SH. A.K. KAL A FOR THE PURPOSE OF LENDING THE SAME ON INTEREST AND WAS NOT RECEIVED AS SECURITY FOR AD VANCES GIVEN. HOWEVER, THE LD. AO WITHOUT ANY BASIS HAS ALLEGED T HAT THESE CHEQUES WERE RECEIVED BY ASSESSEE AS SECURITY OF EQUAL AMOUNT IN RESPECT OF THE UNACCOUNTED LOANS GIVEN BY HIM AND ACCORDINGLY, TREATED THE AMOUNT OF CHEQUES I.E. RS. 3,00,000/- AS UNACCOUNTED LOANS / ADVANCES GIVEN BY ASSESSEE AND ADDED THE SAME U/S 6 9 OF THE ACT. FURTHER, THE LD. AO ADDED INTEREST THEREON @ 1% AMOUNTING TO RS. 36,000 /- WHICH ACTION IS CONFIRMED BY LD. CIT(A) WITHOUT APPRECIATING THE EXPLANATION TENDERE D. IN THIS REGARD, IT WAS SUBMITTED BEFORE THE LD. AO VIDE SUBMISSION DATED 18.08.2011 (APB 27-29) THAT THE SAID CHEQUES WERE NOT GIVEN ON ADVANCE TO ANY PERSON AND THAT THESE CHEQUES WERE RECEIVED BY ASSESSEE FROM SH. A. K. KALA, BROTHER-IN-LAW OF ASSESSEE FOR THE PURPOSE OF LENDING THE SAME ON INTEREST. THESE FACTS WERE EVEN DEPOSED BY THE ASSESSEE IN HIS STATEMENTS RECORDED U/S 132(4) DURI NG THE COURSE OF SEARCH. HOWEVER, THE STATEMENTS OF ASSESSEE WERE BRUSHED ASIDE BY THE LD . AO AND HE PROCEEDED WITH HIS PRECONCEIVED NOTION TO ADD THE AMOUNT FOR THE SAKE OF MAKING ADDITION ONLY AND WITHOUT SPECIFYING ANY REASON. THOUGH, THE ASSESSEE USED TO OBTAIN CHEQUES FROM DE BTORS AS SECURITY FOR THE AMOUNT LENT TO THEM, HOWEVER, THESE CHEQUES AS AFFI RMED BY ASSESSEE IN HIS STATEMENTS WERE NOT RECEIVED AS SECURITY CHEQUES. FURTHER, THE RE WAS NO MATERIAL OR REASON BROUGHT BY LD. AO TO ESTABLISH THAT THESE CHEQUES WERE GIVEN T O ASSESSEE AS SECURITY. FURTHER, THERE IS NO EVIDENCE TO SHOW THAT SH. A.K. KALA WAS DEBTOR O F ASSESSEE. WHILE THE ACTUAL FACT IS THAT HE IS A RELATIVE OF ASSESSEE AND SINCE THE ASSESSEE IS IN BUSINESS OF MONEY LENDING, THEREFORE, SH. A.K. KALA HAD HANDED HIM OVER THE SA ME TO THEM IN MARKET ON INTEREST. HOWEVER, THE LD. AO WITHOUT ANY BASIS AND WITHOUT C ONSIDERING THE SUBMISSIONS MADE BEFORE HIM PRESUMED THAT THESE CHEQUES WERE KE PT AS SECURITY OF AN AMOUNT EQUAL TO 22 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY THE ADVANCE GIVEN AND TREATED THE SAME AS UNACCOUNT ED ADVANCES GIVEN BY ASSESSEE HAD IT BEEN SO, THE LD. AO COULD HAVE MADE ENQUIRY FROM SH RI A.K. KALA WHICH HE OPTED NOT TO DO. ALSO, LD. CIT(A) CONFIRMED THE ADDITION ON THE SAME FOOTING THAT SINCE IT IS GENERAL PRACTICE OF TRADE TO OBTAIN CHEQUES AGAINST CASH LOANS, THE IMPUGNED CHEQUES WERE ALSO OBTAINED IN THE SAME MANNER WITHOUT CONSIDERING THE STATEMENTS RECORDED. IN FACT, APART FROM PRESUMPTIONS MADE BY LD. AO THERE WAS NO OTHER CORR OBORATIVE EVIDENCE BROUGHT ON RECORD TO MAKE THIS ADDITION. IT IS ALSO RELEVANT TO STATE THAT AGAINST THE REMAI NING CHEQUES / HUNDIES / PROMISSORY NOTES FOUND AND SEIZED FROM SAME LOCKER, ASSESSEE H AS WORKED OUT THE UNDISCLOSED INCOME IN VARIOUS ASSESSMENT YEAR AT RS. 46,38,000/- AS PR INCIPAL AND RS. 6,62,631/- AS INTEREST THEREON IN TERMS OF FUND FLOW STATEMENT (APB 14-16) . SINCE THE ASSESSEE CAME WITH CLEAN HANDS AND DULY OFFERED THE ACTUAL AMOUNT OF HIS UND ISCLOSED INCOME INVESTED IN MONEY LENDING BUSINESS TO THE LINE OF MORE THAN 50 LACS, THERE IS NO REASON AS TO WHY THIS PETTY AMOUNT OF RS. 3.00 LACS BE NOT INCLUDED IN HIS TOTA L UNDISCLOSED INCOME MORE PARTICULARLY WHEN THESE CHEQUES WERE UNDATED AND REQUIRED TO BE ASSESSED IN A.Y. 2010-11 HAVING LEAST LIABILITY OF INTEREST ALSO. IT IS THUS SUBMITTED TH AT THE ALLEGATION OF LD. AO AND LD. CIT(A) THAT THESE CHEQUES ARE ALSO RECEIVED AS SECURITY AGAINST THE ADVANCE IS NOT ONLY AGAINST THE PRELIMINARY STATEMENTS OF ASSESSEE BUT ALSO WITHOUT APPRECIATING THE FACT THAT TOTAL UNDISCLOSED INCOME WORKED OUT AND DECLARED BY APPEL LANT IS MULTIFOLD TO THIS PETTY AMOUNT OF RS. 3.00 LACS. IT IS THEREFORE PRAYED THAT THE A DDITION OF RS. 3.00 LACS DESERVES TO BE DELETED. FURTHER, THE LD. AO STEPPED EVEN FURTHER IN PRESUMI NG THAT THE ASSESSEE HAS EARNED AN INTEREST OF RS. 36,000/- @ 1% ON SUCH ADVANCES W HICH IS COMPLETELY WITHOUT ANY BASIS AND CONTRARY TO THE ACTUAL FACTS AND CIRCUMSTANCES OF THE CASE. IT IS AN ESTABLISHED PRINCIPLE THAT NO HYPOTHETICAL INCOME COULD BE ASSESSED AS HA S BEEN HELD BY HONBLE SUPREME COURT IN THE CASE OF GODARA ELECTRICITY CO. REPORTED IN 2 25 ITR 746 AND SHORJEE VALLABH DAS & CO., 46 ITR 144. IT IS ALSO A MATTER OF FACT THAT LD. AO HAS FURTHER ESTIMATED INTEREST INCOME OF RS. 1,40,154/- ON OTHER ADVANCES ADMITTED BY ASSESS EE WHICH ADDITION STOOD DELETED BY LD. CIT(A) ON RELYING UPON THE ABOVE STATED DECISIONS H OWEVER FOR RS. 36,000/- HE HAS CHANGED HIS STAND WITHOUT ANY BASIS. IN THE CIRCUMSTANCES IT IS PRAYED THAT ADDITION MAD E BY LD. AO U/S 69 OF RS. 3,00,000/- AS UNACCOUNTED ADVANCES AND RS 36,000 A S INTEREST ON IT MAY PLEASE BE DELETED AS SUCH AMOUNT WAS NEVER ADVANCED. 11.1. ON THE OTHER HAND, THE LD. D/R OPPOSED THE SU BMISSIONS AND SUBMITTED THAT THE ASSESSEE HAD DISCLOSED ADDITIONAL INCOME FROM M ONEY LENDING BUSINESS AND OBTAINED CHEQUES/ HUNDIES AS SECURITIES AGAINST CAS H LOANS TO VARIOUS PARTIES THUS 23 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY THESE CHEQUES HAVE THE SAME CHARACTER AND ASSESSEE S CONTENTION THAT THESE CHEQUES WERE GIVEN BY SHRI ASHOK KALA HIS RELATIVE FOR GIVING THEM IN MARKET ON INTEREST BASIS IS WITHOUT ANY EVIDENCE OR MATERIAL. HE THUS SUPPORTS THE ORDERS OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE AO AND LD. CIT(A) HAS RIGHTLY TREATED THE SAME AS UNEXPLAINED INCOME OF ASSESSEE U/S 69 OF TH E ACT. 11.2. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL AVAILABLE ON THE RECORD AS WELL AS GONE THROUGH THE ORDERS PASSE D BY THE AUTHORITIES BELOW. WE FIND THAT THE AUTHORITIES BELOW HAVE FAILED TO APPR ECIATE THE FACTS THAT IN THE PRELIMINARY STATEMENT RECORDED DURING THE COURSE OF SEARCH U/S 132(4) ASSESSEE HAS CATEGORICALLY STATED THE ACTUAL NATURE OF THE TRANS ACTION WHICH CONTENTION HAS BEEN MADE BEFORE ALL THE AUTHORITIES BELOW AND ALSO BEFO RE US. THE AO EXCEPT ASSUMING THE CHEQUES AS SECURITY AGAINST CASH LOANS MADE, NO EFFORT BY ISSUING SUMMONS TO SHRI ASHOK KALA FOR BRINGING ON RECORD THE MATERIAL AGAINST THE PLEA OF THE ASSESSEE. IN THE YEAR ASSESSEE HAS DECLARED INCOME OF RS. 28, 30,972/- BASED ON THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH IN THE LOCKER PERTAINING TO MONEY LENDING BUSINESS AND ADMITTED IN THE STATEMENTS REC ORDED DURING THE COURSE OF SEARCH. THEREFORE, WE FIND NO REASON AS TO WHY THI S SMALL AMOUNT OF RS. 3.00 LACS WOULD NOT BE OFFERED FOR TAXATION. FURTHER, WE ARE IN AGREEMENT WITH THE LD. COUNSEL FOR THE ASSESSEE THAT THE INTEREST OF RS. 36,000/- HAS BEEN ESTIMATED WITHOUT THERE BEING ANY BASIS. UNDER THESE CIRCUMSTANCES, WE HAVE NO DOUBT THAT THE ADDITION MADE BY THE AUTHORITIES BELOW WERE WITHOUT ANY JUST IFICATION AND COGENT REASONS. ACCORDINGLY THE ADDITIONS OF RS. 3,36,000/- IN THE HANDS OF THE ASSESSEE IS DELETED. 24 ITA NO. 466(3)/JP/2015 SHRI OM PRAKASH CHOUDHARY IN VIEW OF THE ABOVE DISCUSSION, THE GROUNDS OF APP EAL NOS. 1 TO 1.2 OF ASSESSEE ARE ALLOWED. 12. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 14/09 /2016. SD/- SD/- ( HKKXPUN ( YFYR DQEKJ ) ( BHAGCHAND) (LALIET KUMAR ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 14/09/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI OM PRAKASH AGARWAL, JAIPUR. 2. THE RESPONDENT THE DY.CIT, CC-3, JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 466(3)/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR