Shri Madappa Hanmanta Andure, Aurangabad V. Asstt.CIT, (Cen), Aurangabad, Aurangabad

ITA 620/PUN/2005

• Counselvise Citation: 62024514 RSA 2005
• Duration Of Justice: 9 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-11-2013
• Assessment Year: misc
• Appeal Filed On: 01-03-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VERMA
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Unexplained investment; Income from undisclosed sources; Search and seizure; Salary income; Document seized; Cost of acquisition; Corroborative evidences; Valuation report; Assessment record; Block assessment; Onus to prove; Documents seized
• Section: 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 620/PN/2005 (BLOCK PERIOD 01-04-2005 TO 21-11-2001 ) SHRI MAHADAPPA HANMANTA ANDURE, 28, MAULI, JYOTINAGAR, AURANGABAD 431 005 PAN NO. ABEPA5649L .. APPELLANT VS. ACIT, CENTRAL, AURANGABAD .. RESPONDENT ITA NO. 1047/PN/2005 (BLOCK PERIOD 01-04-2005 TO 21-11-2001 ) ACIT, CENTRAL CIRCLE, AURANGABAD .. APPELLANT VS. SHRI MAHADAPPA HANMANTA. ANDURE, C/O. MEGH SEEDS PVT. LTD., SHOP NO.101, APNA BAZAR SHOPPING COMPLEX, AURANGABAD 431001. .. RESPONDENT PAN NO.ABEPA5649L ASSESSEE BY : SHRI SUNIL PATHAK REVENUE BY : SMT. M.S. VERMA DATE OF HEARING : 20-03-2014 DATE OF PRONOUNCEMENT : 12-05-2014 ORDER PER R.K. PANDA, AM : THESE ARE CROSS APPEALS. THE FIRST ONE IS FILED BY THE ASSESSEE AND THE SECOND ONE FLED BY THE REVENUE AND ARE DIRE CTED AGAINST THE ORDER DATED 28-01-2005 OF THE CIT(A)-I, NAGPUR RELA TING TO BLOCK PERIOD 01-04-2005 TO 21-11-2001. FOR THE SAKE OF C ONVENIENCE, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DIS POSED OF BY THIS COMMON ORDER. 2 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF CONSTRUCTION IN T HE NAME AND STYLE OF HIS PROPRIETORSHIP CONCERN M/S. MEGH SEEDS PVT. LTD. WHICH STARTED IN THE YEAR 1996. THE ASSESSEE IS REGULARLY ASSED TO INCOME TAX. A SEARCH AND SEIZURE OPERATION U/S.132 OF THE INCOME TAX ACT, 1961 WAS CARRIED ON AT THE RESIDENTIAL PREMISES OF THE ASSES SEE ON 21-11-2001 DURING WHICH CERTAIN INCRIMINATING DOCUMENTS WERE S EIZED AS PER ANNEXURE-A OF THE PANCHANAMA. SIMULTANEOUS SEARCH OPERATIONS WERE ALSO CONDUCTED IN THE PREMISES OF THE FOLLOWIN G CLOSE RELATIVES AND FRIENDS OF THE ASSESSEE : (I) MR. N.H. JALKOTE SUPERINTENDENT ENGINEER, PWD WHO IS ASSESSEES CO-BROTHER (II) SHRI PRASHANT BALIRAM MAHAJAN, ASSESSEES BROTHER -IN-LAW (III) SHRI BALIRAM BASWANT MAHAJAN, ASSESSEES FATHER-IN -LAW (IV) RESIDENTIAL AND BUSINESS SPREMISES OF SHRI M.B. PATI L GROUP, GOVT. CONTRACTOR WHO IS CLOSE ASSOCIATE OF THE ASSESSEE. 2.1 IN RESPONSE TO NOTICE U/S.158BC THE ASSESSEE FI LED BLOCK RETURN DISCLOSING UNDISCLOSED INCOME OF RS.98,63,500/-. T HE ASSESSING OFFICER ISSUED A DETAILED QUESTIONNAIRE BASED ON VA RIOUS ISSUES THAT HAD CROPPED UP FROM THE STATEMENTS RECORDED U/S.132 (4) AND U/S.131 AND SEIZED MATERIAL. IN RESPONSE TO THE SAME THE A SSESSEE FILED VARIOUS DETAILS FROM TIME TO TIME. AFTER CONSIDERING THE V ARIOUS SUBMISSIONS MADE BY THE ASSESSEE FROM TIME TO TIME THE ASSESSIN G OFFICER DETERMINED THE TOTAL UNDISCLOSED INCOME OF RS.1,86, 53,630/- UNDER THE FOLLOWING HEADS : SR. NO. PARA NO. DESCRIPTION AMOUNT (RS.) 1. 11.1 SALARY FROM M/S.MEGH SEEDS PVT. LTD.AFTER DEDUCTION U/S.16(I) 2,00,000/- 2. 11.2 INVESTMENT IN SHOP AT APNA BAZAR 1,31,280/- 3. 11.2 RENT FROM SHOP AT APNA BAZAR 1,20,000/- 4. 11.3 INVESTMENT IN PURCHASE OF PLOT NO.6 OSMANPURA 4,75,000/- 3 5. 11.4 COST OF CONSTRUCTION OF HOUSE AT 6, OSMANPURA 5 2,80,000/- 6. 11.5 INVESTMENT IN HOUSE AT JYOTI NAGAR 8,10,301/- 7. 11.6 INVESTMENT IN SHARES OF SAMBHAJI RAJE SUGAR FACTORY 1,00,000/- 8. 11.7 BALANCE IN THE RUNNING ACCOUNT IN THE DIARI ES OF SHRI N.H. JALKOTE 43,07,500/- 9. 11.8 INVESTMENT IN MITMITA LAND 23,23,000/- 10. 11.9 INVESTMENT IN PADEGAON FARM 9,50,000/- 11. 11.10. ADVANCES TO SHRI GANGADHAR MAHAJAN 22,82 ,700/- 12. 11.11(I) OTHER ENTRIES IN THE DIARY MRS. RENU M AHAJAN 1,00,000/- 13. 11.11(II) OTHER ENTRIES IN THE DIARY SHRI SANJAY MAHAJAN 1,00,000/- 14. 11.12 INVESTMENT IN FDS & NCDS OF EL&FL 70,000/- 15. 11.13 INVESTMENT IN FDS & NCDS OF EL&FL 20,138/- 16. 11.14 INVESTMENT IN SHARES OF M/S. MEGH SEEDS PVT. LTD. 2,78,000/- 17. 11.15 INVESTMENT IN FDS WITH SBI 70,000/- 18. 11.16 CASH DEPOSITS IN THE ACCOUNT WITH SBI 1,82,5 00/- 19. 11.17 INTEREST FROM SBI AFTER ALLOWING DEDUCTION U/S.80L 14,896/- 20. 11.18 CASH DEPOSITS IN VARIOUS BANKS ACCOUNTS AND EXPENDITURE THROUGH BOB CARD 8,60,315/- TOTAL UNDISCLOSED INCOME 1,86,53,630/- 2.2 THE ASSESSEE FILED DETAILS SUBMISSIONS BEFORE T HE CIT(A) BASED ON WHICH THE LD.CIT(A) CALLED FOR A REMAND REPORT F ROM THE ASSESSING OFFICER. AFTER CONFRONTING THE SAME TO THE ASSESSE E THE LD.CIT(A) GAVE PART RELIEF TO THE ASSESSEE. BASED ON SUCH PA RT RELIEF, THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US. ITA NO.620/PN/2005 (BY ASSESSEE) : 3. GROUND OF APPEAL NO.1 BY THE ASSESSEE READS AS U NDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS), ERRED WHEN HE UP HELD AN ADDITION OF RS.2,00,000/- TOWARDS ALLEGED SALARY RECE IVED BY THE APPELLANT FROM M/S. MEGH SEEDS PVT. LTD. AURANGABAD M ERELY ON THE BASIS OF STATEMENT RECORDED DURING THE COURSE OF SEARCH ACTION 3.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE IS THE MANAGING DIRECTOR OF M/S. MEGH SEEDS PVT. LTD., WHICH IS ENG AGED IN THE BUSINESS OF PURCHASE OF SEEDS IN RESPECT OF COTTON, JAWRA, BARJA AND VEGETABLE WHICH ARE PROCESSED AND SOLD UNDER THE CO MPANIES LABEL. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IN HIS REPLY TO 4 QUESTION NO.26 PAGE 14 AND QUESTION NO.46 PAGE 21 O F THE STATEMENT RECORDED U/S.132(4) DATED 21-11-2001 WHEREIN THE AS SESSEE HAD CATEGORICALLY ACCEPTED THAT SALARY FROM M/S. MEGH S EEDS PVT. LTD., RECEIVED BY HIM HAS NOT BEEN SHOWN IN THE RETURN FI LED PRIOR TO THE SEARCH. HE OBSERVED THAT THE ASSESSEE HAS CATEGORI CALLY ACCEPTED SUCH UNDISCLOSED SALARY FROM M/S. MEGH SEEDS PVT. LTD., AS UNDER : ASSTT. YEAR GROSS SALARY DED. U/S.16(I) NET SALARY 1999-2000 RS.16,000/- RS.5,332/- RS.10,600/- 2000-2001 RS.96,000/- RS.20,000/- RS.76,000/- 2001-2002 RS.96,000/- RS.20,000/- RS.76,000/- 2002-2003 RS.56,000/- RS.18,600/- RS.37,400/- RS.2,00,000/- 3.2 REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE THE ASSESSING OFFICER TREATED THE NET SALARY INCOME OF RS.2 LAKHS AS UNDISCLOSED INCOME OF THE ASSESSEE. 3.3 BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE ASS ESSEE IS A DIRECTOR OF THE SAID COMPANY SINCE LAST 5 YEARS. T HE COMPANY IS ALSO ASSESSED TO INCOME TAX AND FILING ITS RETURN OF INC OME ALONG WITH AUDITED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT. REFERRING TO THE PROFIT AND LOSS ACCOUNT OF THE SAID COMPANY FOR THE YEAR 1999-2000 TO THE DATE OF SEARCH IT WAS SUBMITTED THAT THE COMPAN Y HAS NOT DEBITED ANY SALARY TO DIRECTORS IN PROFIT AND LOSS ACCOUNT AND THE EXPENSES DEBITED UNDER THE HEAD SALARY EXPENSES ARE THE S ALARY EXPENSES OF THE STAFF OF THE COMPANY. IT WAS SUBMITTED THAT T HE ADDITION HAS BEEN MADE BY THE AO MERELY ON THE BASIS OF THE STATEMENT RECORDED U/S.132(4) DURING THE SEARCH WHICH WAS MADE WITHOUT KNOWING THE REAL FACTS BY THE AO. THE ASSESSEE FURTHER SUBMITT ED THAT THE AO HAS NOT ALLOWED STANDARD DEDUCTION U/S.16(I) ON THE ALL EGED SALARY WHILE MAKING THE ADDITION OF RS.1,43,000/-. 5 3.4 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM THE AO WH O STATED THAT THE SALARY MUST HAVE BEEN PAID BY THE COMPANY OUT OF IT S UNDISCLOSED INCOME AND THAT IS WHY THE ASSESSEE HAD ON HIS OWN AND WITHOUT ANY PRESSURE VOLUNTARILY STATED THE FACT OF EARNING OF SALARY FROM M/S. MEGH SEEDS PVT. LTD. WHICH WAS NOT DISCLOSED BY HIM . THE AO FURTHER STATED THAT ONCE AN ADMISSION IS MADE BY TH E ASSESSEE THAT CERTAIN INCOME REMAINED TO BE DISCLOSED AND ONCE IF THIS POSITION IS ACCEPTED BY HIM IN THE STATEMENT RECORDED U/S.132(4 ) THEN BY VIRTUE OF SECTION 58 OF THE INDIAN EVIDENCE ACT, SUCH ADMISSI ON FACT IS NOT REQUIRED TO BE PROVED. THE AO FURTHER RELIED ON QU ESTION NO.14 AND 46, PAGE NO.21 OF STATEMENT U/S.132(4) DATED 21-11- 2001, WHERE THE ASSESSEE HAD CATEGORICALLY ACCEPTED THAT SALARY FRO M M/S. MEGH SEEDS PVT. LTD. RECEIVED BY HIM IS NOT SHOWN IN THE RETUR N OF INCOME FILED PRIOR TO SEARCH. 3.5 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE , THE LD.CIT(A) UPHELD THE ADDITION MADE BY THE AO. AGGR IEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALLE NGED THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE ASSESSEE IN T HE COURSE OF STATEMENT RECORDED U/S.132(4) VIDE QUESTION NO.26 HAD ADMITTED THAT HE HAD RECEIVED SALARY OF RS.8,000/- PER MONTH FROM THE COMPANY. HOWEVER, THAT STATEMENT WAS GIVEN UNDER TENSION DUR ING THE SEARCH AND HENCE THE REPLY WAS NOT CORRECT. HE SUBMITTED THAT THE ASSESSEE HAS NOT TAKEN ANY SALARY FROM THE COMPANY AND THE C OMPANY HAS ALSO NOT DEBITED SUCH SALARY IN ITS ACCOUNTS. THERE IS NO INCRIMINATING 6 EVIDENCE FOUND TO INDICATE THAT THE COMPANY HAD PAI D THE SALARY TO THE ASSESSEE. THEREFORE, MERELY ON THE BASIS OF THE RE PLY IN THE STATEMENT, THE ADDITION IS NOT JUSTIFIED. FOR THIS PROPOSITIO N, THE ASSESSEE RELIED ON THE DECISION OF THE CHANDIGARH BENCH OF THE TRIB UNAL IN THE CASE OF DCIT VS. PRATAP SINGH RAJENDRA CHAMOLA & CO. REPORT ED IN 19 DTR (CHD) (TRIB) 182, THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF MR. SANTOSH V. SHETTY VS. ACIT VIDE ITA NO.213/PN/2005 AND THE DECISION OF THE TRIBUNAL IN THE CASE OF CHITRA DEVI VS. ACIT REPORTED IN 77 TTJ 640. 5. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAV E ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE IS A DIRECTOR OF M/S. MEGH SEEDS PVT. LTD. THERE IS ALSO NO DISPUTE TO THE FACT THAT THE ASSESSEE IN HI S REPLY TO VARIOUS QUESTIONS RECORDED U/S.132(4) ON 21-11-2001 HAD CAT EGORICALLY ACCEPTED THAT SALARY FROM M/S. MEGH SEEDS PVT. LTD. RECEIVED BY HIM HAS NOT BEEN SHOWN IN THE RETURN OF INCOME FILED PR IOR TO SEARCH. THE ASSESSEE HAS ALSO GIVEN A STATEMENT U/S.131 DATED 0 3-01-2002 AND AFFIDAVITS CONFIRMING THE CONTENTS OF THE STATEMENT GIVEN U/S.132(4). THE ASSESSEE HAS NOT RETRACTED SUCH STATEMENT WITHI N A REASONABLE TIME TO SHOW THAT HE HAS NOT RECEIVED SUCH SALARY FROM T HE COMPANY. THE RECEIPT OF SALARY AS DIRECTOR FROM A CLOSELY HELD C OMPANY WAS WITHIN THE EXCLUSIVE KNOWLEDGE OF THE ASSESSEE. THEREFORE , IN THIS PARTICULAR 7 CASE, IT IS IMMATERIAL AS TO WHETHER ANY OTHER EVID ENCE IS FOUND OR NOT. UNDER THESE CIRCUMSTANCES, THE VARIOUS DECISIONS CI TED BY THE LD. COUNSEL FOR THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AND ARE DISTINGUISHABLE. 6.1 IN THE CASE OF PRATAP SINGH RAJENDRA CHAMOLA & CO. (SUPRA) ADDITIONS WERE MADE ON THE BASIS OF STATEMENT OF SO ME THIRD PARTIES SUCH AS EMPLOYEES FROM WHOM SECURITY OF RS.12,000/- EACH TOTALING TO RS.20,35,000/- FROM 170 SALESMEN WAS CLAIMED TO HAV E BEEN COLLECTED BY THE FIRM. DURING THE COURSE OF SEARCH/SURVEY ST ATEMENTS OF 26 SALESMEN WERE RECORDED WHO STATED THAT NO SECURITY DEPOSITS HAD BEEN GIVEN BY THEM TO THE ASSESSEE FIRM. ONE OF THE PAR TNERS OF THE FIRM ALSO STATED THAT NO SUCH SECURITY DEPOSITS HAD INDE ED BEEN RECEIVED BY THE ASSESSEE FIRM FROM THE EMPLOYEES. HOWEVER, IN THE FRESH PROCEEDINGS MADE IN PURSUANCE TO THE DIRECTION OF T HE TRIBUNAL, THE ASSESSEE FIRM PRODUCED 3 SALESMEN AND THE PARTNER O F THE FIRM FOR RECORDING THEIR STATEMENTS. IN THEIR FRESH STATEME NTS, THE 3 EMPLOYEES CATEGORICALLY ACCEPTED THAT THEY HAD GIVEN SECURITY DEPOSIT OF RS.12,000/- EACH TO THE ASSESSEE FIRM AND THEIR EAR LIER STATEMENTS HAVE BEEN RECORDED BY THE ADDL. DIRECTOR OF INCOME-TAX U NDER DURESS AND UNDUE PRESSURE. AFFIDAVITS OF VARIOUS OTHER MEMBER S WERE ALSO FILED WHEREIN THEY HAVE ACCEPTED THAT THEY HAD GIVEN SECU RITY DEPOSIT TO THE ASSESSEE FIRM. IT WAS ARGUED THAT THE STATEMENTS E ARLIER RECORDED AT THE TIME OF SEARCH WERE BEHIND THE BACK OF THE ASSESSEE AND NO OPPORTUNITY OF CROSS-EXAMINATION WAS GRANTED EVEN D URING THE COURSE OF SEARCH AND THE EARLIER ASSESSMENT PROCEEDINGS. FINALLY, IT WAS ARGUED THAT THERE WAS NO EVIDENCE FOUND AS A RESUL T OF SEARCH TO ALLEGE 8 THAT UNEXPLAINED SECURITY DEPOSIT HAD BEEN RECEIVED BY THE ASSESSEE FIRM AND SUCH SECURITY DEPOSIT WAS ALREADY SHOWN I N THE ORIGINAL RETURN FILED. IT WAS ACCORDINGLY ARGUED THAT IN AB SENCE OF ANY MATERIAL FOUND AS A RESULT OF SEARCH AND THE FACTUM OF SECUR ITY DEPOSITS HAVING BEEN DISCLOSED BY THE ASSESSEE IN THE ORIGINAL RETU RN NO UNDISCLOSED INCOME COULD BE BROUGHT TO TAX UNDER CHAPTER XIVB. UNDER THESE CIRCUMSTANCES, WHEN THE AO MADE THE ADDITION, THE T RIBUNAL UPHELD THE ORDER OF LD.CIT(A) BY HOLDING THAT NO ADDITION IN BLOCK ASSESSMENT CAN BE MADE SOLELY ON THE BASIS OF STATE MENT RECORDED DURING THE COURSE OF SEARCH. 6.2 HOWEVER, THE FACTS IN THE INSTANT CASE ARE DIFF ERENT. THE ASSESSEE HIMSELF HAS ACCEPTED IN HIS STATEMENT RECO RDED U/S.132(4) THAT HE WAS GETTING SALARY OF RS.8,000/- PER MONTH FROM MEGH SEEDS (P) LTD. THE FACTS RELATING TO THIS SALARY RECEIPT WAS WITHIN THE EXCLUSIVE KNOWLEDGE OF THE ASSESSEE. THEREFORE, THE DECISION RELIED ON BY LD. COUNSEL FOR THE ASSESSEE IS NOT APPLICABLE TO THE F ACTS OF THE PRESENT CASE. THE VARIOUS OTHER DECISIONS RELIED ON BY LD. COUNSEL FOR THE ASSESSEE ARE ALSO DISTINGUISHABLE AND NOT APPLICABL E TO THE FACTS OF THE PRESENT CASE. IN THIS VIEW OF THE MATTER AND IN VI EW OF THE DETAILED REASONING GIVEN BY THE LD.CIT(A) UPHOLDING THE ADDI TION AFTER ALLOWING STANDARD DEDUCTION WE FIND NO INFIRMITY IN THE SAME. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) ON THIS ISSUE AND THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 7. GROUNDS OF APPEAL NO.2 BY THE ASSESSEE READS AS UNDER : 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AL SO ERRED WHEN HE SUSTAINED AN ADDITION OF RS.4,75,000/- TO THE TOTAL UNDISCLOSED INCOME OF THE APPELLANT ON ACCOUNT OF THE INVESTMENT IN 9 THE PURCHASE OF PLOT NO. 6, OSMANPURA, AURANGABAD INST EAD OF ACTUAL CONSIDERATION AMOUNTING TO RS.2,64,501/- DULY OFFERED BY THE APPELLANT. 7.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE IN HIS ANSWER TO QUESTION NO.20, PAGE NO.9, QUESTION NO.32 , PAGE NO.15, QUESTION NO.64 & 65, PAGE NOS.30/31 OF STATEMENT RE CORDED U/S.132(4) DATED 21-01-2011 HAD CATEGORICALLY ACCEP TED THAT HE HAD PURCHASED PLOT NO.6 IN THE YEAR 1999 ADMEASURING 36 00 SQ.FT. IN OSMANPURA, AURANGABAD FOR RS.4,75,000/- FROM MRS. S ANGEETA PATIL. HE NOTED THAT THE ASSESSEE HAD CONSTRUCTED A BUNGLO W ON THIS PLOT AND THE CONSTRUCTION OF CARPET AREA OF 2000 SQ. FT. WAS COMPLETED IN DECEMBER 2000. THE ASSESSEE SOLD THE SAID PLOT WIT H CONSTRUCTION TO SHRI N.H. JALKOTE FOR RS.12,50,000/-. IN ANSWER TO QUESTION NO.65, THE ASSESSEE STATED THAT SAID INVESTMENT OF RS.4,75 ,000/- IN PURCHASE OF PLOT IS UNACCOUNTED AND THEREFORE HE OFFERED THE SA ME AS ADDITIONAL INCOME FOR THE A.Y. 2000-2001. HOWEVER, DURING BLO CK ASSESSMENT PROCEEDINGS, THE ASSESSEE REVISED THE COST OF PURCH ASE OF THE SAID PLOT TO RS.2,64,501/- IN THE CASH FLOW STATEMENT AS WELL AS IN THE RECONCILIATION STATEMENT. THE ASSESSING OFFICER RE JECTED THE CASH FLOW STATEMENT OF THE ASSESSEE ON THE GROUND THAT THE AG RICULTURAL INCOME SHOWN BY HIM IS NOT SUPPORTED BY ANY EVIDENCE. FUR THER, THE ASSESSEE HAS NOT FILED THE COPY OF PURCHASE DEED OF THE SAID PLOT. IN VIEW OF THE CATEGORICAL STATEMENT MADE AT THE TIME OF SEARCH AN D IN ABSENCE OF ANY SUPPORTING EVIDENCE OF THE REVISED FIGURE, THE ASSE SSING OFFICER CONSIDERED THE AMOUNT OF RS.4,75,000/- AS UNDISCLOS ED INVESTMENT OF THE ASSESSEE ON SUBSTANTIVE BASIS AND TAXED THE SAM E AS HIS UNDISCLOSED INCOME FOR THE A.Y. 2000-2001. 10 7.2 BEFORE THE CIT(A) IT WAS SUBMITTED THAT WHILE M AKING THIS ADDITION THE ASSESSING OFFICER HAS RELIED ONLY ON T HE STATEMENT RECORDED U/S.132(4) OF THE I.T. ACT, 1961. IT WAS SUBMITTED THAT THAT AT THE TIME OF RECORDING OF THE STATEMENT COPY OF PURC HASE DEED WAS SHOWN TO THE ASSESSEE, ON FIRST PAGE OF WHICH TWO F IGURES ARE MENTIONED, I.E. (A) RS.4,74,000/- (VALUATION FOR ST AMP DUTY PURPOSE) AND RS.2,21,000/- (ACTUAL CONSIDERATION). IT WAS S UBMITTED THAT HURRIEDLY AND UNDER PRESSURE THE ASSESSEE WRONGLY S TATED THE COST OF ACQUISITION AT RS.4,75,000/- WHICH IS NOT THE ACTUA L CONSIDERATION. IT WAS ALSO SUBMITTED THAT THE EVIDENCE AVAILABLE ON R ECORD IS THE SAID PURCHASE DEED ONLY ACCORDING TO WHICH THE ACTUAL CO ST IS RS.2,64,501/- (RS.2,21,000/- + STAMP DUTY AND REGISTRATION CHARGES RS.43,501/-). IT WAS ARGUED THAT IN SEIZED MATERIAL THERE IS NO EVID ENCE SHOWING THAT THE ASSESSEE HAS PAID ANY AMOUNT OVER AND ABOVE THE ACTUAL CONSIDERATION STATED IN THE PURCHASE DEED. IT WAS F INALLY ARGUED THAT ON FACTUAL BASIS THE ASSESSING OFFICER SHOULD HAVE CON SIDERED ONLY RS.2,64,501/- AS UNDISCLOSED INCOME OF THE ASSESSEE BUT INSTEAD OF THAT HE HAS ADDED RS.4,75,000/- ON 'SUBSTANTIVE BASIS' T O THE TOTAL UNDISCLOSED INCOME OF THE ASSESSEE. IT WAS ACCORDINGLY ARGUED T HAT THE ADDITION OF RS.2,10,499/- BE DELETED. 7.3 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSES SING OFFICER WHO REITERATED HIS REASONING GIVEN IN THE ASSESSMENT OR DER. THE ASSESSING OFFICER STATED THAT THE ASSESSEE IN HIS STATEMENT R ECORDED U/S.132(4) ON 21-01-2011 HAD CATEGORICALLY ACCEPTED THAT HE HAD P URCHASED A PLOT AT A COST OF RS.4,75,000/-. SINCE THE AGRICULTURAL IN COME SHOWN BY THE 11 ASSESSEE IN THE CASH FLOW STATEMENT WAS NOT SUPPORT ED WITH ANY CORROBORATIVE EVIDENCE THE ASSESSING OFFICER HAD RE JECTED THE CASH FLOW STATEMENT. WHEN THE REMAND REPORT WAS CONFRON TED TO THE ASSESSEE, IT WAS SUBMITTED THAT THE ASSESSEE, THROU GH OVERSIGHT AND UNDER TREMENDOUS PRESSURE, HAD GIVEN THE STATEMENT U/S.132(4) THAT THE VALUE OF THE SAID PLOT WAS RS.4,75,000/-. 8. HOWEVER, THE LD.CIT(A) WAS ALSO NOT SATISFIED WI TH THE EXPLANATION GIVEN BY THE ASSESSEE AND UPHELD THE AD DITION MADE BY THE ASSESSING OFFICER BY HOLDING AS UNDER : 7.3 THE SUBMISSIONS OF THE APPELLANT, REMAND REPORT OF THE AO AND THE ARGUMENTS MADE BY LEARNED AR WERE DULY CONSIDERED . PERUSAL OF THE PURCHASE DEED SHOWS THAT THE SAID PLOT WAS BOUGHT B Y THE APPELLANT FOR A CONSIDERATION OF RS.2,64,501/- INCLU SIVE OF STAMP DUTY AND REGISTRATION. HOWEVER, THE COLLECTOR OF STAMPS FO R THE PURPOSE OF DETERMINING, THE STAMP DUTY HAS TAKEN THE MARKET VAL UE OF THE SAID PLOT AT RS.4,74,000/- WHICH IS EVIDENT ON PAGE 1 OF THE SALE DEED. THE APPELLANT IN HIS STATEMENT U/S. 132(4) AT QUE. NO. 32 & 65 HAS ADMITTED THAT HE HAD MADE UNACCOUNTED INVESTMENT OF RS.4,75,000/- IN THE PLOT DURING THE ACCOUNTING YEAR 1997-98. CON SIDERING THESE FACTS, THERE REMAINS NO DOUBT THAT THE TRUE AND CORRE CT INVESTMENT IN THE SAID PLOT WAS AT RS.4,75,000/- AS ADMITTED BY THE A PPELLANT AND VALUE ASSESSED BY THE COLLECTOR OF STAMPS. THE SOURCE OF INVESTMENT IN SUCH PLOT DOES NOT STAND EXPLAINED IN THE RELEVANT ACC OUNTING YEAR IN QUESTION AND, THEREFORE, HAS BEEN RIGHTLY ASSESSED AS UDI IN THE HANDS OF THE APPELLANT BY THE AO. IN THE RESULT THIS GROUND OF APPEAL IS DISMISSED. 8.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 9. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SAME ARGUMENTS AS MADE BEFORE THE ASSESSING OFFICER AND THE CIT(A) . IT WAS SUBMITTED THAT THE ASSESSEE HAS NOT PAID THE ABOVE AMOUNT OF RS.4,75,000/- FOR THE PLOT. SINCE THE ASSESSEE WA S UNDER TENSION DURING THE COURSE OF SEARCH HE HAD WRONGLY STATED T HE FIGURE OF STAMP DUTY VALUATION AS THE CONSIDERATION PAID. IT WAS S UBMITTED THAT NO 12 EVIDENCE WAS FOUND TO INDICATE THAT THE ASSESSEE HA S ACTUALLY PAID THE ABOVE CONSIDERATION. IT WAS CLARIFIED DURING ASSESS MENT PROCEEDINGS THAT THE ADMISSION WAS OUT OF CONFUSION. IT WAS AC CORDINGLY ARGUED THAT THE ADDITION MADE BY THE ASSESSING OFFICER SHO ULD BE DELETED. THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED ON THE FOLLOWING DECISIONS : 1. DCIT VS. PRATAP SINGH RAJENDRA CHAMOLA & CO. REPO RTED IN 19 DTR (CHD) (TRIB) 182, 2. MR. SANTOSH V. SHETTY VS. ACIT VIDE ITA NO.213/PN /2005 3. CHITRA DEVI VS. ACIT REPORTED IN 77 TTJ 640. 10. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIN D THE ASSESSEE IN HIS STATEMENT RECORDED U/S.132(4) HAS CATEGORICALLY STATED THAT HE HAD INVESTED RS.4.75 LAKHS TOWARDS PURCHASE OF PLOT WHI CH WAS UNACCOUNTED AND FOR WHICH HE OFFERED THE SAME AS HI S UNDISCLOSED INCOME. THE ASSESSEE NEVER RETRACTED THE SAME IMME DIATELY WITHIN A REASONABLE TIME. WE FIND DURING THE COURSE OF ASSE SSMENT PROCEEDINGS THE ASSESSEE TOOK A U-TURN AND STATED T HAT THE ACTUAL COST IS RS.2,64,501/- AND HE HAS NOT PAID ANYTHING OVER AND ABOVE THE SAID AMOUNT. WE FIND THE ASSESSEE IN HIS STATEMENT RECO RDED U/S.132(4) HAD CATEGORICALLY STATED TO HAVE INVESTED RS.4,75, 000/- TOWARDS PURCHASE OF THE PLOT AND THIS INFORMATION WAS WITHI N HIS EXCLUSIVE KNOWLEDGE. THE PURCHASE DEED WAS SHOWN TO HIM AT T HE TIME OF RECORDING THE STATEMENT. SINCE THE SOURCE OF THE I NVESTMENT HAS NOT BEEN PROPERLY EXPLAINED, THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE 13 ORDER OF THE LD.CIT(A) UPHOLDING THE ADDITION MADE BY THE ASSESSING OFFICER. THE VARIOUS DECISIONS RELIED ON BY LD. CO UNSEL FOR ASSESSEE ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE CASE IN VIEW OF OUR REASONINGS AT PARA 6.1 AND 6.2 OF THE IMPUGN ED ORDER. IN THIS VIEW OF THE MATTER, WE UPHOLD THE ORDER OF THE LD.C IT(A) ON THIS ISSUE. THIS GROUND BY THE ASSESSEE IS ACCORDINGLY D ISMISSED. 12. GROUND OF APPEAL NO.3 BY THE ASSESSEE READS AS UNDER : 3. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LEARNE D COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING AN ADDITION OF RS.52,58,000/- TOWARDS CONSTRUCTION OF HOUSE AT PLO T NO,6, OSMANPURA INSTEAD OF SUSTAINING RS.26,76,479/- DULY OFF ERED AS CONSTRUCTION EXPENSES FROM UNDISCLOSED INCOME BY THE AP PELLANT. THESE UNEXPLAINED EXPENSES MAY BE SUSTAINED AT RS.26,74,4 79/- IN THE HANDS OF THE APPELLANT AS UNDISCLOSED INCOME. 12.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSE SSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT DURING THE COURSE OF SEARCH ACTION THE ASSESSEE WAS CONFRONTED WITH T HE COPY OF PAGE NO. 11 OF INVENTORY A-73 SEIZED FROM THE RESIDENCE OF S HRI JALKOTE, WHICH GIVES ITEM WISE DETAILS OF TOTAL EXPENDITURE OF RS. 51,90,000/-. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IN ANS WER TO QUESTION NO. 49 HAS CATEGORICALLY SURRENDERED UN-DISCLOSED INCOM E OF RS.52,58,000/- FOR THE AY 2000-2001 AS THE CONSTRUC TION OF HOUSE AT OSMANPURA WAS COMPLETED IN THE PREVIOUS YEAR RELEVA NT TO AY 2000- 2001. THE A. O. NOTED THAT THE ASSESSEE HAS ACCEPT ED THE TOTAL AMOUNT OF RS.52,58,000/- AS CONSTRUCTION EXPENSES OF OSMAN PURA BUNGLOW INCLUDING INTERIOR FITTINGS, INTERIOR DECORATION, F URNITURE ETC., INCURRED BY HIM OUT OF UNDISCLOSED SOURCES. THE A.O. NOTED T HAT DURING BLOCK ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SHOWN REVI SED UN-DISCLOSED INVESTMENT OF ONLY RS.26,76,479/- FOR CONSTRUCTION OF OSMANPURA 14 HOUSE WITHOUT ANY SUPPORTING EVIDENCE CLAIMING THAT THIS WAS HIS ACTUAL AMOUNT OF INVESTMENT. THE A.O. NOTED THAT TH E ASSESSEE HAS RETRACTED HIS EARLIER DECLARATION OF RS.52,58,000/- BUT THE ASSESSEE WAS NOT ABLE TO PROVE WITH SUPPORTING EVIDENCE ABOUT HI S SUBSEQUENT CLAIM THAT THE EXPENDITURE NOTED ON SEIZED DOCUMENT A-73, PAGE NO. 11 RELATED TO THE CONTRACT WORK. IN VIEW OF THE ABOVE AND IN VIEW OF THE FINDING GIVEN IN THE BLOCK ASSESSMENT ORDER OF SHRI N.H. JALKOTE, THE AO TREATED THE UN-DISCLOSED INVESTMENT OF RS.52,58, 000/- IN THE CONSTRUCTION OF OSMANPURA HOUSE AS UN-DISCLOSED INC OME OF SHRI JALKOTE ON SUBSTANTIVE BASIS. HOWEVER SINCE THE ASS ESSEE HAS ADMITTED THAT HE HAD INCURRED EXPENDITURE FOR ACTUAL CONSTRU CTION OF THE SAID HOUSE, THE AO TREATED THE AMOUNT OF RS.52,58,000/- AS UN-DISCLOSED INCOME OF THE ASSESSEE ON PROTECTIVE BASIS. 13. BEFORE CIT(A) IT WAS SUBMITTED THAT DURING THE COURSE OF RECORDING OF STATEMENT U/S 132 (4) OF THE INCOME TA X ACT' 1961 THE ASSESSEE HAD CATEGORICALLY STATED & ACCEPTED THAT H E HAD CONSTRUCTED THE HOUSE ON PLOT NO. 6 AT OSMANPURA AURANGABAD. IT WAS ARGUED THAT THE AO HAS GROSSLY ERRED IN REJECTING THE CLAI M OF THE ASSESSEE THAT ENTRIES RECORDED ON PG.NO.11 OF A-73 ARE PERTAINING TO THE CONTRACT EXPENSES OF HIS PROPRIETARY CONCERN M/S.SANCHAR CON STRUCTIONS, AURANGABAD AND THE INCOME FROM SUCH BUSINESS WAS AL READY OFFERED TO TAX U/S.44AD OF I.T. ACT AND THE SAID CONTRACT E XPENSES ARE ALREADY COVERED IN THE 92% EXPENSES CLAIMED U/S.44AD IN THE REGULAR RETURN. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAS STATED DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS THAT COST OF CONSTRUCT ION OF BUILDING IS RS. 26,76,479/-. IT WAS ARGUED THAT THE AMOUNTS APP EARING IN RUNNING 15 ACCOUNT OF THE ASSESSEE ON PG. NO. 18 (OL) IN INVEN TORY A-68 & PG. NO. 23 IN INVENTORY A-71 FOR RS.47,66,000/- & RS. 4 ,92,000/- RESPECTIVELY INCLUDE INVESTMENTS IN MITMITA LAND, P ADEGAON FARM, CONSTRUCTION EXPENSES AT OSMANPURA AND CONTRACT EXP ENSES INCURRED BY THE ASSESSEE. IT WAS ARGUED THAT THE ASSESSEE HAS A LSO OBTAINED VALUATION REPORT OF A REGISTERED VALUER REGARDING THE SAID HO USE AT OSMANPURA AND THE VALUATION OF THE SAME AS PER THE SAID REPOR T IS RS.16,85,000/- WHICH IS QUITE REASONABLE CONSIDERING THE TOTAL ARE A OF CONSTRUCTION. THE SAID REPORT WAS ALSO SEIZED DURING THE SEARCH ACTIO N U/S 132. IT WAS ARGUED THAT THE ASSESSEE HAS SOLD THE SAID HOUSE ON 30.07.2001 TO HIS RELATIVES MR. & MRS. N. H. JALKOTE FOR A CONSIDERATION OF RS.12,50,000/-. IT WAS ARGUED THAT ALL THE DOCUMENT S RELATING TO THE SAID PROPERTY I.E. BUILDING CONSTRUCTION PERMISSION , OCCUPANCY CERTIFICATE, P.R.CARD, LIGHT BILL, PROPERTY TAXES, VALUATION REPORT ETC. WERE IN THE NAME OF ASSESSEE HIMSELF PRIOR TO ITS S ALE AND HE WAS PAYING LIGHT BILL, PROPERTY TAX, ETC. IN RESPECT OF THE SA ID PROPERTY. IT WAS ACCORDINGLY ARGUED THAT THE SAID ADDITION HAS TO BE RESTRICTED TO RS.26,76,479/- ON 'SUBSTANTIVE BASIS' IN THE HANDS OF THE ASSESSEE INSTEAD OF RS.52,58,000/-. 13.1 ON THE BASIS OF THE ARGUMENTS ADVANCED BY THE ASSESSEE, THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM THE AO AN D CONFRONTED THE SAME TO THE ASSESSEE. BASED ON THE ARGUMENTS ADVANC ED BY THE ASSESSEE THE LD.CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER BY HOLDING AS UNDER: 8.5 I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESS EE, REMAND REPORT OF THE A.O. AND REJOINDER SUBMITTED BY THE ASSE SSEE AND ALSO THE ARGUMENTS MADE BY THE LEARNED A.R. IN THIS CONNEC TION, REFERENCE 16 IS MADE TO THE APPELLATE ORDER IN THE CASE OF SHRI N. H. JALKOTE AT GROUND NO. 3 WHEREIN I HAVE DISCUSSED AT LENGTH IN HOLDING THAT THE INVESTMENT OF RS.52.58 LACS IN THE CONSTRUCTION OF HOUSE AT OSMAN PURA, AURANGABAD HAS BEEN MADE BY SHRI N.H. JALKOTE, WHICH IS ESTABLISHED FROM THE EVIDENCES AVAILABLE IN THE SEIZED RECORDS. ACCORDINGLY THE UNEXPLAINED INVESTMENT OF RS.52.58 LACS TOWARDS INVEST MENT IN THE SAID HOUSE HAS BEEN CONFIRMED IN THE HANDS OF SHRI N.H. JALKOTE AS HIS UDI. THEREFORE, FOLLOWING THE APPELLATE ORDER IN TH E CASE OF SHRI N.H. JALKOTE, THE UNDISCLOSED INCOME OF RS.52.58 LACS ASSES SED IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS IS NOT SUSTAINABLE. I MAY ADD HERE THAT THE ISSUE OF QUANTUM OF EXPENDITURE IN CONSTRUCT ION OF SUCH HOUSE CHALLENGED BY THE ASSESSEE ON THE GROUND OF VALUATIO N REPORT, BILLS AND VOUCHERS SEIZED IN FILE A-19 AND INCLUSION OF SITE EXPE NSES OF SIMILAR CONSTRUCTION, HAVE BEEN ADEQUATELY REJECTED FOR WANT OF SUPPORTING EVIDENCE IN THE APPELLATE ORDER OF SHRI N.H. JALKOT E AT GROUND NO.3. ACCORDINGLY, ADDITION OF RS.52.58 LACS ASSESSED ON P ROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE IS HEREBY DELETED. 13.2 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE AS SESSEE IS IN APPEAL BEFORE US. 14. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SAME ARGUMENTS AS MADE BEFORE THE ASSESSING OFFICER AND THE CIT(A) . HE SUBMITTED THAT DURING THE SEARCH, A PAPER WAS FOUND INDICATIN G VARIOUS BUSINESS/CONSTRUCTION EXPENSES. THESE EXPENSES TOTA LED RS.52,58,000/-. THE ASSESSEE SUBMITTED THAT THESE ARE THE EXPENSES INCURRED ON THE CONSTRUCTION OF THE BUNGALOW AT OSMANPURA AND ALSO FOR BUSINESS PURPOSES. THE ASSESSEE ALSO HAD OFFICE AND RESIDEN CE IN THIS HOUSE AND THE PAPER REVEALED THE EXPENSES PERTAINING TO THE C ONSTRUCTION OF THE HOUSE AS WELL AS THE CONSTRUCTION EXPENSES AT VARIO US SITES OF THE ASSESSEE. THE ASSESSEE IS A GOVT. CONTRACTOR. THE A .O. AND THE CIT(A) HAVE HELD THAT THE TOTAL CONSTRUCTION COST OF THE H OUSE WAS RS.52,58,000/-. THEY SUSTAINED THE ADDITION IN THE HANDS OF SHRI JALKOTE. THIRDLY, THEY HELD THAT AS AGAINST THIS FIGURE, SHR I JALKOTE HAD PAID A SUM OF RS. 12,50,000/- TO THE ASSESSEE AND ACCORDIN GLY, THE BALANCE ADDITION HAS BEEN SUSTAINED BY THE CIT(A) IN THE HA NDS OF SHRI JALKOTE AND HE DELETED THE ADDITION IN THE HANDS OF THE ASS ESSEE. HE SUBMITTED 17 THAT SINCE MR JALKOTE HAS ADMITTED PURCHASE OF THE HOUSE FROM TH E ASSESSEE, THE ISSUE HAS TO BE DECIDED IN THE HANDS OF SHRI JALKOTE. THE ASSESSEE IN THIS GROUND HAS ASKED FOR SUSTAINING TH E ADDITION IF ANY REQUIRED, IN HIS HANDS. THIS GROUND ACCORDINGLY, IS NOT JUSTIFIED. HOWEVER, IN CASE, WHATEVER ADDITION REQUIRED, ON TH IS ISSUE IS DECIDED TO BE MADE IN THE HANDS OF THE ASSESSEE AND NOT SHRI J ALKOTE, THE ARGUMENTS ON MERITS WILL BE ADVANCED. 15. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND HEAVILY RELIED ON THE ORDER OF THE AO. 16. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. IN THI S CASE IT IS AN ADMITTED FACT THAT MR. JALKOTE HAS ADMITTED THE PUR CHASE OF THE HOUSE FROM THE ASSESSEE. THEREFORE, ADDITION, IF ANY, HA S TO BE MADE IN THE HANDS OF MR. JALKOTE ON SUBSTANTIVE BASIS. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED FINDING GIVEN BY LD.CIT (A) WE UPHOLD HIS ORDER ON THIS ISSUE AND THE GROUND RAISED BY THE AS SESSEE IS DISMISSED. 17 GROUND OF APPEAL NO.4 BY THE ASSESSEE READS AS U NDER : 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS)-I, NAGPUR ERRED W HEN HE UPHELD AN ADDITION OF RS.23,23,000/- AS PURCHASE VALUE OF MITMITA LAND TO THE TOTAL UNDISCLOSED INCOME OF THE APPELLAN T INSTEAD OF HIS ACTUAL CONTRIBUTION AT RS.16,30,000/- OFFERED BY THE APPELLANT. 17.1 FACTS OF THE CASE IN BRIEF ARE THAT THE AO DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS REFERRED TO ANSWERS TO Q.NO. 41, PAGE NO.17, Q.NO.44, PAGE NO.20 & Q.NO.51, PAGE NO.25 & 26 OF S TATEMENT RECORDED U/S.132(4) DATED 22-11-2003 AND 23-11-2001 WHERE THE 18 ASSESSEE WAS CONFRONTED WITH THE ENTRY ON PAGE NO.2 4 OF INVENTORY A- 71 WHICH IS A DIARY FOUND FROM THE RESIDENTIAL PREM ISES OF SHRI JALKOTE. THE ASSESSEE STATED THAT ENTIRE HANDWRITI NG IS OF SHRI JALKOTE AND THE ACCOUNT IS ACCEPTABLE TO HIM. THEREFORE, T HE ASSESSEE HAD ALSO SIGNED ON THE PAGE NO.23(OL) FOR CONFIRMATION. THE ASSESSEE HOWEVER STATED THAT INVESTMENT IN MITMITA PROPERTY BELONG TO FOLLOWING FOUR PERSONS: (I) MEGH SEEDS PVT. LTD. (II) SHANKAR HANMANTA ANDURE (III) GOPAL GORTE (IV) SIDDHARAM NALGE THE AO NOTED THAT THE ENTRY ON PAGE NO.24 OF DIARY A-71 SHOWS THE TOTAL COST OF MITMITA LAND AS ON 16-10-98 WAS RS.34 ,29,773/- OUT OF WHICH RS.30.00 LAKHS WAS PAID BY SHRI N.H. JALKOTE. SHRI JALKOTE HAS WRITTEN AS SELF PAID AGAINST THE ETNRY OF RS.30 L AKHS. THE ENTRY FOR DIFFERENCE OF RS.4,29,773/- OR SAY RS.4.30 LAKHS D ATED 16-10-98 WAS MARKED WITH TWO ASTERIC (* *) FOR THE SAKE OF IDENT IFICATION. THE SAME MARK OF IDENTIFICATION, I.E. (* *) ALSO APPEARS ON PAGE 23(OL) OF DIARY A-71 IN RESPECT OF ENTRY OF RS.4.30 LAKHS DEDUCTED FROM THE RUNNING ACCOUNT OF SHRI M.H. ANDURE, THE ASSESSEE WITH A NA RRATION MITMITA DIFFERENCE. THE AO THEREFORE WAS OF THE OPINION T HAT THE COST OF LAND TO THE EXTENT OF RS.30.00 LAKHS WAS PAID BY SHRI N. H. JALKOTE AND THE REMAINING COST OF RS.4.30 LAKHS WAS BRONE BY SHRI N .H.JALKOTE THROUGH THE SAID RUNNING ACCOUNT OF THE ASSESSEE. IN VIEW OF THIS, IT WAS STATED BY THE ASSESSEE THAT HE HAD PAID RS.4,30 ,000/- ON 16-10- 1998. HE THEREFORE SURRENDERED UNDISCLOSED INCOME OF RS.4,30,000/- IN ANSWER TO QUESTION NO.44. 19 17.2 THE AO FURTHER NOTED THAT THE ASSESSEE HAS HIM SELF ADMITTED IN ANSWER TO QUESTION NO.51 ABOUT THE ENTIRE COST OF R S.34,30,000/-. HOWEVER, HE HAS SHOWN THE AMOUNT OF RS.16,30,000/- AS HIS CONTRIBUTION FOR THE COST OF MITMITA LAND IN THE RE CONCILIATION STATEMENT AS WELL AS IN THE CASH FLOW STATEMENT FIL ED DURING BLOCK ASSESSMENT PROCEEDINGS. IN THE RECONCILIATION STAT EMENT FILED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS, IT IS CLAIM ED THAT THE AMOUNT OF RS.11,70,000/- WAS CONTRIBUTED BY SHRI P.B. MAHA JAN AND RS.5,70,000/- BY SHRI GOPAL GORTE. IN THE RECONCIL IATION STATEMENT, THE ASSESSEE HAS SHOWN TOTAL SOURCES OF RS.33,07,00 0/- ONLY FOR THE COST OF LAND OF RS.34,29,773/-. THUS, THE SOURCE F OR DIFFERENCE OF RS.1,22,773/- WAS NOT EXPLAINED. HE REFERRED TO TH E BLOCK ASSESSMENT ORDER IN THE CASE OF SHRI PRASHANT MAHAJAN WHEREIN THE AMOUNT OF RS.11,07,201/- WAS SHOWN AS HIS CONTRIBUTION TOWARD S THE COST OF MITMITA LAND IN THE CASH FLOW STATEMENT FILED IN TH AT CASE. THUS, EVEN THE CONTRIBUTION OF SHRI PRASHANT MAHAJAN AS CLAIME D IN THE CASE OF ASSESSEE DOES NOT TALLY WITH THE CONTRIBUTION SHOWN BY SHRI PRASHANT MAHAJAN IN HIS OWN CASE. THE CONFIRMATION OF SHRI GOPAL GORTE FOR HIS CONTRIBUTION OF RS.5,70,000/- WAS FILED IN THE CASE OF SHRI N.H.JALKOTE. BUT THE CREDIT WORTHINESS OF SHRI GOP AL GORTE AND THE GENUINENESS OF HIS CONTRIBUTION ARE NOT PROVED. IN VIEW OF THIS POSITION, THE AO TAXED THE AMOUNT OF RS.11,70,000/- IN THE HANDS OF SHRI PRASHANT MAHAJAN ON PROTECTIVE BASIS ON ACCOUN T OF INVESTMENT IN MITMITA LAND. THE REMAINING AMOUNT OF RS.23,23,000 /- WAS TAXED BY HIM IN THE HANDS OF SHRI M.H. ANDURE ON PROTECTIVE BASIS ON ACCOUNT OF INVESTMENT IN MITMITA LAND. 20 17.3 BEFORE THE CIT(A) IT WAS ARGUED THAT THE AO HA S MADE THE ADDITION OF RS.23,23,000/- ON PROTECTIVE BASIS TO T HE TOTAL UNDISCLOSED INCOME OF THE ASSESSEE TOWARDS HIS SHARE IN MITMITA LAND. IT WAS POINTED OUT THAT THE ENTRY ON PAGE NO.24 OF DIARY A -71 SHOWS COST OF MITMITA LAND AS ON 16-10-1998 AT RS.34,29,773/- AND THE NARRATION WRITTEN AGAINST THE SAID ENTRY IS SELF PAID, I.E. CONTRIBUTION OF THE ASSESSEE. MR. P.B. MAHAJAN & GOPAL GORTE HAVE CONT RIBUTED AROUND RS.30.00 LAKHS TOWARDS INVESTMENT IN MITMITA LAND A ND BALANCE EXPENSES INCURRED THEREON AT RS.4.30 LAKHS WERE BOR NE BY THE ASSESSEE. PROOF OF INVESTMENT MADE BY GOPAL GORTE, AMOUNTING TO RS.5,70,000/- BY WAY OF AFFIDAVIT DULY NOTARISED AN D PROOF OF HIS CREDITWORTHINESS I.E. 7/12 EXTRACT SHOWING OWNERSHI P OF AGRICULTURAL LAND AT VILLAGE KAVTHAL,TQ. MARGRULPIR, DIST. WASHI M WERE FILED BEFORE CIT(A). IT WAS ARGUED THAT THE ASSESSING OFFICER H AS FAILED TO CONSIDER THE ABOVE FACTS, AND HAS ADDED RS.5,70,000/-BEING S HARE OF SHRI GOPAL GORTE TO THE TOTAL UNDISCLOSED INCOME OF THE ASSESS EE WITHOUT EXAMINING THE CREDITWORTHINESS & FINANCIAL CAPACITY OF SHRI GOPAL GORTE. IT WAS ARGUED THAT THE TOTAL INVESTMENT IN T HE SAID LAND AS PER SEIZED DIARY A-71, PG. NO. 24 IS RS.34,29,773/- OUT OF WHICH RS.33,07,000/- WAS CONTRIBUTED BY RESPECTIVE INDIVI DUALS AS AFORESAID. THE REMAINING AMOUNT OF RS.1,22,773/- ARE THE EXPEN SES INCURRED ON THE SAID LAND OUT OF HIS RUNNING ACCOUNT. IT WAS AR GUED THAT THE ASSESSING OFFICER HAS MADE THE ENTIRE ADDITION OF R S. 34.30 LACS ON SUBSTANTIVE BASIS IN THE HANDS OF THE CO-BROTHER OF THE ASSESSEE SHRI. N. H. JALKOTE WHICH IS NOT CORRECT. 21 17.4 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSE E THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM THE AO WH O REITERATED THE SAME REASONING. THE LD.CIT(A) CONFRONTED THE REMAN D REPORT TO THE ASSESSEE. IT WAS SUBMITTED THAT THE ASSESSING OFFI CER HAS FAILED TO CONSIDER THE AFFIDAVIT CUM CONFIRMATION OF SHRI GOP AL GORTHE AND ADDED HIS SHARE OF CONTRIBUTION AMOUNTING TO RS.5,7 0,000/- ALONGWITH SHARE OF THE ASSESSEE AMOUNTING TO RS.17,53,000/- [ I.E. RS.16,30,000/- (+) EXPS.1,23,000/-] ON 'PROTECTIVE BASIS ' IN THE HANDS OF THE ASSESSEE. IT WAS FURTHER ARGUED THAT THE ASSESSING OFFICER HA S COME TO THIS CONCLUSION WITHOUT GIVING THE ASSESSEE A REASONABLE OPPORTUNITY. APART FROM PRODUCING HIS AFFIDAVIT AND PROOF OF AGR ICULTURAL INCOME, THE ASSESSEE HAS ALSO PRODUCED CONFIRMATION LETTER DT.2.10.2003 AND AFFIDAVIT OF SHRI GOPAL GORTE. IT WAS STATED THAT IN HIS CONFIRMATION LETTER DT.2.10.2003 SHRI GOPAL GORTE HAS STATED THE SOURCE OF HIS CONTRIBUTION OF RS.5.70 LACS AS OUT OF AGRICULTURAL INCOME OF HUF OF SHRI SURYAKANTAPPA GORTE, FATHER OF SHRI GOPAL GORT E. IT WAS ARGUED THAT THE ASSESSING OFFICER HAS NOT CROSS EXAMINED M R.GOPAL GORTE IN CONNECTION WITH THE AFFIDAVIT FILED BEFORE HIM. RE FERRING TO THE DECISION OF HON. SUPREME COURT IN THE CASE OF MEHTA PARIKH AND CO. VS CIT (1956) 30 ITR 181 IT WAS ARGUED THAT THE HON BLE SUPREME COURT IN THE SAID DECISION HAS HELD THAT WHEN NONE OF THE AUTHORITIES CONSIDERED IT NECESSARY TO CROSS EXAMINE THE DEPONE NT WITH REFERENCE TO THE STATEMENT MADE IN THE AFFIDAVIT, IT WAS NOT OPE N TO THE REVENUE UNDER THESE CIRCUMSTANCES TO CHALLENGE THE CORRECTN ESS OF THE STATEMENT MADE BY THE DEPONENT. 22 17.5 IT WAS FURTHER ARGUED THAT THE ASSESSEE WAS EN TITLED TO ASSUME THAT THE AUTHORITIES WERE SATISFIED WITH THE AFFIDA VIT AS SUFFICIENT PROOF ON THIS POINT. IT WAS ALSO ARGUED THAT THE A SSESSEE HAS DISCHARGED HIS BURDEN OF PROOF BY FILING AFFIDAVIT OF SHRI GOPAL GORTE. IT WAS SUBMITTED THAT CONCLUSION DRAWN BY THE AO IS QUITE CONTRADICTORY, ON THE ONE HAND HE IS ALLEGING THAT THE ENTIRE INVESTMENT IS MADE BY SHRI JALKOTE, AND ON THE OTHER HAND, BY MAKING ADDITION OF SHARE OF SHRI GOPAL GORTE IN THE HANDS OF THE ASSES SEE, THAT TOO ON PROTECTIVE BASIS. HE IS THUS INDIRECTLY ACCEPTING THE FACT THAT THE INVESTMENT IN THE SAID LAND IS MADE BY THE ASSESSEE . OTHERWISE HE WOULD HAVE RETAINED THE AMOUNT OFFERED IN THE BLOCK RETURN BY THE ASSESSEE, I.E. RS.16,30,000/- ON PROTECTIVE BASIS WHICH GOES TO PROVE THAT THE AO HIMSELF IS NOT SURE WHO IS THE RE AL OWNER OF THE SAID PROPERTY. 17.6 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSE E THE LD.CIT(A) GAVE PART RELIEF TO THE ASSESSEE BY OBSE RVING AS UNDER : 10.5 I HAVE CAREFULLY GONE THROUGH THE RELEVANT PA RT OF THE ASSESSMENT ORDER, SUBMISSION OF THE APPELLANT, REMAND REPORT OF THE ASSESSING OFFICER AND REJOINDER OF THE APPELLANT AN D ALSO THE ARGUMENTS MADE BY THE LEARNED A.R. IT IS A FACT THAT ALL THE RELEVANT PROPERTY DOCUMENTS I.E., PURCHASE DEED, 7/12 EXTRACTS ETC. ARE IN THE NAME OF THE APPELLANT ALONGWITH OTHER 3 PERSONS AND, THEREFOR E, SHRI N.H.JALKOTE WAS NOT THE LEGAL OWNER OF SUCH PROPERTY. I WOULD LIKE TO REFER TO THE APPELLATE ORDER IN THE CASE OF SHRI N.H .JALKOTE, GROUND NO.4 WHEREIN I HAVE GIVEN CLEAR FINDING THAT THE INVESTME NT IN THE MITMITA LAND CANNOT BE ASSESSED AS UDI IN HIS HAND ON ACCOUNT O F DETAILED REASON MENTIONED IN THE ORDER. THEREFORE, RELYING ON THE SAID APPELLATE ORDER OF SHRI N.H.JALKOTE, IT IS IMPERATIVE THAT THE UNEXPLAINED INVESTMENT IN THE SAID PROPERTY HAD TO BE TAXED ON SUB STANTIVE BASIS IN THE HANDS OF THE APPELLANT AND OTHER CO-OWNERS OF THE SAID PROPERTY. THE ASSESSING OFFICER HAS NO WHERE PROVED THAT THE APPELLANT AND OTHERS ARE BENAMIDARS OF MR. JALKOTE. IN VIEW OF THE FACT THAT TITLE PAPERS OF THE PROPERTY IS IN THE NAME OF THE APPELLAN T WHICH HAS BEEN OFFERED AS HIS UNDISCLOSED INVESTMENT IN THE BLOCK RETURN AND IN THE ABSENCE OF CONTRARY EVIDENCE ON RECORD TO PROVE THA T THE SAID PROPERTY DID NOT BELONG TO THE APPELLANT, I AM TO HOLD THAT THE UNEXPLAINED INVESTMENT IN THE SAID PROPERTY NEEDS TO BE TAXED AS U DI IN THE HANDS 23 OF THE APPELLANT ON SUBSTANTIVE BASIS. IT IS PERTINENT TO MENTION HERE THAT THE APPELLANT IN HIS STATEMENT U/S. 132(4) DT. 22-11-2001 AT QUE. NO. 41 HAS CATEGORICALLY STATED THAT HE HAD PURCHASED THE SAID MITMITA LAND IN THE NAME OF FOUR PERSONS AND THE PAYMENT TO WARDS SUCH PURCHASE WAS MADE BY HIM. 10.6 AS FAR AS THE INVESTMENT BY SHRI GOPAL GORTE GOE S, I FIND THAT HE WAS SIMPLY A NAME LENDER WITHOUT HAVING MADE ANY INVESTMENT IN THE SAID PROPERTY. THE AFFIDAVIT FILED BY SHRI GOPAL GORTE STATING THAT HE HAS INVESTED IN THE SAID PROPERTY OU T OF HIS FATHERS HUF INCOME WAS PERUSED WHICH SHOWS THAT IT IS QUITE VAGUE A ND DOES NOT SPECIFY THE AMOUNT INVESTED IN THE SAID PROPERTY NOR DOES IT EXPLAIN THE SOURCE OF FATHER'S HUF INCOME. THE EVIDENTIARY VALUE OF SUCH INCOMPLETE AFFIDAVIT CANNOT BE TAKEN COGNIZANCE IN SUCH INCOME TAX PROCEEDINGS. THE AO WAS, THEREFORE, RIGHT IN HOLDING THAT THE CREDIT WORTHINESS OF SHRI GOPAL GORTE AND THE GENUINENESS OF H IS CONTRIBUTION TOWARDS PURCHASE OF SUCH PROPERTY DOES NOT STAND PROVED. THEREFORE, IN THE LIGHT OF ADMISSION MADE BY THE APPELLANT AT QUE NO. 41 & 51, THE SO CALLED INVESTMENT OF RS.5,70 ,000/- MADE BY SHRI GOPAL GORTE BEEN RIGHTLY CLUBBED AS UNEXPLAINE D INVESTMENT IN THE HANDS OF THE APPELLANT. CONSIDERING THE FACT THAT OUT OF THE TOTAL INVESTMENT OF RS.34.30 LACS, SHRI PRASHANT MAHAJAN H AS OFFERED RS.11.07 LACS AS HIS UNEXPLAINED INVESTMENT IN THE MITMITA L AND AND WHICH HAS BEEN CONFIRMED ON SUBSTANTIVE BASIS IN THE APPELLATE ORDER IN HIS CASE, THE BALANCE AMOUNT OF RS.23.23 LACS AS INVESTMENT I N THE SAID MITMITA LAND IS HELD TO BE UNDISCLOSED INCOME OF THE APPELL ANT ON SUBSTANTIVE BASIS. 17.7 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE AS SESSEE IS IN APPEAL BEFORE US. 18. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PURCHASE CONSIDERATION FOR MITMITA LAND WAS GIVEN BY THE ASS ESSEE ALONG WITH SHRI PRASHANT B.MAHAJAN AND SHRI GOPAL GORTE AS STA TED ON PAGE 18 OF THE CIT(A) ORDER. THE ASSESSEE CONTRIBUTED A SUM OF RS.16,30,000/-. THE ASSESSEE FILED THE AFFIDAVIT OF SHRI GOPAL GORT E THAT HE HAD CONTRIBUTED RS.5,70,000/- TOWARDS THE LAND. THE A.O . AND THE CIT(A) HELD THAT THIS IS THE BENAMI INVESTMENT MADE BY THE APPELLANT IN THE NAME OF SHRI GORTE. THEY FURTHER ADDED RS.1,22,773/ - ON ACCOUNT OF THE EXPENSES INCURRED ON THE REGISTRATION, STAMP DU TY, ETC. AND THUS, MADE THE ADDITION OF RS. 6,93, 000/- IN THE HANDS O F THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT (A) HAS CLEARLY 24 STATED IN PARA 10.5 THAT THE PURCHASE DEED, 7/12 EX TRACT, ETC. ARE IN THREE NAMES. HE HAS ACCEPTED THE SHARE OF SHRI PRAS HANT MAHAJAN IN THE LAND. SHRI GORTE HAS GIVEN THE AFFIDAVIT ABOUT HIS CONTRIBUTION FOR THE LAND. IN THAT EVENT, THERE IS NO REASON AS TO W HY, THE CONTRIBUTION OF SHRI GORTE SHOULD BE CONSIDERED IN THE ASSESSEE'S H ANDS. AFTER ALL, HE HAS NOT MENTIONED ANY ADVERSE STATEMENT IN THIS REG ARD. NO INCRIMINATING EVIDENCE WAS FOUND AGAINST THE ASSESS EE. IF THE DEPT. IS NOT SATISFIED ABOUT THE SOURCES OF SHRI GORTE, THE ADDITION COULD HAVE BEEN MADE IN HIS HANDS. THE BURDEN TO PROVE THAT HE IS THE BENAMIDAR OF THE ASSESSEE IS NOT DISCHARGED BY THE A.O. AND H ENCE, THIS ADDITION IS NOT JUSTIFIED. 18.1 WITHOUT PREJUDICE TO THE ABOVE, HE SUBMITTED T HAT THE CIT(A) HAS ACCEPTED THE SHARE OF PRASHANT MAHAJAN IN THE L AND. IF THAT BE SO, SHRI GORTE COULD BE HIS BENAMIDAR ALSO. WHEN THER E IS NO EVIDENCE THAT THE ASSESSEE CONTRIBUTED THE SHARE OF SHRI GOR TE IN THE COST OF THE LAND, THERE IS NO WARRANT TO MAKE THE ADDITION IN T HE HANDS OF THE ASSESSEE. 18.2 THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTH ER HAND HEAVILY RELIED ON THE ORDER OF THE LD.CIT(A) ON THIS ISSUE. SHE SUBMITTED THAT ASSESSMENT IN THE HANDS OF MR. GORTE CANNOT BE REOP ENED NOW AS THE SAME IS BARRED BY LIMITATION. THAT IS WHY THE ASSE SSEE IS ASKING NOW TO ASSESS THE INVESTMENT OF RS.5,70,000/- IN THE HA NDS OF MR. GORTE. 18.3 WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND 25 THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. FR OM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS APPEAL PROCEEDINGS WE FIND THE RELEVANT PROPERTY DOCUMENTS, I.E. PURCHASE DEED, 7/12 EXTRAC TS ETC. ARE IN THE NAME OF THE ASSESSEE ALONG WITH 2 OTHER PERSONS. IN THE CASE OF MR. PRASHANT MAHAJAN VIDE ORDER OF EVEN DATE WE HAVE UP HELD THE ADDITION OF RS.11.07 LAKHS BEING HIS SHARE OF CONTRIBUTION T OWARDS INVESTMENT IN MITMITA LAND ON SUBSTANTIVE BASIS. SO FAR AS TH E AMOUNT OF RS.5,70,000/- ACCEPTED BY MR. GOPALGORTE IT IS AN A DMITTED FACT THAT THE ASSESSEE HAS FURNISHED VARIOUS DETAILS INCLUDIN G CONFIRMATION LETTER AND AFFIDAVIT BY MR. GOPAL GORTE. MR. GOPAL GORTE WAS NEVER EXAMINED BY THE ASSESSING OFFICER. MERELY BECAUSE NO BLOCK ASSESSMENT HAS BEEN MADE IN THE CASE OF MR. GOPAL GORTE THE SAME CANNOT BE A GROUND TO ADD THE SHARE OF HIS INVESTME NT IN THE HANDS OF THE ASSESSEE. THEREFORE, THE SHARE OF INVESTMENT A MOUNTING TO RS.5,70,000/- OF MR. GOPAL GORTE, IN OUR OPINION, C ANNOT BE ADDED IN THE HANDS OF THE ASSESSEE. ONCE THE SHARE OF INVES TMENT OF MR. PRASHANT MAHAJAN AMOUNTING TO RS.11,07,000/- AND TH E SHARE OF INVESTMENT OF MR. GOPAL GORTE AMOUNTING TO RS.5,70, 000/- BOTH TOTALLING TO RS.16,77,000/- IS DEDUCTED FROM THE CO ST OF RS.34,29,773/- THE BALANCE REMAINS RS.17,52,773/- WHICH HAS TO BE TREATED AS THE INVESTMENT OF THE ASSESSEE. WE DO NOT FIND ANY FOR CE IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT AN AMOUNT OF RS.16,30,000/- ONLY HAS TO BE ADDED ON SUBSTANTIVE BASIS SINCE AN AMOUNT OF RS.1,22,773/- COULD NOT BE EXPLAINED BY T HE ASSESSEE. SINCE IT HAS BEEN HELD IN THE CASE OF MR. N.H. JALKOTE TH AT SUCH INVESTMENTS, WHICH STAND IN THE NAMES OF DIFFERENT PERSONS AND A DMITTED BY THEM TO 26 BE OUT OF THEIR OWN SOURCES CANNOT BE ADDED IN THE HANDS OF MR. N.H JALKOTE ON SUBSTANTIVE BASIS AND HAS TO BE ADDED IN THE HANDS OF RESPECTIVE PERSONS ON SUBSTANTIVE BASIS, THEREFORE, THE ADDITION OF RS.17,52,773/- HAS TO BE MADE IN THE HANDS OF THE A SSESSEE ON SUBSTANTIVE BASIS. WE HOLD AND DIRECT ACCORDINGLY. THIS GROUND BY THE ASSESSEE IS ACCORDINGLY PARTLY ALLOWED. 19. GROUND OF APPEAL NO.5 BY THE ASSESSEE READS AS UNDER : 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I , NAGPUR ALSO ERRED WHEN HE IGNORED THE CORRECT AMOUNT OF ADV ANCES TO MR. GANGADHAR MAHAJAN AT RS.15,82,700/- OFFERED BY THE A PPELLANT AND INSTEAD SUSTAINED ON ADDITION OF RS.22,82,000/- TO THE TOTAL UNDISCLOSED INCOME OF THE APPELLANT TOWARDS THE SAID AD VANCE. 19.1 FACTS OF THE CASE IN BRIEF ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT IN THE DIARIES FOUND AT THE RESIDENCE OF MR. JALKOTE THERE WERE NO TINGS ABOUT THE ADVANCES TO MR. GANGADHAR MAHAJAN OF RS.22,82,700/- BY THE ASSESSEE. ON BEING CONFRONTED BY THE ASSESSING OFF ICER THE ASSESSEE SUBMITTED THAT OUT OF THESE AMOUNTS HE HAD OFFERED A SUM OF RS.15,82,700/- IN HIS RETURN. THE BALANCE AMOUNT W AS ADVANCED PRIOR TO THE BLOCK PERIOD. HOWEVER, THE ASSESSING OFFICE R WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. FROM T HE CASH FLOW STATEMENT FILED BY THE ASSESSEE HE OBSERVED THAT TH ERE ARE CONTRADICTORY FIGURES. SINCE HE HAS REJECTED THE CASH FLOW STATE MENT FILED BY THE ASSESSEE DUE TO INABILITY OF THE ASSESSEE TO EXPLAI N VARIOUS ENTRIES FOUND IN THE RECEIPT SIDE OF THE CASH FLOW AND CONS IDERING THE FACT THAT CERTAIN ASSURANCE OF REPAYMENT OF LOAN GIVEN BY GAN GADHAR MAHAJAN TO MR. M.H. ANDURE WHICH WERE DULY SIGNED BY BOTH O F THEM WHICH 27 WERE FOUND, THE ASSESSING OFFICER MADE ADDITION OF RS.22,82,700/- TO THE TOTAL INCOME OF THE ASSESSEE AS HIS UNDISCLOSED INCOME. 19.2 BEFORE THE CIT(A) THE ASSESSEE MADE ELABORATE SUBMISSIONS BASED ON WHICH THE LD.CIT(A) CALLED FOR A REMAND RE PORT FROM THE ASSESSING OFFICER. AFTER CONFRONTING THE SAME TO T HE ASSESSEE THE LD.CIT(A) UPHELD THE ADDITION OF RS.22,82,700/- IN THE HANDS OF THE ASSESSEE BY OBSERVING AS UNDER : 11.3 I HAVE DULY CONSIDERED THE SUBMISSION OF THE APPELLANT, REMAND REPORT OF THE ASSESSING OFFICER AND REJOINDER OF THE APPELLANT AND ALSO THE ARGUMENTS MADE BY THE LEARNED A.R. THE RELEVANT ENTRY OF LOAN ADVANCED BY THE APPELLANT TO SHRI GANGADHAR MAHAJAN AS APPEARING ON PAGE NO. 13(OL) OF SEIZED DIARY A-71 WAS EXAMINED BY ME WHICH CLEARLY SHOWS THAT CERTAIN ASSURANCE OF REPAYMENT OF L OAN HAS BEEN GIVEN BY SHRI GANGADHAR MAHAJAN TO SHRI M.H. ANDURE WHICH HAS BEEN DULY SIGNED BY BOTH OF THEM ON 24-10-1998. THEREFOR E, IT LEAVES NO IOTA OF DOUBT THAT THE ENTRY APPEARING IN THE SAID DIARY WAS A LOAN ADVANCED BY SHRI M.H. ANDURE TO SHRI GANGADHAR MAHAJAN AND T HEIR CORRESPONDING LOAN, THEREFORE, APPEARS IN THE RUNNIN G ACCOUNT IN THE NAME OF SHRI GANGADHAR MAHAJAN IN THE SEIZED DIARY A-71. FURTHER, ON PERUSAL OF THE STATEMENT OF SHRI M.H. ANDURE RECORD ED U/S. 132(4) DT. 24-11-2001 AT QUE NO. 58 TO 60 IT IS SEEN THAT HE HAS ADMITTED OF ADVANCING CASH LOANS TO SHRI GANGADHAR MAHAJAN OUT O F HIS UNDISCLOSED SOURCE OF INCOME. THE SAID STATEMENT OF SHRI M.H.ANDUR E HAS BEEN CONFIRMED BY SHRI GANGADHAR MAHAJAN IN HIS STATEMEN T RECORDED U/S. 131 DT. 23-1-2002 AT QUE. NOS. 5 & 7. THESE STATEM ENTS, THEREFORE, ESTABLISHES THAT THE APPELLANT HAD ADVANCED UNEXPLAIN ED LOANS WHICH HAVE BEEN OFFERED AS UDI IN BLOCK RETURN. 11.4 FURTHER IN THE LIGHT OF MY FINDING GIVEN I N THE APPELLATE ORDER OF SHRI N.H. JALKOTE THAT THE ENTRIES IN THE SEIZED DIAR Y DID NOT BELONG TO HIM CONSIDERING THE STATEMENTS OF THE APPELLANT AND S HRI SANJAY MAHAJAN, I HAVE, NO HESITATION TO HOLD THAT THE LOA N OF RS.22.82 LACS ADVANCED BY THE APPELLANT TO SHRI GANGADHAR MAHAJAN IS UNEXPLAINED AND, THEREFORE, NEEDED TO BE ASSESSED IN HIS HANDS ON SUBSTANTIVE MANNER. AS FAR AS THE CLAIM OF THE ASSESSEE THAT A SUM OF RS.7,00,000/- OUT OF THE TOTAL LOAN OF RS.22.83 LACS PERTAINS TO THE ACCOUNTING YEARS PRIOR TO THE BLOCK PERIOD GOES, I FIND THAT NO CORR OBORATIVE EVIDENCE HAS BEEN PRODUCED BEFORE ME IN SUPPORT OF SUCH CLAIM. ON THE CONTRARY I FIND THAT RUNNING ACCOUNT IN THE NAME OF SHRI GANGAGHAR MAHAJAN AS ENTERED IN THE SAID DIARY CLEARLY GIVES THE DATE OF 29-1-19 97 TO 24-10-1998 WHICH CLEARLY FALLS IN THE BLOCK PERIOD AND, THEREFORE, T HE CLAIM MADE BY THE A.R. IS NOT ACCEPTABLE. IN THE LIGHT OF ABOVE DISCUSSIO N, I AM TO HOLD THAT THE SOURCE OF TOTAL LOAN OF RS.22,82,700/- ADVANCED BY THE APPELLANT DOES NOT STAND EXPLAINED AND, THEREFORE, DIRECTED TO BE ASSE SSED AS UDI IN THE HANDS ON SUBSTANTIVE BASIS. 28 19.3 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE AS SESSEE IS IN APPEAL BEFORE US. 19.4 WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. THE L D. COUNSEL FOR THE ASSESSEE COULD NOT CONTROVERT THE FINDING GIVEN BY THE LD.CIT(A) THAT PAGE 13 (OL) OF SEIZED DIARY A-71 SHOWS CERTAIN ASS URANCE OF REPAYMENT OF LOAN GIVEN BY MR. GANGADHAR MAHAJAN TO MR. M.H. ANDURE AND THAT THE SAME HAS BEEN SIGNED BY BOTH OF THEM ON 24-10- 1998. FURTHER, THE LD. COUNSEL FOR THE ASSESSEE AL SO COULD NOT CONTROVERT THE FINDING GIVEN BY THE LD.CIT(A) THAT M.H. ANDURE IN HIS STATEMENT RECORDED U/S.132(4) AT QUESTION NOS. 58 T O 60 HAS ADMITTED TO HAVE ADVANCED CASH LOANS TO MR.GANGADHAR MAHAJAN OUT OF HIS UNDISCLOSED SOURCE OF INCOME. FURTHER, THE LD. COU NSEL FOR THE ASSESSEE ALSO COULD NOT CONTROVERT THE FINDING GIVE N BY THE LD.CIT(A) THAT MR. GANGADHAR MAHAJAN IN HIS STATEMENT RECORDE D U/S.131 ON 23- 10-2002 HAS CONFIRMED THE STATEMENT OF MR. M.H. AND URE IN HIS REPLY TO QUESTION NO.5 AND 7. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED REASONING GIVEN BY THE LD.CIT(A) ON THIS I SSUE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD.CIT(A) SUSTAINING THE ADDITION OF RS.22,82,000/-. GROUND RAISED BY THE ASSESSEE IS A CCORDINGLY DISMISSED. 20. GROUND OF APPEAL NO.6 BY THE ASSESSEE READS AS UNDER : 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED WHEN HE SUSTA INED ADDITION OF RS.1,00,000/- EACH I.E, RS.2,00,000/- TO THE TOTAL UNDISCLOSED INCOME OF THE APPELLANT AS UNEXPLAINED PAY MENTS TO MR,RENU MAHAJAN AND MR.SANJAY MAHAJAN RESPECTIVELY, WHICH IN FACT ARE REGULAR BUSINESS TRANSACTIONS OF THE APPELLANT. 29 20.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED FROM THE NOTINGS IN THE DIARIES THAT THE ASSESSEE HAS GIVEN ADVANCE OF RS.1 LAKH EACH TO SMT. RENU MAHAJAN AND MR. SANJAY MAHAJAN. THE ASSESSEE OWNED UP THE ADVANCES GIVEN BUT SUBMITTED THAT THE SAME WERE GIV EN FROM HIS PROPRIETARY CONCERN SANCHAR CONSTRUCTIONS FOR WHICH NO BOOKS OF ACCOUNTS WERE MAINTAINED. HOWEVER, THE ASSESSING O FFICER WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSE E AND MADE ADDITION OF RS.2 LAKHS AS UNDISCLOSED INCOME OF THE ASSESSEE ON PROTECTIVE BASIS AND MADE ADDITION OF RS.2 LAKHS IN THE HANDS OF MR. N.H. JALKOTE ON SUBSTANTIVE BASIS. 20.2 BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE AS SESSEE HAS PAID A SUM OF RS.1,00,000/- EACH TO SMT. RENU MAHAJAN AND SHRI SANJAY MAHAJAN AS ADVANCE FROM HIS PROPRIETARY CONCERN NAM ELY M/S. SANCHAR CONSTRUCTIONS. IT WAS ARGUED THAT THE ASSE SSEE IN THE STATEMENTS RECORDED U/S.132(4) AND 131 OF THE I.T. ACT AND AFFIDAVITS FILED BY HIM IN POST SEARCH PROCEEDINGS UNDOUBTEDLY HAS ACCEPTED THE TRANSACTIONS RECORDED IN THE DIARIES A-67, 68 & 71 IN HIS NAME AS THE TRANSACTIONS OF THE ASSESSEE AND ACCORDINGLY THE AS SESSEE HAS OWNED UP THE SAID TRANSACTIONS. THEREFORE, ALTHOUGH THE DIARIES ARE SEIZED FROM THE RESIDENCE OF SHRI N.H. JALKOTE, IT IS CRYS TAL CLEAR THAT SHRI N.H. JALKOTE IS NOWHERE CONCERNED WITH THESE TRANSA CTIONS AND SAME NEED TO BE TAXED IN THE HANDS OF THE ASSESSEE ON SU BSTANTIVE BASIS INSTEAD OF PROTECTIVE BASIS. 30 20.3 HOWEVER, THE LD.CIT(A) WAS NOT CONVINCED WITH THE ARGUMENTS ADVANCED BY THE ASSESSEE AND UPHELD THE ADDITION MA DE BY THE AO BY OBSERVING AS UNDER : 12.3 THE SUBMISSIONS OF THE APPELLANT ALONG WITH R EMAND SUBMITTED BY THE AO AND THE RELEVANT DOCUMENTS HAVE BEEN DULY CONSIDERED AND I DO NOT FIND ANY MERIT IN THE ARGUMENT OF THE AR. PE RUSAL OF THE ENTRY ON PAGE 9 OF ANNEXURE A-71 SHOWS THAT TWO PAYMENTS OF RS . 1,00,0007- EACH HAVE BEEN MADE TO MR. RENU MAHAJAN AND SHRI SA NJAY MAHAJAN ON 31-10-1998 AND 9-12-1998 RESPECTIVELY AND ACCORDINGL Y THE AO HAS TAXED THE SAME AS UNDISCLOSED INVESTMENT IN THE HANDS OF SHRI N.H. JALKOTE. HOWEVER, IN THE LIGHT OF MY FINDING GIVEN IN THE APPELLATE ORDER OF SHRI N.H. JALKOTE WHEREIN ALL THE ENTRIES A PPEARING IN DIARIES A-67, A-68 AND A-71 HAVE BEEN HELD TO BE TRANSACTION S PERTAINING TO SHRI P.B. MAHAJAN, SHRI M.H. ANDURE AND SHRI M.B. P ATIL, IT IS RELEVANT TO TREAT SUCH ENTRY PERTAINING TO MR. RENU MAHAJAN AND SHRI SANJAY MAHAJAN IN THE HANDS OF SHRI M.H. ANDURE. IT IS OBSER VED THAT THE APPELLANT IN HIS WRITTEN SUBMISSION DT. 6-11- 2003 BEF ORE THE AO HAS EXPLAINED THAT HE HAD MADE PAYMENT TO MR. RENU MAHA JAN ON BEHALF OF HIS FIRM SANCHAR CONSTRUCTIONS AND THE SOURCE OF SU CH PAYMENT WAS EITHER FROM DISCLOSED / UNDISCLOSED INCOME. I FIND THAT THE APPELLANT HAS REITERATED THE SAME STAND BEFORE ME WITHOUT ANY CO RROBORATIVE EVIDENCE IN SUPPORT OF ITS CLAIM. I ALSO DO NOT FIND A NY EVIDENCE ON RECORD OF SUCH PAYMENT MADE BY SANCHAR CONSTRUCTIONS . IN THE LIGHT OF THESE OBSERVATIONS, THE PAYMENT OF RS. 1,00,000/- TO SH RI RENU MAHAJAN IS TREATED AS UNEXPLAINED SINCE THE SOURCE OF SU CH PAYMENT HAS NOT BEEN ESTABLISHED BY THE APPELLANT AND ACCORDIN GLY THE SAME IS TREATED AS UDI OF THE APPELLANT ON SUBSTANTIVE BASI S. 12.4 AS FAR AS THE PAYMENT OF RS. 1,00,000/- TO SHRI SANJAY MAHAJAN IS CONCERNED, THE APPELLANT IN HIS WRITTEN SUBMISSION BE FORE THE AO HAS ACCEPTED SUCH PAYMENT WITHOUT SPECIFYING THE SOURCE OF SUCH PAYMENT. HERE AGAIN I FIND THAT THE SUBMISSION OF THE AR IS MERE REPETITION WITHOUT ANY CORROBORATIVE EVIDENCE IN SUP PORT. THEREFORE, THE PAYMENT OF RS. 1,00,000/- IS TREATED AS UNEXPLAIN ED TO BE TAXED AS UNDISCLOSED INCOME IN THE HANDS OF THE APPELLANT ON SUB STANTIVE BASIS. IN THE RESULT, THE APPEAL ON THIS GROUND IS HEREBY D ISMISSED. 20.4 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE AS SESSEE IS IN APPEAL BEFORE US. 20.5 WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND IN THE INSTANT CASE THE LD.CIT(A) HAD GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE IN HIS WRITTEN SUBMISSION DATED 06-11-2003 BEFORE T HE ASSESSING OFFICER HAD EXPLAINED THAT HE HAD MADE PAYMENT TO M RS. RENU 31 MAHAJAN ON BEHALF OF HIS FIRM M/S. SANCHAR CONSTRUC TIONS AND THE SOURCE OF SUCH PAYMENT WAS EITHER FROM THE UNDISCLO SED ACCOUNT OR UNDISCLOSED INCOME. SINCE THE FIRM M/S. SANCHAR CO NSTRUCTIONS WAS NOT MAINTAINING ANY BOOKS OF ACCOUNTS AND THE ASSES SEE COULD NOT PRODUCE ANY CORROBORATIVE EVIDENCE THAT SUCH PAYMEN T HAS BEEN MADE BY M/S. SANCHAR CONSTRUCTIONS, THEREFORE, WE FIND N O INFIRMITY IN THE ORDER OF THE ORDER OF THE CIT(A) UPHOLDING THE ADDI TION MADE BY THE ASSESSING OFFICER ON ACCOUNT TO OF PAYMENT OF RS. 1 LAKH TO MRS. RENU MAHAJAN. SO FAR AS PAYMENT OF RS.1 LAKHS TO S HRI RANJAY MAHAJAN IS CONCERNED WE FIND THE ASSESSEE NEITHER C OULD PROVE THE SOURCE OF SUCH INVESTMENT BEFORE THE ASSESSING OFFI CER OR THE CIT(A) NOR BEFORE US. UNDER THESE CIRCUMSTANCES, WE FIND N O INFIRMITY THE ORDER OF THE CIT(A) UPHOLDING THE ADDITION MADE BY THE ASSESSING OFFICER. WE ACCORDINGLY UPHOLD THE ORDER OF THE CI T(A) ON THIS ISSUE AND THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 21. GROUND OF APPEAL NO.7 BY THE ASSESSEE READS AS UNDER : 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), ALSO ERRED IN SUSTAINING AN ADDITION OF RS.2,78,000/- TO THE TOTA L UNDISCLOSED INCOME OF THE APPELLANT AS INVESTMENT IN MEGH SEEDS PV T. LTD. BY THE APPELLANT AND HIS WIFE, WHICH INFACT IS FROM THE REGU LAR AND DISCLOSED SOURCE OF INCOME OF THE APPELLANT AND HIS WIFE. 21.1 FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESS ING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED FROM THE SEIZED DOCUMENTS THAT THE ASSESSEE AND HIS WIFE SMT. SUCHI TA ANDURE HAD APPLIED FOR THE SHARE OF MEGH SEEDS PVT. LTD. AND T HE TOTAL APPLICATION MONEY WAS RS.2,78,000/-, I.E. M.H. ANDURE RS.2,28,0 00/- AND SUCHITA ANDURE RS.50,000/-. THE ASSESSEE TRIED TO EXPLAIN THE SOURCE OF SUCH INVESTMENT THROUGH THE CASH FLOW STATEMENT. SO FAR AS THE INVESTMENT 32 IN THE NAME OF HIS WIFE IS CONCERNED IT WAS EXPLAIN ED THAT THE SAME IS OUT OF AGRICULTURAL INCOME AND INCOME FROM XEROX AC TIVITY. HOWEVER, THE ASSESSING OFFICER, IN VIEW OF HIS FINDINGS GIVE N EARLIER, REJECTED THE CASH FLOW STATEMENT AND WAS NOT SATISFIED WITH THE SOURCE OF INVESTMENT IN SHARES. HE ALSO REJECTED THE EXPLANA TION REGARDING THE SOURCE OF INVESTMENT OF RS.50,000/- IN THE HANDS OF HIS WIFE. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE THE ASSESSING OFFICER MADE ADDITION OF RS.2,78,000/- AS THE EXPLAINED INV ESTMENT. 21.2 BEFORE THE CIT(A) THE ASSESSEE REITERATED THE SAME ARGUMENTS AND TRIED TO EXPLAIN THE SOURCE OF INVESTMENT. HOW EVER, THE LD.CIT(A) WAS ALSO NOT SATISFIED WITH THE EXPLANATI ON GIVEN BY THE ASSESSEE AND UPHELD THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER : 14.4 THE SUBMISSION OF THE APPELLANT AND THE REMAND R EPORT OF THE AO ALONG WITH SEIZED DOCUMENTS PERTAINING TO THE ISSUE WAS DULY EXAMINED BY ME. SCRUTINY OF THE SEIZED DOCUMENTS A-5 , PAGE 68 CLEARLY ESTABLISHES THAT SHRI M.H. ANDURE HAD INVESTED A SUM OF RS.2,28,000/- AND MS. SUCHITA ANDURE A SUM OF RS.50,000 /- TOWARDS SHARE APPLICATION MONEY IN MEGH SEEDS PVT. LTD. THE A PPELLANT HAS TRIED TO EXPLAIN THE SOURCE OF SUCH INVESTMENT THROUG H THE CASH FLOW STATEMENT WHICH WAS PRODUCED BEFORE ME AND HAS ALSO REI TERATED THAT IT HAD DECLARED TOTAL INCOME OF RS. 9,94,436/- IN TH E REGULAR RETURN FOR AY 98-99 TO 2001-02 AND THEREFORE, HAD SUFFICIENT BA LANCE TO INVEST IN SUCH SHARE APPLICATION OF RS. 228000. I HAVE CONSIDERED THE SO CALLED CASH FLOW STATEMENT AND IS UNABLE TO ACCEPT THE AUTHEN TICITY AND VALIDITY OF THE SAME FOR WANT OF SUPPORTING DOCUMENTS IN RESPECT OF THE ITEMS OF IN FLOW SUCH AS CASH BALANCES, BANK BALANC ES, SECURED AND UNSECURED LOANS ETC. SIMILARLY THE APPLICATION OF F UND ON VARIOUS IMMOVABLE AND MOVABLE ASSETS, LOAN AND ADVANCES ALSO DOE S NOT STAND SUBSTANTIATED IN SUCH CASH FLOW STATEMENT. FURTHER OUT FLOW OF FUNDS IN THE SO CALLED CASH FLOW STATEMENT DOES NOT INCORPORATE THE CORRECT VALUE OF INVESTMENTS DETECTED DURING THE COURSE OF SEAR CH OPERATION. I AM THEREFORE IN AGREEMENT WITH THE FINDING OF THE A O THAT THE CASH FLOW STATEMENT IS NOT RELIABLE AND THEREFORE DESERVES T O BE REJECTED. IN THE LIGHT OF THESE OBSERVATIONS, THE INVESTMENT OF R S.2,28,000/- BY SHRI M.H.ANDURE IN THE SHARE APPLICATION MONEY OF MEGH S EEDS PVT. LTD. STANDS UNEXPLAINED AND THEREFORE HAVE BEEN CORRECTLY ASSESSED AS UDI IN HIS HANDS BY THE AO. 33 14.5 AS FAR AS THE INVESTMENT OF RS. 50,000/- BY MS . SUCHITA ANDURE GOES, I FIND THAT THE APPELLANT HAS TRIED TO EXPLAI N THE SOURCE THROUGH THE AGRICULTURE INCOME EARNED BY HER. I MAY MENTION HER E THAT THE SAID SOURCE OF INCOME HAS ALREADY BEEN CONSIDERED TOWARDS IN VESTMENT IN FDS OF RS. 70,000/- IN GROUND NO. 11 OF THIS APPELLATE ORDER AND THEREFORE THE SAME FUND CANNOT BE ACCEPTED TO EXPLAI N THE SOURCE OF INVESTMENT OF RS.50,000/- IN MEGH SEEDS PVT. LTD. IN T HE LIGHT OF THESE OBSERVATIONS, THE SOURCE OF INVESTMENT BY MS. SUCHITA AN DURE DOES NOT STAND EXPLAINED AND THEREFORE HAVE BEEN RIGHTLY ASSESSED AS UDI IN THE HANDS OF THE APPELLANT. ACCORDINGLY THE ACTION O F THE AO IN MAKING ADDITION OF RS.2,78,000/- IS HEREBY CONFIRMED. APPEAL ON THIS GROUND IS HENCE DISMISSED. 21.3 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE AS SESSEE IS IN APPEAL BEFORE US. 21.4 WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE LD. COUNSEL FOR THE ASSESSEE COULD NOT SUBSTANTIATE WIT H ANY CREDIBLE EVIDENCE REGARDING THE ENTRIES IN THE CASH FLOW STA TEMENT WHICH WAS REJECTED BY THE LD.CIT(A). THE SOURCE OF INVESTMEN T IN THE SHARE OF MEGH SEEDS PVT. LTD. AMOUNTING TO RS.2,78,000/- (RS . 2,28,000 BY THE ASSESSEE AND RS.50,000/- BY HIS WIFE) COULD NOT BE EXPLAINED BEFORE US BY ANY OTHER CREDIBLE EVIDENCE. IN ABSENCE OF THE SAME AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOT ICE AGAINST THE ORDER OF THE CIT(A) WHICH IN OUR OPINION IS A REASO NED ONE, WE FIND NO INFIRMITY IN THE SAME. ACCORDINGLY, THE GROUND IS UPHELD AND THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 22. GROUND OF APPEAL NO.8 BY THE ASSESSEE READS AS UNDER : 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED WHEN HE UPH ELD AN ADDITION OF RS.70,000/- TO THE TOTAL UNDISCLOSED INCO ME OF THE APPELLANT ON ACCOUNT OF INVESTMENT IN FDR WITH THE S TATE BANK OF INDIA WHICH INFACT IS AN INVESTMENT BY THE WIFE OF THE APPE LLANT FROM HER OWN SOURCES. 34 22.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSE SSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE WIFE OF THE ASSESSEE MRS.SUCHITA ANDURE HAD MADE A BANK FIXED D EPOSIT OF RS.70,000/. ON BEING QUESTIONED BY THE ASSESSING O FFICER TO EXPLAIN THE SOURCE OF SUCH INVESTMENT THE ASSESSEE EXPLAINE D THE SAME TO BE OUT OF HER AGRICULTURAL INCOME. HOWEVER, THE ASSES SING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASS ESSEE AND MADE ADDITION OF RS.70,000/- TO THE TOTAL INCOME OF THE ASSESSEE AS INCOME FROM UNDISCLOSED SOURCES. THE ASSESSEE MADE ELABOR ATE ARGUMENTS BEFORE THE CIT(A) AND TRIED TO SUBSTANTIATE THE SOU RCE OF SUCH INVESTMENT OF RS.70,000/- MADE TOWARDS THE FIXED DE POSIT. 22.2 HOWEVER, THE LD.CIT(A) ALSO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND UPHELD THE AD DITION MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER : 15.2 I HAVE CONSIDERED THE EXPLANATION OF THE APP ELLANT ALONGWITH THE DOCUMENTS PRODUCED BEFORE ME ON THE ISSUE, WHICH IS FO UND TO HAVE NO MERIT IN IT. I FIND THAT THE APPELLANT HAS ATTEMPTED TO EXPLAIN THE SOURCE OF INVESTMENT OF RS. 70,000/- IN FDS WITH SBI IN TH E NAME OF MS. SUCHITA ANDURE BY WAY OF RECEIPTS FROM AGRICULTURE INCOME. I HAVE ALREADY GIVEN A DETAILED FINDING ON SUCH RECEIPTS OF AGRICULT URE INCOME AT GROUND NO. 11 OF THIS ORDER IN CONSIDERING THE INVES TMENT BY MS. SUCHITA ANDURE TOWARDS FD IN ELECTRONICA LEASING AND FINANCE LTD. AND THEREFORE THE SAME CANNOT BE CONSIDERED TIME AND AGA IN IN ALL OTHER INVESTMENTS MADE BY HER AS APPEARING IN GROUND NO. 12 , 13, 14. IT IS PERTINENT TO MENTION HERE THAT MS. SUCHITA ANDURE H AD A MEAGRE LAND HOLDING OF 1.31 HECTARE WHICH IS NOT SUFFICIENT TO GI VE SUBSTANTIAL AGRICULTURE INCOME TO EXPLAIN THE TOTAL INVESTMENT OF RS.3,02,500/- APPEARING IN GROUND NO. 12, 13, 14. FURTHER THE 7/1 2 EXTRACT FOR THE RELEVANT PERIOD OF INVESTMENT MADE BY MS. SUCHITA AND URE WAS ALSO NOT MADE AVAILABLE TO ME AND THEREFORE THE CLAIM MA DE BY THE APPELLANT DOES NOT SUBSTANTIATED. 15.3 AS FAR AS, THE CLAIM OF THE APPELLANT THAT TH E SAID INVESTMENT IN THE NAME OF HIS WIFE MS. SUCHITA ANDUR E CANNOT BE ASSESSED IN HIS HANDS GOES, I DO NOT FIND ANY MERIT IN IT. IT IS AN ADMITTED FACT THAT THE DETAILS OF FDS IN BANKS WAS FOUND IN THE SEIZED DOCUMENT MARKED ANNEXURE A-9 PAGE 65 FROM THE POSSESSION OF THE APPELLANT AND THEREFORE ONUS LAY ON THE APPELLANT TO EXPLAIN THE SOURCE OF SUCH INVESTMENT. FURTHER THE PROVISIONS OF SECTION 132(4A) PROVIDES 35 INHERENT PRESUMPTION OF TREATING THE CONTENTS OF THE DOCUMENTS TO BELONG TO THE PERSON FROM WHOM IT IS FOUND TO BE IN P OSSESSION OR IN CONTROL. THEREFORE, IN THE ABSENCE OF ANY SATISFACTOR Y EXPLANATION AND SUPPORTING EVIDENCE GIVEN BY MS. SUCHITA ANDURE TO EX PLAIN THE SOURCE OF INVESTMENT IN SUCH FDS, IT IS IMPERATIVE THAT THE SAME HAD TO BE TAXED IN THE HANDS OF THE ASSESSEE AS HIS UNDISCLOSED IN COME. I, THEREFORE, ENDORSE THE VIEW TAKEN BY THE AO IN MAKIN G ADDITION OF RS.70,000/- TOWARDS UNEXPLAINED INVESTMENT IN FDS AS UDI IN THE HANDS OF THE ASSESSEE. IN THE RESULT, THE APPEAL ON GROU ND NO.13 IS DISMISSED. 22.3 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE AS SESSEE IS IN APPEAL BEFORE US. 23. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE LD.CIT(A) HAS ALREADY REJECTED THE CASH FLOW STATEM ENT FILED BY THE ASSESSEE AND THE ASSESSEE WAS NOT IN A POSITION TO SUBSTANTIATE WITH ANY CREDIBLE EVIDENCE AS TO THE ADMISSIBILITY OF TH E SAME. THE WIFE OF THE ASSESSEE DOES NOT HAVE ANY SOURCE OF INCOME TO EXPLAIN THE SOURCE OF INVESTMENT OF RS.70,000/- IN BANK FIXED DEPOSIT. IN ABSENCE OF THE SAME AND IN VIEW OF THE DETAILED REASONING GIVEN BY THE LD.CIT(A) ON THIS ISSUE, WE FIND NO INFIRMITY IN THE SAME. ACCO RDINGLY, THE SAME IS UPHELD AND THE GROUND RAISED BY THE ASSESSEE IS DIS MISSED. 24. GROUND OF APPEAL NO.9 BY THE ASSESSEE READS AS UNDER : 9. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS) ALSO ERRED WHEN HE SUSTAINED AN ADDITION OF RS.1,82,500/- TO THE TOTAL UNDISCLOSED INCOME OF THE APPELLANT ON ACCOUNT OF CASH DEPOSITS IN THE SAVINGS AC COUNT OF THE STATE BANK OF INDIA, AND ALSO SUSTAINED ADDITION OF RS. 14,896/- TOWARDS INTEREST ON THE SAME ACCOUNT WHICH INFACT IS AN ACCOUNT OF THE WIFE OF THE APPELLANT MAINTAINED FROM HER OWN SOURCE S. 36 24.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSE SSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE WIFE OF THE ASSESSEE HAD MADE CASH DEPOSITS IN HER SAVINGS BANK ACCOUNT IN DASHMESH NAGAR, AURANGABAD VIDE ACCOUNT NO.01190/03 0067. THE DATE-WISE AND AMOUNT-WISE DETAILS ARE AS UNDER : DATE AMOUNT 04/01/1998 50,000/- 09/01/1998 4,000/- 09/01/1998 1,00,000/- 11/02/1998 3,500/- 1,57,500/- 25/08/1998 (FDR) 25,000/- F.Y. 1998-1999 1,82,500/- 24.2 THE ASSESSING OFFICER THEREFORE ASKED THE ASSE SSEE TO EXPLAIN THE SOURCE OF SUCH CASH DEPOSITS IN THE BANK ACCOUN T OF HIS WIFE. HE ALSO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE IN TEREST CREDITED TO THE SAID ACCOUNT AMOUNTING TO RS.14,896/- SHOULD NOT BE TAXED IN THE HANDS OF THE ASSESSEE. IT WAS EXPLAINED BY THE ASS ESSEE THAT THE INVESTMENT OF RS.1,82,500/- WAS MADE BY HIS WIFE F ROM HER AGRICULTURAL INCOME. HOWEVER, THE ASSESSING OFFICE R WAS NOT SATISFIED WITH THE SOURCE OF SUCH INVESTMENT AND MADE ADDITIO N OF RS.1,82,500/- TO THE TOTAL INCOME OF THE ASSESSEE AS HIS INCOME F ROM UNDISCLOSED SOURCES. SIMULTANEOUSLY THE ASSESSING OFFICER ALSO BROUGHT TO TAX THE INTEREST AMOUNTING TO RS.14,896/- EARNED FROM SUCH SAVINGS ACCOUNT. 24.3 BEFORE CIT(A) THE ASSESSEE TRIED TO EXPLAIN TH E SOURCE OF SUCH DEPOSIT IN THE SAVINGS ACCOUNT BUT THE LD.CIT(A) AL SO WAS NOT CONVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSE E AND UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER : 37 16.4 THE ARGUMENT OF THE LEARNED AR AS ALSO THE W RITTEN SUBMISSION HAVE BEEN DULY CONSIDERED AND I AM NOT IN AGREEMENT WITH THE CONTENTION OF THE APPELLANT. IT IS AN UNDISPUTED FAC T THAT MS. SUCHITA ANDURE HAD MADE A CASH DEPOSITS OF RS. 1,82,500/- I N HER SAVING BANK ACCOUNT WITH SBI ON DIFFERENT DATES FALLING IN THE B LOCK PERIOD. THE SOURCE OF SUCH DEPOSITS HAS BEEN EXPLAINED OUT OF AGRICU LTURE INCOME. IN THE LIGHT OF DETAILED REASONING GIVEN IN GROUND N O. 13 OF THIS ORDER, THE SUBMISSION OF THE APPELLANT DESERVES TO BE REJECTE D. IT IS ALSO AN ADMITTED FACT THAT MS. SUCHITA ANDURE HAD NO OTHER SOURCE OF INCOME EXCEPT FOR AGRICULTURE INCOME. THE SO CALLED INCOME FROM XEROXING BUSINESS OF THE APPELLANT HAS BEEN REJECTED BY THE AO IN RELEVANT PARA OF THE ASSESSMENT ORDER OF THE APPELLANT. THEREFORE, IN THE ABSENCE OF ANY OTHER SOURCE OF KNOWN INCOME AVAILABLE WITH THE MS. SUCHITA ANDURE, THE STAND OF THE AO IN HOLDING THAT INVESTM ENT WERE MADE BY HER HUSBAND I.E. THE APPELLANT IS ACCEPTABLE. THERE FORE, CONSIDERING THE FACT THAT THE SOURCE OF SUCH INVESTMENT DOES NOT STAND EXPLAINED IN THE HANDS OF THE APPELLANT, IT HAS BEEN CORRECTLY ASSESSED AS UNDISCLOSED INCOME IN THE HANDS OF THE APPELLANT. ACCORDINGLY TH E ACTION OF THE AO IS HEREBY CONFIRMED AND THE APPEAL ON THIS GROUND IS DISMISSED. 17.2 THE SUBMISSION OF THE APPELLANT AND THE CASE RECOR DS WERE DULY PERUSED. THE ISSUE OF INTEREST ON SAVING BANK ACCO UNT OF MS. SUCHITA ANDURE IS CONNECTED TO THE ISSUE DISCUSSED IN GRO UND NO.14 OF THIS ORDER. THEREFORE, FOLLOWING MY FINDING GIVEN I N GROUND NO.14, THE INTEREST OF RS.14,896/- ADDED BY THE AO AS UDI IN THE HANDS OF THE APPELLANT IS HEREBY CONFIRMED. 24.4 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE AS SESSEE IS IN APPEAL BEFORE US. 25. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE LD.CIT(A) HAS ALREADY REJECTED THE CASH FLOW STATEM ENT FILED BY THE ASSESSEE AND THE ASSESSEE WAS NOT IN A POSITION TO SUBSTANTIATE WITH ANY CREDIBLE EVIDENCE AS TO THE ADMISSIBILITY OF TH E SAME. THE WIFE OF THE ASSESSEE DID NOT HAVE ANY SOURCE TO EXPLAIN THE SOURCE OF CASH DEPOSIT OF RS.1,82,500/- IN THE ACCOUNT MAINTAINED WITH SBI ON DIFFERENT DATES. IN VIEW OF THE ABOVE AND IN VIEW OF THE DETAILED REASONING GIVEN BY THE LD.CIT(A) THE ADDITION OF RS .1,82,500/- HAS TO BE UPHELD. THE INTEREST ON THE SAVINGS BANK ACC OUNT AMOUNTING TO 38 RS.14,896/- HAS ALSO TO BE UPHELD IN THE HANDS OF T HE ASSESSEE IN VIEW OF THE FOREGOING REASONS. SINCE THE LD. COUNSEL FO R THE ASSESSEE COULD NOT PROVE ANY OTHER MATERIAL SO AS TO TAKE A CONTRA RY VIEW THAN THE VIEW TAKEN BY THE LD.CIT(A) WHICH IN OUR OPINION IS A REASONED ONE, THEREFORE, THE SAME IS UPHELD AND THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 26. GROUND OF APPEAL NO.10 BY THE ASSESSEE READS AS UNDER : 10. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS)-I, NAGPUR ERRED W HEN HE SUSTAINED AN ADDITION OF RS.5,55,315/- TOWARDS UNEXPLAI NED CASH DEPOSITS MADE IN THE VARIOUS BANK ACCOUNTS WHICH INFACT IS FROM THE EXPLAINED AND KNOWN SOURCES. 26.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSE SSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE HAD MADE CASH DEPOSITS IN VARIOUS BANK ACCOUNTS TOTALLI NG TO RS.8,60,315/. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF SUCH DEPOSITS. THE ASSESSEE FILED THE FOLLOWING CASH FL OW STATEMENT EXPLAINING THE VARIOUS DEPOSITS ON DIFFERENT DATES IN THE DIFFERENT BANK ACCOUNTS : 26.2 HOWEVER, THE CASH FLOW STATEMENT WAS REJECTED BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE WAS NOT ABL E TO EXPLAIN THE SOURCE OF ENTRIES APPEARING IN THE RIGHT SIDE. REJ ECTING THE VARIOUS BANK NAME ACCOUNT NO. AMOUNT DENA BANK SB A/C.NO.6880 53,000/- SARASWAT BANK SB A/CNO.33195 50,000/- JAMMU & KASHMIR BANK SB A/C NO.485 1,83,560/- ICICI BANK A/C NO.00440-100-3798 21,100/- SBI CURR. A/C.NO.10148 5,30,000/- DEPOSIT IN BOB CARD NO.4293-9000-2376-8004 22,655/- TOTAL 8,60,315/- 39 EXPLANATIONS GIVEN BY THE ASSESSEE THE ASSESSING OF FICER MADE ADDITION OF RS.8,60,315/- TO THE TOTAL INCOME OF TH E ASSESSEE. 26.3 BEFORE CIT(A) THE ASSESSEE TRIED TO EXPLAIN TH E SOURCE OF SUCH DEPOSITS BY FILING THE CASH FLOW STATEMENT. IT WAS FURTHER SUBMITTED THAT AMOUNT OF RS.3,05,000/- WAS A REFUND RECEIVED FROM ONE MR. GHULAB BHIMRAO RAJALE WHICH WAS GIVEN EARLIER. THE SAID AMOUNT WAS TOWARDS PURCHASE OF HOUSE AT JYOTINAGAR, THEREF ORE, THIS AMOUNTS TO DOUBLE TAXATION. 26.4 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSE E THE LD.CIT(A) SUSTAINED THE ADDITION OF RS.5,55,315/- A S AGAINST RS.8,60,315/- ADDED BY THE ASSESSING OFFICER BY OBS ERVING AS UNDER : 18.4 I HAVE CONSIDERED THE SUBMISSION OF THE APPE LLANT AS ALSO THE COPIES OF THE BANK ACCOUNTS AND THE ASSESSMENT RECORDS. P ERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE AO HAD NOTICED LARGE AMOU NT OF CASH DEPOSITS MADE IN VARIOUS BANK ACCOUNTS MAINTAINED BY TH E APPELLANT ON DIFFERENT DATES FALLING IN THE BLOCK PERIOD AND T HE APPELLANT WAS UNABLE TO EXPLAIN THE SOURCE OF SUCH CASH DEPOSITS. THE ENTIRE BLOCK ASSESSMENT IN THIS CASE HAS BEEN BASED ON THE ENTRIES APP EARING IN THE SEIZED DIARIES AND DOCUMENTS SHOWING UNEXPLAINED INVESTMENTS/EXPENSES MADE BY THE APPELLANT. DURING T HE COURSE OF SUCH ASSESSMENT PROCEEDINGS, THE UNACCOUNTED INVESTMENTS/EXPENDITURES HAVE BEEN EXPLAINED BY THE AP PELLANT THROUGH A CONSOLIDATED CASH FLOW STATEMENT SHOWING THE INFLOW AND OUTFLOW DURING VARIOUS ACCOUNTING YEARS FALLING IN T HE BLOCK PERIOD. THE SO CALLED CASH FLOW STATEMENT WAS REJECTED BY THE A O ON THE GROUND THAT THE ITEMS OF IN FLOW AND OUT FLOW DID NO T TALLY WITH THE INVESTMENTS/EXPENDITURES DETECTED FROM THE SEIZED MATER IALS AND THE STATEMENT GIVEN TO THIS EFFECT. IT WAS IN THIS CONT EXT THAT THE AO EXAMINED THE CASH DEPOSITS APPEARING IN THE VARIOUS BAN K ACCOUNTS OF THE APPELLANT, HAVING BEEN INCORPORATED IN THE CASH FLOW STATEMENT. IT IS AN ADMITTED FACT THAT THE QUANTUM OF CASH DEPOSITS AS MENTIONED BY THE AO IN PARA 11.18 ACTUALLY DID NOT FIGURE OUT IN THE CASH FLOW STATEMENT SUBMITTED BY THE APPELLANT. IN THE LIGHT OF THESE FINDINGS, THE AO WAS OF THE VIEW THAT THE CASH DEPOSITS APPEARING IN THE VARIOUS BANK ACCOUNTS DOES NOT STAND EXPLAINED FROM THE KNOW N SOURCE OF INCOME OF THE APPELLANT AND ACCORDINGLY THE SAME WER E HELD TO BE UNDISCLOSED INCOME IN HIS HANDS. I AM IN AGREEMENT WITH THE FINDING GIVEN BY THE AO IN MAKING ADDITION OF SUCH CASH DEPO SITS AS UDI OF THE APPELLANT. 40 18.5 THE LEARNED AR DURING THE COURSE OF APPELLATE PROCEEDINGS, HAS STRONGLY ARGUED THAT THE CASH DEPOSITS APPEARING IN THE VARIOUS BANK ACCOUNTS OF THE APPELLANT, WERE NOT PART OF THE SEIZ ED DOCUMENTS AND, THEREFORE, IT DOES NOT COME UNDER THE AMBIT OF DEFIN ITION OF UNDISCLOSED INCOME AS PER SECTION 158B OF THE I.T. ACT. I AM NO T IN AGREEMENT WITH THE LD. AR ON THIS ISSUE, SINCE IT IS OBSERVED THAT THE RELEVANT DETAILS OF THE BANK ACCOUNTS AND ITS DISCLOSURE IN THE REGULAR RETURN OF INCOME WERE OBTAINED DURING THE RECORDING OF STATEMENT OF THE APPELLANT U/S.132(4) DATED 21-11-2001 AT Q.NO.14 AND 15. THE REFORE, IT CLEARLY FOLLOWS THAT THE INFORMATION ON SUCH CASH DEPOSITS IN BANK ACCOUNTS WAS DETECTED IN CONSEQUENCE TO THE STATEMENT RECORDE D U/S. 1342(4) DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS. T HUS, THE UNACCOUNTED TRANSACTION APPEARING IN THE SAID BANK A CCOUNTS WOULD SURELY COME UNDER THE DEFINITION OF UNDISCLOSED INCOME GIVEN IN SECTION 158B OF THE I.T.ACT. 18.6 THE AR HAS ALSO POINTED OUT TO FACTUAL ERROR IN TAXING SPECIFIC CASH DEPOSITS OF RS.3,05,000/- ON TWO OCCASIONS BY THE AO. THE AR PRODUCED BEFORE ME THE COPY OF THE BANK ACCOUNT NO. 10148 WITH SBI, AURANGABAD TO SHOW THAT THE CASH DEPOSITS OF RS.3,0 5,000/- WAS MADE ON 20.1.1997 WHICH HAS A CORRESPONDING WITHDRAWAL O F SAME AMOUNT BY CHEQUE NO.682218. THE AR HAS ARGUED THAT THE SAID C HEQUE OF RS. 3,05,000/- WAS PAID TO MR. GULAB BHIMRAO RAJALE TOWA RDS PURCHASE OF HOUSE AT JYOTI NAGAR WHICH HAS ALREADY BEEN INCLUDED TOTAL UNDISCLOSED INVESTMENT OF RS.8,90,301/- IN THE SAID PROP ERTY OFFERED BY THE APPELLANT. THIS UDI HAS BEEN ACCEPTED BY THE A O AND ASSESSED AS UDI AT PARA 11.5 OF THE ASSESSMENT ORDER. THE LD. AR, THEREFORE, ARGUED THAT THE AMOUNT OF RS. 3,05,000/- HAS BEEN T AXED AS UNDISCLOSED INCOME ON TWO OCCASIONS NAMELY UNEXPLAINED INVESTMEN T IN JYOTI NAGAR HOUSE AS ALSO UNEXPLAINED CASH DEPOSITS IN THE SAID BANK ACCOUNT. THEREFORE, ADDITION OF RS.3,05,000/- DESERVE S TO BE DELETED TAKEN IN GROUND NO. 16. I HAVE PERUSED THROUGH THE RELEVANT DOCUMENTS AND IS CONVINCED THAT THE UNDISCLOSED INCOME OF RS.3,0 5,000/- HAS BEEN TAXED TWICE IN THE HANDS OF THE APPELLANT AND, THEREFORE, DIRECT THE AO TO DELETE THE SAME OUT OF THE TOTAL CASH DEPOS ITS OF RS.8,60,315/- ADDED AS UDI IN THE HANDS OF THE APPELLA NT. IN THE RESULT, THE ADDITION OF RS.5,55,315/- AS UDI IN THE HANDS OF THE APPELLANT IS HEREBY CONFIRMED. THE APPEAL ON THIS GROUND IS PART LY ALLOWED. 26.5 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE AS SESSEE IS IN APPEAL BEFORE US. 27. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. W E FIND THE LD.CIT(A) REJECTED THE CASH FLOW STATEMENT FILED BY THE ASSESSEE SINCE THE ASSESSEE WAS UNABLE TO EXPLAIN THE VARIOUS ENTR IES GIVING THE SOURCE OF INCOME IN THE SAID CASH FLOW. THE LD. CO UNSEL FOR THE 41 ASSESSEE COULD NOT SUBSTANTIATE WITH ANY CREDIBLE E VIDENCE SO AS TO ACCEPT THE CASH FLOW STATEMENT FILED BEFORE HIM EXP LAINING THE VARIOUS ENTRIES FOUND THEREIN AS CORRECT. WE FIND THE LD.C IT(A) AFTER CONSIDERING THE FACTUAL ERROR BY THE ASSESSING OFFI CER HAS DELETED AN AMOUNT OF RS.3,05,000/- FROM THE UNDISCLOSED INCOME OF THE ASSESSEE AND SUSTAINED THE BALANCE AMOUNT FOR WANT OF ANY CR EDIBLE EVIDENCE TO EXPLAIN THE SOURCE OF SUCH ENTRIES. SINCE THE LD. COUNSEL FOR THE ASSESSEE WAS UNABLE TO SUBSTANTIATE WITH ANY EVIDEN CE SO AS TO TAKE A CONTRARY VIEW THAN THE VIEW TAKEN BY THE LD.CIT(A), THEREFORE, WE FIND NO INFIRMITY IN THE SAME. ACCORDINGLY, THE SA ME IS UPHELD AND THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 28. GROUNDS OF APPEAL NO. 11, 12 & 13 BY THE ASSESS EE BEING GENERAL IN NATURE ARE DISMISSED. ITA NO.1047/PN/2005 (BY REVENUE) : 29. GROUNDS OF APPEAL NO. 1 AND 2 BY THE REVENUE RE AD AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES, CIT(A) IS NO T JUSTIFIED IN DIRECTING TO CONVERT THE ADDITION OF RS.43,07,500/- OF THE RUNNING ACCOUNT IN THE SEIZED DIARIES IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS TO AN ADDITION ON SUBSTANTIVE BASIS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES, CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE ADDITION OF RS.51,88,428/- AS UDI OF RUNNING ACCOUNT IN THE SEIZED DIARIES TO BE MADE ON SUBSTANTIVE BASIS IN THE CASE OF ASSESSEE AND NOT IN THE CASE OF SHRI N.H. JALKOTE. 29.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO D URING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE H AD ACCEPTED THE TRANSACTIONS APPEARING IN DIARIES A-67, A-68 AND A- 71 AS HIS OWN TRANSACTIONS. THE ASSESSING OFFICER FURTHER NOTED THAT IN VIEW OF THE DISCUSSION MADE IN PARA 7.1 TO 7.5 OF HIS ASSESSMEN T ORDER AND IN VIEW OF THE FINDING GIVEN IN THE BLOCK ASSESSMENT O RDER OF SHRI N.H. 42 JALKOTE, THE CORRECTED BALANCE AMOUNT OF RS.43,07,5 00/- AFTER EXCLUDING THE ELEMENT OF ACCRUED INTEREST HAS TO BE CONSIDERED AS UN- DISCLOSED INCOME OF SHRI JALKOTE ON SUBSTANTIVE BAS IS. THE A.O. HAS ALSO POINTED OUT THAT, SINCE THE ASSESSEE HAD ADMIT TED THAT THE SAID RUNNING ACCOUNT SHOWS HIS TRANSACTIONS, HE TAXED TH E AMOUNT OF RS.43,07,500/- AS HIS UN-DISCLOSED INCOME ON PROTEC TIVE BASIS. 29.2 BEFORE CIT(A) IT WAS ARGUED THAT THE ASSESSEE HAS OFFERED FINANCIAL TRANSACTIONS APPEARING IN THE SEIZED DIAR IES A-67, A-68 AND A-71 AND DECLARED RS.93,00,720/- TOWARDS UNDISCLOSE D INCOME RECORDED IN THE SAID DIARIES. IT WAS ARGUED THAT IN THE STA TEMENT RECORDED U/S.132(4) AND U/S.131, THE ASSESSEE HAD REPEATEDLY ADMITTED THAT THE TRANSACTIONS RECORDED IN THE SAID DIARIES ARE HIS U NDISCLOSED INCOME & ACCORDINGLY HE HAS FILED HIS BLOCK RETURN. THE ASSE SSING OFFICER HAS FAILED TO ACCEPT THE CONTENTION OF THE ASSESSEE AND ADDED CLOSING BALANCE OF RS.43,07,000/- IN THE SAID DIARY AS UNDI SCLOSED INCOME OF THE ASSESSEE ON 'PROTECTIVE BASIS' INSTEAD OF 'SUBS TANTIVE BASIS'. 29.3 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSE E THE LD. CIT(A) CALLED FOR A REMAND REPORT FROM THE AO WHO R EITERATED THE SAME STAND AS TAKEN EARLIER. IT WAS STATED THAT TH E EVIDENCES ON RECORD DO NOT SUPPORT THE ASSESSEE'S CONTENTION. THE ASSES SEE IN HIS REPLY TO REMAND REPORT DT.08.09.2004 SUBMITTED THAT THE ASSE SSING OFFICER HAS FAILED TO CONSIDER THE FACT THAT THE ASSESSEE W AS EARNING HUGE INCOME FROM HIS UNDISCLOSED SOURCES AND THE EVIDENC ES OF THE SAME WERE ALSO FOUND FROM THE SEIZED RECORDS AT HIS RESI DENCE. IT WAS ARGUED THAT IN HIS AFFIDAVIT FILED BEFORE THE DDIT (INV.), AURANGABAD THE ASSESSEE HAS STATED THAT HE HAD REQUESTED MR. N.H.J ALKOTE TO WRITE HIS 43 BUSINESS TRANSACTIONS AND ACCORDING TO THE SPECIFIC INSTRUCTION OF THE ASSESSEE, THE FORMER HAS WRITTEN THE SAID TRANSACTI ONS IN THE RUNNING ACCOUNT OF THE ASSESSEE. IT WAS ARGUED THAT THE ASS ESSEE HAS ALSO ACCEPTED DURING HIS STATEMENT RECORDED U/S.132(4) T HAT THE CLOSING BALANCE APPEARING IN THE SAID DIARIES ARE NOTHING B UT HIS UNDISCLOSED INCOME AND ACCORDINGLY HE HAS FILED HIS BLOCK RETUR N AND OFFERED THE SAID CLOSING BALANCE AS HIS UNDISCLOSED INCOME, BUT THE ASSESSING OFFICER HAS IGNORED ALL THE SAID IMPORTANT FACTS AN D CIRCUMSTANCES AND MADE THE ADDITIONS RS.43,07,500/- [CORRECTED FIGURE ] ON 'PROTECTIVE BASIS' IN THE HANDS OF THE ASSESSEE, INSTEAD ON 'SU BSTANTIVE BASIS. IT WAS POINTED OUT THAT THE SIMILAR AMOUNT HAS ALSO BE EN ADDED IN THE HANDS OF SHRI.N.H. JALKOTE ON 'SUBSTANTIVE BASIS'. 29.4 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSE E THE LD. CIT(A) MADE THE ADDITION IN THE HANDS OF THE ASSESS EE ON SUBSTANTIVE BASIS BY OBSERVING AS UNDER : 9.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, SUBMISSION OF THE APPELLANT, REMAND REPORT OF THE A.O. AND REJOINDER SUBMITTED BY THE APPELLANT AND ALSO THE ARGUMENTS MADE BY THE LEARNED A.R. THE CLOSING CORRECTED BALANCE APPEARING IN THE VERTICAL ACCOUNT OF THE APPELLANT IS RS.43.07 LACS. THE SAID AMOUNT WAS ADDED I N THE HANDS OF MR.N.H.JALKOTE ON SUBSTANTIVE BASIS AND THE SAME AMOUNT IN THE HANDS OF THE APPELLANT ON PROTECTIVE BASIS. I HAVE GIVEN ELABORATE FINDING IN THE APPELLATE ORDER OF MR. N.11.JALKOTE AT GROUND N OS. 1 & 2 WHERE IT IS HELD THAT THE TRANSACTIONS RECORDED IN THE SEIZED DI ARIES BELONG TO THE RESPECTIVE INDIVIDUALS, INCLUDING THE APPELLANT AND SHOULD BE ASSESSED IN THEIR HANDS. ACCORDINGLY, THE ADDITION OF RS.43 .07 LACS MADE IN THE HANDS OF SHRI N.H. JALKOTE HAS BEEN DELETED IN THE SAI D APPELLATE ORDER. I HAVE ALSO GIVEN A FINDING THAT THE RUNNING ACCOUNT BALANCE IN THE NAME OF SHRI M.H. ANDURE APPEARING IN DIARIES A-67, A-68 AND A-71 REPRESENTS UNDISCLOSED LOANS AND ADVANCES AND, THER EFORE, ESSENTIALLY NEEDED TO BE TAXED AS UDI IN THE HANDS OF SHRI M.H. A NDURE. THEREFORE, FOLLOWING THE APPELLATE ORDER IN THE CASE OF SHRI N. H. JALKOTE AND ALSO CONSIDERING THE FACT THAT THE SAID RUNNING ACCOUNT B ALANCE HAS BEEN ADMITTED AS HIS UDI IN THE STATEMENT U/S.132(4) GIVEN BY SHRI M.H. ANDURE AND ALSO OFFERED IN THE BLOCK RETURN, I AM TO HOLD THAT THE RUNNING ACCOUNT BALANCE OF RS.43.07 LACS HAS TO BE TA XED AS UDI IN THE HANDS OF APPELLANT ON SUBSTANTIVE BASIS. ACCORDINGL Y THE ASSESSING OFFICER IS HEREBY DIRECTED TO ASSESS THE SAID UNDISCLOSED INCOME IN THE HANDS OF THE APPELLANT ON SUBSTANTIVE BASIS. 44 9.4 I MAY ADD HERE THAT IN THE APPELLATE ORDER OF S HRI N.H.JALKOTE AT GROUND NO. 8,1 HAVE GIVEN A FINDING THAT THE EXPENS ES OF RS. 4,00,500/- APPEARING IN SEIZED DIARY AND REFERRED BY AO IN ANN EXURE 2 OF THE ORDER DID NOT PERTAIN TO HIM AND THEREFORE NEEDS TO BE TA XED IN THE HANDS OF SHRI M.H.ANDURE. A SHOW CAUSE NOTICE FOR ENHANCEMENT OF SUCH INCOME IN THE HANDS OF THE APPELLANT WAS SERVED, TO WH ICH THE LD. AR HAS TRIED TO EXPLAIN THE SAME WITH THE CASH FLOW STATEM ENT. I FIND THAT THE CASH FLOW STATEMENT HAS BEEN REJECTED BY THE AO IN THE SAID ASSESSMENT ORDER FOR SPECIFIC REASONS MENTIONED THEREIN. ON PERUSAL OF THE SAID CASH FLOW STATEMENT, I FIND THAT MANY I TEMS OF IN FLOW AND OUT FLOW HAVE NOT BEEN CORRECTLY INCORPORATED AS APPEARI NG IN THE SEIZED MATERIALS AND, THEREFORE, THE AUTHENTICITY OF SUCH ST ATEMENT CANNOT BE RELIED UPON AND HENCE DESERVES TO BE REJECTED. IN T HE LIGHT OF ABOVE DISCUSSION, THE EXPENSES OF RS. 4,00,500/- APPEARING IN THE RUNNING ACCOUNT OF MR. M.H. ANDURE IN THE SEIZED DIARY AND ALSO OWNED BY HIM IN HIS STATEMENT U/S 132(4) AND THE SOURCE OF SUCH EXP ENSE DOES NOT STAND EXPLAINED, I AM OF THE CONSIDERED VIEW THAT IT NEEDE D TO BE ASSESSED AS UNDISCLOSED INCOME OF THE APPELLANT. ACCORDINGLY THE AO IS DIRECTED TO ENHANCE THE CLOSING BALANCE OF THE RUNNING ACCOUNT OF RS.43,07,500/- BY RS. 4,00,500/- TOWARDS MISCELLANEOUS EXPENSES APPEARIN G IN THE RUNNING ACCOUNT OF SHRI M.H. ANDURE. FURTHER I WOUL D ALSO LIKE TO MENTION HERE THAT IN MY APPELLATE ORDER IN THE CASE OF SHRI N.H. JALKOTE AT GROUND NO. 5 PERTAINING TO THE FENCING EXPENSES TOWARDS PA DEGAON (TISGAON) FARM, I HAVE HELD THAT THE SAID EXPENSES OF RS.4,80,428/ - CANNOT BE ASSESSED IN HIS HANDS AND ACCORDINGLY DEL ETED THE SAID ADDITION. I HAVE ALSO GIVEN A FINDING IN THE SAID APP ELLATE ORDER THAT THE SAID EXPENSES PERTAINED TO SHRI M.H. ANDURE AND, THERE FORE, THE SAME NEED TO BE CONSIDERED AS HIS UNEXPLAINED EXPENSES. HOWE VER, I FIND THAT THE APPELLANT HAS NOT OFFERED SUCH EXPENSES TOWARD S PADEGAON (TISGAON) FARM IN HIS BLOCK RETURN AND, THEREFORE, A SHOW CAUSE NOTICE FOR SUCH ENHANCEMENT WAS SERVED ON THE APPELLANT. I N RESPONSE, THE AR HAS TRIED TO EXPLAIN THAT IT STANDS INCLUDED IN THE TOTAL UDI OF RS.9,50,000/- TOWARDS UNEXPLAINED INVESTMENT IN PADEGA ON (TISGAON) FARM OFFERED BY THE APPELLANT SINCE THE NATURE OF EX PENSES OF RS.4,80,428/- TOWARDS FENCING EXPENSES WHICH APPEAR TO HAVE BEEN INCURRED OVER AND ABOVE THE TOTAL INVESTMENT IN PURC HASE OF SUCH FARM BY SHRI M.H. ANDURE. ACCORDINGLY, THE AO IS DIRECTE D TO FURTHER ENHANCE THE CLOSING BALANCE OF THE RUNNING ACCOUNT I N THE SEIZED DIARY BY AN AMOUNT OF RS.4,80,428/-. THUS, THE TOTAL CLOSIN G BALANCE OF THE RUNNING ACCOUNT IN THE SEIZED DIARY IN THE NAME OF T HE APPELLANT WORKS OUT TO RS.43,07,500 + RS.4,00,500/- + RS.4,80,428/- WH ICH TOTALS TO RS.51,88,428/-. THE AO IS DIRECTED TO ASSESS THE UDI OF RS.51,88,428/- IN THE HANDS OF THE APPELLANT ON SUBSTANTIVE BASIS. 29.5 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE RE VENUE IS IN APPEAL BEFORE US. 30. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES. VIDE ORDER OF EVEN DATE, WE HAVE UPHELD THE FINDING GIVEN BY THE LD.CIT(A) IN THE CASE OF SHRI N.H. JALKOTE THAT TRA NSACTIONS RECORDED IN THE SEIZED DIARIES BELONG TO THE RESPECTIVE INDI VIDUALS INCLUDING THE 45 PRESENT ASSESSEE AND THEREFORE, THE SAME HAS TO BE ASSESSED IN THEIR RESPECTIVE HANDS. IN VIEW OF THE ABOVE AND CONSIDE RING THE FACT THAT THE ASSESSEE IN HIS STATEMENT RECORDED U/S.132(4) H AS ADMITTED SUCH INCOME AND OFFERED THE SAME TO TAX IN THE BLOCK RET URN WE FIND NO INFIRMITY IN THE ORDER OF LD.CIT(A) SUSTAINING THE AMOUNT OF RS.43,07,500/-. SIMILARLY, FOR THE DETAILED REASON ING GIVEN BY CIT(A) ON ACCOUNT OF ADDITION OF RS.4,00,500/- AND RS.4,80 ,428/- RESPECTIVELY BEING EXPENSES RELATABLE TO SHRI M.H. ANDURE, WE FI ND NO INFIRMITY IN THE SAME. ACCORDINGLY, THE ORDER OF LD.CIT(A) ON T HIS ISSUE IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED . 31. GROUNDS OF APPEAL NO. 3 AND 4 BY THE REVENUE RE AD AS UNDER : 3. ON THE FACTS AND IN THE CIRCUMSTANCES, CIT(A) IS NO T JUSTIFIED IN DIRECTING TO CONVERT THE ADDITION OF RS.22,82,700/- BEING UNEXPLAINED SOURCE OF LOAN ASSESSED IN THE HANDS OF ASSESSEE ON PROTECTIV E BASIS TO AN ADDITION ON SUBSTANTIVE BASIS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES, CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE ADDITION OF RS.22,82,700/- AS UDI IN RESPECT OF SOURCE OF TOTAL LOAN TO BE MADE ON SUBSTANTIVE BASIS IN THE CA SE OF THE ASSESSEE AND NOT IN THE CASE OF SHRI N.H. JALKOTE. 31.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO M ADE ADDITION OF RS.22,82,700/- ON ACCOUNT OF ADVANCE GIVEN TO SHRI GANGADHAR MAHAJAN ON PROTECTIVE BASIS AND TAXED IN THE HANDS OF SHRI N.H. JALKOTE ON SUBSTANTIVE BASIS. 31.2 BEFORE CIT(A) IT WAS POINTED OUT THAT THE ASSE SSEE HAS GIVEN LOAN TO MR. GANGADHAR MAHAJAN WHICH COULD BE VERIFI ED FROM THE SEIZED MATERIAL INVENTORISED AS A-71 PAGE NO.13 OL WHICH IS AN AGREEMENT SIGNED BETWEEN MR. GANGADHAR MAHAJAN AND MR. M.H. ANDURE. IT WAS FURTHER POINTED OUT THAT OUT OF THE TOTAL ADVANCE OF 46 RS.22,82,700/- THE ASSESSEE HAS ADVANCED RS.7,00,00 0/- PRIOR TO THE BLOCK PERIOD. IT WAS SUBMITTED THAT THE AO WITHOUT EXAMINING THE TRUE FACTS ADDED RS.22,82,700/- ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE INSTEAD OF RS.15,82,700/- I.E. (RS.2282,70 0 RS.7,00,000/-) ON SUBSTANTIVE BASIS. IT WAS FURTHER SUBMITTED THA T THE SAID AMOUNT OF RS.22,82,700/- WAS ALSO ADDED TO THE TOTAL UNDISCLO SED INCOME OF MR. N.H. JALKOTE ON SUBSTANTIVE BASIS. 31.3 THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM THE AO WHO VIDE HIS REMAND REPORT DT.15.07.2004 FULLY RELIED O N HIS FINDING GIVEN IN PARA 11.10 OF HIS BLOCK ASSESSMENT ORDER. IT WAS STATED THAT IN VIEW OF SPECIFIC DECLARATION MADE U/S 132(4) BY THE ASSESSEE HE HAS MADE THE SAID ADDITION ON PROTECTIVE BASIS. THE ASS ESSEE IN HIS REPLY TO REMAND REPORT DT.08.09.2004 STATED THAT THE SIGNATU RE ON PG 13 (OL) OF A-71, WAS BEING MADE BY SHRI GANGADHAR MAHAJAN A ND THE ASSESSEE IN TOKEN OF THEIR MUTUAL AGREEMENT. IT WAS ALSO POINTED OUT THAT SHRI N.H.JALKOTE IN HIS STATEMENT RECORDED U/ S 131 IN POST SEARCH INVESTIGATION, HAS STATED IN ANSWER TO Q.NO.37 & 38 , THAT HE IS NO WAY CONCERNED WITH GANGADHAR MAHAJAN, IN THE SAID TRANS ACTIONS. IT WAS SUBMITTED THAT OUT OF TOTAL ADVANCE OF RS.22,82,700 /- THE ASSESSEE HAS GRANTED RS.7,00,000/- PRIOR TO BLOCK PERIOD I.E., M UCH BEFORE MARCH 1995. IT WAS STATED THAT MR.GANGADHAR MAHAJAN HAS A LSO ADMITTED THIS TRANSACTION OF LOAN IN ANSWER TO Q.NO. 07 IN HIS ST ATEMENT RECORDED U/S 131 OF THE INCOME TAX ACT 1961. IT WAS ARGUED THAT THE CONTENTION OF THE ASSESSING OFFICER THAT FIGURES SHOWN IN CASH FL OW AND OFFERED IN STATEMENT U/S.132(4) IS NOT TALLYING IS NOT BASED O N FACTS. IT WAS SUBMITTED THAT THE ASSESSING OFFICER IGNORED ALL TH E AFORESAID FACTS AND 47 EVEN AFTER KNOWING THE REALITY HAS MADE ADDITION OF RS.22,82,000/- ON 'PROTECTIVE BASIS ' IN THE HANDS OF THE ASSESSEE, A ND THE SAME AMOUNT ON 'SUBSTANTIVE BASIS' IN THE HANDS OF SHRI.N.H.JAL KOTE. 31.4 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSE E THE LD.CIT(A) DIRECTED THE AO TO TREAT THE ADDITION IN THE HANDS OF THE ASSESSEE ON SUBSTANTIVE BASIS BY OBSERVING AS UNDER : I HAVE DULY CONSIDERED THE SUBMISSION OF THE ASSESS EE, REMAND REPORT OF THE ASSESSING OFFICER AND REJOINDER OF THE ASSESSEE AND ALSO THE ARGUMENTS MADE BY THE LEARNED A.R. THE RELEVANT ENT RY OF LOAN ADVANCED BY THE ASSESSEE TO SHRI GANGADHAR MAHAJAN AS A PPEARING ON PAGE NO. 13(OL) OF SEIZED DIARY A-71 WAS EXAMINED BY ME WHICH CLEARLY SHOWS THAT CERTAIN ASSURANCE OF REPAYMENT OF L OAN HAS BEEN GIVEN BY SHRI GANGADHAR MAHAJAN TO SHRI M.H. ANDURE WHICH HAS BEEN DULY SIGNED BY BOTH OF THEM ON 24-10-1998. THEREFOR E, IT LEAVES NO IOTA OF DOUBT THAT THE ENTRY APPEARING IN THE SAID DIARY WAS A LOAN ADVANCED BY SHRI M.H. ANDURE TO SHRI GANGADHAR MAHAJAN AND T HEIR CORRESPONDING LOAN, THEREFORE, APPEARS IN THE RUNNING ACCOUNT IN THE NAME OF SHRI GANGADHAR MAHAJAN IN THE SEIZED DIARY A-71. FURTHER, ON PERUSAL OF THE STATEMENT OF SHRI M.H. ANDURE RECORD ED U/S. 132(4) DT. 24-11-2001 AT QUE NO. 58 TO 60 IT IS SEEN THAT HE HAS ADMITTED OF ADVANCING CASH LOANS TO SHRI GANGADHAR MAHAJAN OUT O F HIS UNDISCLOSED SOURCE OF INCOME. THE SAID STATEMENT OF SHRI M.H.ANDUR E HAS BEEN CONFIRMED BY SHRI GANGADHAR MAHAJAN IN HIS STATEMEN T RECORDED U/S. 131 DT. 23-1-2002 AT QUE. NOS. 5 & 7. THESE STATEM ENTS, THEREFORE, ESTABLISHES THAT THE ASSESSEE HAD ADVANCED UNEXPLAINED LOANS WHICH HAVE BEEN OFFERED AS UDI IN BLOCK RETURN. FURTHER IN THE LIGHT OF MY FINDING GIVEN IN THE APP ELLATE ORDER OF SHRI N.H. JALKOTE THAT THE ENTRIES IN THE SEIZED DIARY DID NOT BELONG TO HIM CONSIDERING THE STATEMENTS OF THE ASSESSEE AND SHRI S ANJAY MAHAJAN, I HAVE, NO HESITATION TO HOLD THAT THE LOAN OF RS.22. 82 LACS ADVANCED BY THE ASSESSEE TO SHRI GANGADHAR MAHAJAN IS UNEXPLAINED A ND, THEREFORE, NEEDED TO BE ASSESSED IN HIS HANDS ON SUBSTANTIVE MANNER. AS FAR AS THE CLAIM OF THE ASSESSEE THAT A SUM OF RS.7,00,000/- O UT OF THE TOTAL LOAN OF RS.22.83 LACS PERTAINS TO THE ACCOUNTING YEARS PRIO R TO THE BLOCK PERIOD GOES, I FIND THAT NO CORROBORATIVE EVIDENCE HAS BEE N PRODUCED BEFORE ME IN SUPPORT OF SUCH CLAIM. ON THE CONTRARY I FIND T HAT RUNNING ACCOUNT IN THE NAME OF SHRI GANGAGHAR MAHAJAN AS ENTERED IN TH E SAID DIARY CLEARLY GIVES THE DATE OF 29-1-1997 TO 24-10-1998 WHICH CLE ARLY FALLS IN THE BLOCK PERIOD AND, THEREFORE, THE CLAIM MADE BY THE A.R. I S NOT ACCEPTABLE. IN THE LIGHT OF ABOVE DISCUSSION, I AM TO HOLD THAT THE SO URCE OF TOTAL LOAN OF RS.22,82,700/- ADVANCED BY THE ASSESSEE DOES NOT ST AND EXPLAINED AND, THEREFORE, DIRECTED TO BE ASSESSED AS UDI IN THE HA NDS ON SUBSTANTIVE BASIS. 48 31.5 AGGRIEVED WITH SUCH ORDER OF CIT(A) THE REVENU E IS IN APPEAL BEFORE US. 32. AFTER HEARING BOTH SIDES WE FIND NO INFIRMITY I N THE ORDER OF CIT(A) WHO HAS BASED HIS FINDING ON THE BASIS OF AS SURANCE GIVEN BY SHRI GANGADHAR MAHAJAN TO MR. M.H. ANDURE WHICH BEE N SIGNED BY BOTH OF THEM ON 24-10-1998. FURTHER MR. M.H. ANDUR E, IN HIS STATEMENT RECORDED U/S.132(4) HAS ALSO ADMITTED TO HAVE ADVANCED SUCH CASH LOAN TO MR. GANGADHAR MAHAJAN. SHRI GANG ADHAR MAHAJAN IN HIS STATEMENT RECORDED U/S.131 HAS ALSO CONFIRME D RECEIPT OF SUCH LOAN. IN VIEW OF THE ABOVE AND IN VIEW OF OUR ORDE R UPHOLDING THE FINDING GIVEN BY CIT(A) IN THE CASE OF SHRI N.H. JA LKOTE THAT TRANSACTIONS RECORDED IN THE SEIZED DIARIES BELONG TO THE RESPECTIVE INDIVIDUALS WE UPHOLD THE ORDER OF THE LD.CIT(A) ON THIS ISSUE AND THE GROUNDS BY THE REVENUE ARE DISMISSED. 33. GROUNDS OF APPEAL NO. 5 BY THE REVENUE READS AS UNDER : 5. ON THE FACTS AND IN THE CIRCUMSTANCES, CIT(A) IS NO T JUSTIFIED IN HOLDING THAT THE ADDITION OF RS.5,00,000/- IN RESPECT OF UNDISCLOSED INVESTMENT IN SHOPS IN APNA BAZAR BE MADE ON SUBSTANTIVE BASIS IN THE CASE OF THE ASSESSEE AND NOT IN THE CASE OF SHRI N.H. JALKOTE. 33.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO M ADE ADDITION OF RS.5,00,000/- IN THE HANDS OF THE ASSESSEE ON PROTE CTIVE BASIS BEING INVESTMENT IN A SHOP IN APNA BAZAR. 33.2 BEFORE CIT(A) IT WAS SUBMITTED THAT THE ASSESS ING OFFICER HAS MADE AN ADDITION OF RS.1,31,280/- TOWARDS INVESTMEN T MADE BY THE ASSESSEE IN SHOP NO.101 AT APNA BAZAR SHOPPING COMP LEX, AURANGABAD ON PROTECTIVE BASIS INSTEAD OF SUBSTANTI VE BASIS. HE HAS 49 ALSO MADE AN ADDITION OF RS.5,00,000/- TOWARDS INVE STMENT IN FOUR SHOPS AT APNA BAZAR, AURANGABAD ON SUBSTANTIVE BASI S IN THE HANDS OF SHRI N.H. JALKOTE. IT WAS POINTED OUT THAT OUT OF THESE FOUR SHOPS THREE SHOPS ARE OWNED BY SHRI P.B. MAHAJAN, BROTH ER-IN-LAW OF MR. N.H. JALKOTE AND ONE BY THE ASSESSEE. IT WAS POI NTED OUT THAT IN THE STATEMENT RECORDED U/S 132 (4) OF THE INCOME TAX AC T' 1961 THE ASSESSEE HAD ADMITTED BEFORE THE SEARCH PARTIES THA T HE HAD MADE AN INVESTMENT IN A SHOP AT APNA BAZAR COMPLEX, AURANGA BAD WHICH REMAINED TO BE DISCLOSED IN HIS REGULAR INCOME TAX RETURNS AND ACCORDINGLY HE HAS SHOWN THE SAID INVESTMENT IN HIS BLOCK RETURN. IT WAS ARGUED THAT WHILE MAKING ADDITION ON PROTECTIVE BASIS THE ASSESSING OFFICER FAILED TO CONSIDER THE ORIGINAL P URCHASE DEED/ LEASE DEED IN FAVOUR OF LEGAL OWNERS, LEASE RENT PAID TO THE ROMAN CATHOLIC CHURCH FROM TIME TO TIME AND ALSO PROPERTY TAXES, LIGHT BILL AND OTHER INCIDENTAL CHARGES PAID BY THE LEGAL OWNE RS OF THE PROPERTY. IN SUPPORT OF HIS CLAIM THE ASSESSEE PRODUCED LEAS E DEEDS, LEASE RENT RECEIPTS IN THE NAMES OF ORIGINAL OWNERS NAMELY SHR I PRASHANT MAHAJAN AND THE ASSESSEE. 33.3 BASED ON THE DETAILS FILED BEFORE HIM THE LD.C IT(A) CALLED FOR A REMAND REPORT FROM THE AO WHO REITERATED HIS FINDIN GS IN THE ASSESSMENT ORDER. THE A.O. FURTHER STATED THAT THE ASSESSEE'S REQUEST TO ASSESS RS.131280/- ON SUBSTANTIVE BASIS IS NOT B ASED ON FACTS AND THEREFORE CANNOT BE ACCEPTED. THE ASSESSEE IN HIS R EPLY TO REMAND REPORT DT.08.09.2004 STATED THAT THE ASSESSING OFFI CER HAS MISINTERPRETED THE ENTRY OF RS.5.00 LACS THOUGH THE WORD 'SHOP' IS MENTIONED AFTER THE SAID ENTRY, BUT IT HAS NO RELEV ANCE WITH THE SHOPS 50 AT APNA BAZAR. IT WAS STATED THAT THE TOTAL COST OF THE SAID 4 SHOPS IS RS.6,01,000/- WHICH GOES TO PROVE THAT THIS SHOP HA S NOTHING TO DO WITH ENTRY OF RS. 5.00 LACS DEDUCTED FROM THE RUNNI NG ACCOUNT OF THE ASSESSEE. THE ASSESSEE POINTED OUT THAT OUT OF TOTA L 4 SHOPS, 1 SHOP BELONGS TO THE ASSESSEE AND OTHER 3 SHOPS ARE IN TH E NAME OF SHRI.P.B.MAHAJAN. SHRI.P.B.MAHAJAN HAS DISCLOSED 2 SHOPS IN HIS BALANCE SHEET FILED ALONGWITH RETURN OF INCOME PRIO R TO SEARCH. APART FROM THAT, BOTH THE ASSESSEE AS WELL AS SHRI.P.B.MA HAJAN, HAVE ACCEPTED THEIR INVESTMENT (WHETHER DISCLOSED OR UND ISCLOSED) AT THE TIME OF STATEMENT RECORDED U/S 132 (4) OF THE INCOM E TAX ACT, 1961. THEY HAVE OFFERED RENTAL INCOME ON THE 2 SHOPS AS U NDISCLOSED INCOME, WHICH THE ASSESSING OFFICER HAS ACCEPTED ON 'SUBSTANTIVE BASIS'. IT WAS FURTHER STATED THAT THE ASSESSING OF FICER HAS SEPARATELY CONSIDERED THE INVESTMENT OF RS.5.00 LACS ON 'SUBST ANTIVE BASIS' AS UNDISCLOSED INVESTMENT IN THE BLOCK ASSESSMENT ORDE R OF SHRI N.H. JALKOTE. IT WAS STATED THAT IT IS RIDICULOUS TO NOT E THAT INVESTMENT IN PROPERTY IS CONSIDERED BY ASSESSING OFFICE ON PROT ECTIVE BASIS AND RENTAL INCOME EARNED THEREON SUBSTANTIVE BASIS IN THE HANDS OF THE ASSESSEE. 33.4 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSE E THE LD.CIT(A) DIRECTED THE AO TO TREAT THE INVESTMENT O F RS.5,00,000/- IN APNA BAZAR IN THE HANDS OF THE ASSESSEE ON SUBSTANT IVE BASIS BY HOLDING AS UNDER : 5.4 AFTER CONSIDERING THE FACTS OF THE ISSUE, THE ARGU MENTS OF THE LD. AR AND THE REPORTS OF THE A.O. I FIND THAT THE ADDIT ION MADE BY THE AO ON ACCOUNT OF INVESTMENT IN SHOP IN APNA BAZAR ON PR OTECTIVE BASIS IS NOT CORRECT. IN THIS CASE IT IS AN ADMITTED FACT TH AT THE TITLE AND OTHER RELEVANT PAPERS IN RESPECT OF THE SHOP ARE IN THE NAME OF THE APPELLANT. 51 IT IS ALSO A FACT THAT THE APPELLANT HAS ADMITTED IN H IS STATEMENT RECORDED U/S 132(4) OF THE INCOME TAX ACT, 1961 THA T THE SAID SHOP BELONGS TO HIM AND ACCORDINGLY HE HAS OFFERED INVESTM ENT IN THE SAID SHOP AS HIS UNDISCLOSED INVESTMENT IN THE BLOCK RETURN FI LED BY HIM. THE ASSESSING OFFICER HAS ASSESSED RENTAL INCOME FROM THE SA ID SHOP IN THE HANDS OF THE APPELLANT ON SUBSTANTIVE BASIS. FURTH ER IN VIEW OF MY FINDING GIVEN IN THE APPELLATE ORDER OF SHRI N.H. J ALKOTE AT GROUND NO. 7 WHERE IT HAS BEEN HELD THAT THE INVESTMENT IN THE SH OPS IN APNA BAZAR DO NOT PERTAIN TO HIM. I HAVE ALSO HELD THAT T HE INVESTMENT IN THE SAID PROPERTY HAS BEEN MADE BY SHRI P.B.MAHAJAN AND SHRI M.H. ANDURE. THEREFORE, FOLLOWING THE FINDINGS GIVEN IN THE APPE LLANT ORDER OF SHRI N.H. JALKOTE AND THE EVIDENCES IN THE NATURE OF LEA SE AGREEMENT OF SHOP NO. 101 AND CORRESPONDING RENT RECEIVED FROM SUCH S HOP, I HAVE NO HESITATION TO HOLD THAT THE INVESTMENT IN SHOP NO. 101 IS UNEXPLAINED AND, THEREFORE, NEEDS TO BE TAXED AS UDI IN THE HAN DS OF APPELLANT ON SUBSTANTIVE BASIS. 5.5 IT IS ALSO IRONICAL TO SEE THAT THE AO AT ONE HAN D HAS ASSESSED THE RENTAL INCOME FROM THE SAID SHOP NO. 101 IN THE HANDS OF THE APPELLANT BY TREATING AS ITS RIGHTFUL LEGAL OWNER A ND ON THE OTHER HAND ALSO HOLDS THAT THE INVESTMENT IN THE SAID SHOP HAS NOT BEEN MADE BY THE APPELLANT. THE STAND OF THE AO IN ASSESSING THE INVESTMENT IN SHOP AS UDI ON PROTECTIVE BASIS IS, THEREFORE, NOT BASED ON CORRECT APPRECIATION OF FACTS AND CIRCUMSTANCES. FURTHER THE FINDING OF THE AO THAT THE SAID RENTAL INCOME IS REFLECTED IN THE RUN NING ACCOUNT OF SHRI M.H. ANDURE APPEARING IN THE SEIZED DIARY IS UNFOUN DED SINCE NO SUCH SPECIFIC ENTRY IS IDENTIFIABLE. EVEN IF SUPPOSE THIS IS T O BE BELIEVED, THEN WHERE IS THE QUESTION OF ASSESSING RENTAL INCOME ON SUBSTANTIVE BASIS, WHEN IT IS ALLEGED TO HAVE BEEN INCLUDED IN THE RUNNING ACCOUNT OF SHRI M.H. ANDURE. THE ARGUMENT OF THE AO IS BASEL ESS IN TOTAL DISREGARD TO THE EVIDENCE ON RECORD. I MAY ADD HERE THAT IN MY APPELLATE ORDER IN THE CASE OF SHRI N.H. JALKOTE IN GROUND NO.7 IT HAS BEEN STATED THAT THE VALUE OF UNEXPLAINED INVESTMEN T IN APNA BAZAR SHOP IS OF RS.5,00,000/- WHICH IS APPEARING IN THE R UNNING ACCOUNT OF SHRI M.H. ANDURE IN THE SEIZED DIARY WHICH HAS BEEN O WNED UP BY SHRI M.H. ANDURE IN HIS STATEMENT U/S. 132(4) AND 131 AND A FFIDAVIT. HOWEVER, ON PERUSAL OF THE BLOCK RETURN IT IS OBSER VED THAT THE APPELLANT HAS OFFERED ONLY RS.1,31,280/- AS AGAINST UNEXPLAIN ED INVESTMENT OF RS.5,00,000/- EVIDENT IN THE RUNNING ACCOUNT OF THE SEIZED DIARY. A SHOW CAUSE NOTICE FOR ENHANCEMENT OF UDI WAS ISSUED TO T HE APPELLANT. IN RESPONSE THIS HAS BEEN ACCEPTED IN THE WRITTEN SUBM ISSION FILED BEFORE ME. ACCORDINGLY, THE UNEXPLAINED INVESTMENT MADE BY THE APPELLANT IN SHOP NO. 101 AT APNA BAZAR, AURANGABAD IS DIRECTED TO BE TAKEN AT RS.5,00,000/- TO BE ASSESSED AS UDI ON SUBSTANTIVE BASIS IN THE HANDS OF THE APPELLANT. 33.5 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE RE VENUE IS IN APPEAL BEFORE US. 34. AFTER HEARING BOTH SIDES WE DO NOT FIND ANY INF IRMITY IN THE ORDER OF THE LD.CIT(A). WE FIND THE CIT(A) HAD GIVEN A C ATEGORICAL FINDING THAT THE TITLE DEED AND OTHER RELEVANT PAPERS IN RE SPECT OF THE SHOP ARE IN 52 THE NAME OF THE ASSESSEE. THE ASSESSEE IN HIS STATE MENT RECORDED U/S.132(4) HAS ADMITTED THAT THE SAID SHOP BELONGS TO HIM AND HAS OFFERED THE INVESTMENT IN THE SAID SHOP AS HIS UNDI SCLOSED INVESTMENT IN HIS BLOCK RETURN. WE FIND THE AO IN THE INSTANT CA SE HAS ASSESSED RENTAL INCOME FROM THE SAID SHOP IN THE HANDS OF THE ASSES SEE ON SUBSTANTIVE BASIS. VIDE ORDER OF EVEN DATE IN THE CASE OF SHRI N.H. JALKOTE WE HAVE UPHELD THE FINDING GIVEN BY THE LD.CIT(A) THAT THE INVESTMENT IN THE SHOPS IN APNA BAZAR DO NOT PERTAIN TO SHRI N.H. JAL KOTE. IN VIEW OF THE ABOVE AND IN VIEW OF THE DETAILED REASONING GIVEN B Y THE LD.CIT(A) WE DO NOT FIND ANY INFIRMITY IN HIS ORDER HOLDING THAT THE ADDITION OF RS.5 LAKHS IN RESPECT OF UNDISCLOSED INVESTMENT IN SHOP IN APNA BAZAR HAS TO BE MADE ON SUBSTANTIVE BASIS IN THE HANDS OF THE AS SESSEE. ACCORDINGLY, THE ORDER OF THE CIT(A) ON THIS ISSUE IS UPHELD AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. 35. GROUNDS OF APPEAL NO. 6 AND 7 BY THE REVENUE RE AD AS UNDER : 6. ON THE FACTS AND IN THE CIRCUMSTANCES, CIT(A) IS NO T JUSTIFIED IN DIRECTING TO CONVERT THE ADDITION OF RS.23,23,000/- AS UDI IN RESPECT OF INVESTMENT IN MITMITA LAND MADE IN THE CASE OF THE A SSESSEE FROM PROTECTIVE BASIS TO AN ADDITION ON SUBSTANTIVE BASIS. 7. ON THE FACTS AND IN THE CIRCUMSTANCES, CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE ADDITION OF RS.23,23,000/- AS UDI IN RESPECT OF INVESTMENT IN MITMITA LAND ON SUBSTANTIVE BASIS IN THE C ASE OF THE ASSESSEE AND NOT IN THE CASE OF SHRI N.H. JALKOTE. 35.1 THE ASSESSING OFFICER HAS DISCUSSED THIS ISSUE IN PARA 11.8 OF HIS ASSESSMENT ORDER. THE ASSESSING OFFICER NOTED T HAT THE REFERENCE TO THE MITMITA LAND WAS FOUND ON PAGE NO. 24 AND PA GE 23 (OL) OF DIARY A-71 OF SHRI JALKOTE. THE ASSESSING OFFICER F URTHER NOTED THAT THE ENTRY ON PAGE NO. 24 OF DIARY A-71 SHOWS THAT THE T OTAL COST OF MITMITA LAND AS ON 16/10/98 WAS AT RS. 34,29,773/- OUT OF W HICH RS. 30.00 53 LAKHS WAS PAID BY SHRI N.H. JALKOTE. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE HAS HIMSELF ADMITTED IN ANS WER TO QUESTION NO. 51 IN HIS STATEMENT RECORDED U/S.132(4). THE A.O. F URTHER OBSERVED THAT OUT OF THE TOTAL INVESTMENT OF RS.34,29,773/- THE A SSESSEE HAS SHOWN TOTAL SOURCES OF RS.33,07,000/- ONLY WHICH IS AS UN DER : THE ASSESSEE RS.16,30,000/- SHRI PRASHANT MAHAJAN RS.11,07,000/- SHRI GOPAL GORTE RS.5,70,000/- THE DIFFERENCE OF RS.1,22,773/- (RS.34,29,773 (-) R S.33,07,000) WERE REMAINED UNEXPLAINED. THE A.O. MADE ADDITION TOWARD S SHARE OF GOPAL GORTHE AS UNEXPLAINED INVESTMENT I.E., RS.5,7 0,000/- AND THE DIFFERENCE OF RS.1,22,773/- ALONG WITH OWN SHARE OF THE ASSESSEE AMOUNTING TO RS.16,30,000/-. THUS, HE MADE A TOTAL ADDITION OF RS.23,23,000/- IN THE HANDS OF THE ASSESSEE ON PROT ECTIVE BASIS. 35.2 BEFORE CIT(A) IT WAS ARGUED THAT THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS.23,23,000/- ON PROTECTIVE BA SIS TO THE TOTAL UNDISCLOSED INCOME OF THE ASSESSEE TOWARDS HIS SHAR E IN MITMITA LAND. IT WAS SUBMITTED THAT THE ENTRY ON PAGE NO. 24 OF D IARY A-71 SHOWS COST OF MITMITA LAND AS ON 16.10.1998 AT RS.34,29,7 73/- THE NARRATION WRITTEN AGAINST THE SAID ENTRY IS 'SELF PAID' I.E. CONTRIBUTION OF THE ASSESSEE, MR. P.B. MAHAJAN & GOPAL GORTE WHO HAVE C ONTRIBUTED AROUND RS.30.00 LACS TOWARDS INVESTMENT IN MITMITA LAND AND BALANCE EXPENSES INCURRED THEREON RS.4.30 LACS WERE BORNE B Y THE ASSESSEE. IT WAS SUBMITTED THAT THE ASSESSEE HAS FILED PROOF OF INVESTMENT MADE BY GOPAL GORTE AMOUNTING TO RS. 5,70,000/- BY WAY OF A N AFFIDAVIT DULY NOTARISED AND PROOF OF HIS CREDIT-WORTHINESS I.E. 7 /12 EXTRACT SHOWING OWNERSHIP OF AGRICULTURAL LAND AT VILLAGE KAVTHAL,T Q. MARGRULPIR, 54 DIST. WASHIM. IT WAS ARGUED THAT THE ASSESSING OFFI CER FAILED TO CONSIDER THE ABOVE FACTS AND ADDED RS. 5,70,000/- B EING SHARE OF SHRI GOPAL GORTE TO THE TOTAL UNDISCLOSED INCOME OF THE ASSESSEE WITHOUT EXAMINING THE CREDITWORTHINESS & FINANCIAL CAPACITY OF SHRI GOPAL GORTE. IT WAS FURTHER SUBMITTED THAT THE TOTAL INVE STMENT IN THE SAID LAND AS PER SEIZED DIARY A-71, PG. NO. 24 IS RS.34, 29,773/- OUT OF WHICH RS.33,07,000/- WAS CONTRIBUTED BY RESPECTIVE INDIVIDUALS AS AFORESAID. THE REMAINING AMOUNT OF RS.1,22,773/- AR E THE EXPENSES INCURRED ON THE SAID LAND OUT OF HIS RUNNING ACCOUN T. IT WAS POINTED OUT THAT THE ASSESSING OFFICER HAS ALSO MADE ENTIRE ADD ITION OF RS. 34.30 LACS ON SUBSTANTIVE BASIS IN THE HANDS OF THE CO-BR OTHER OF THE ASSESSEE SHRI. N. H. JALKOTE. IT WAS ARGUED THAT THE ASSESS ING OFFICER FAILED TO CONSIDER THE AFFIDAVIT CUM CONFIRMATION OF SHRI GOP AL GORTHE AND ACCORDINGLY ADDED HIS SHARE OF CONTRIBUTION AMOUNTI NG TO RS.5,70,000/- ALONGWITH SHARE OF THE ASSESSEE AMOUN TING TO RS.17,53,000/- ON 'PROTECTIVE BASIS ' IN THE HANDS OF THE ASSESSEE. IT WAS ARGUED THAT THE ASSESSING OFFICER CAME TO THIS CONCLUSION WITHOUT GIVING THE ASSESSEE A REASONABLE OPPORTUNITY. IT W AS ARGUED THAT THE ASSESSING OFFICER HAS NOT CROSS EXAMINED MR.GOPAL G ORTE IN CONNECTION WITH THE AFFIDAVIT FILED BEFORE HIM. THE ASSESSEE RELIED ON THE DECISION OF HON. SUPREME COURT OF INDIA IN THE CASE OF MEHTA PARIKH AND CO. VS CIT (1956) 30 ITR 181 WHEREIN IT HAS BEEN HELD THAT WHEN NONE OF THE AUTHORITIES CONSIDERED IT NEC ESSARY TO CROSS EXAMINE THE DEPONENT WITH REFERENCE TO THE STATEMEN T MADE IN THE AFFIDAVIT, IT WAS NOT OPEN TO THE REVENUE UNDER THE SE CIRCUMSTANCES TO CHALLENGE THE CORRECTNESS OF THE STATEMENT MADE BY THE DEPONENT IN THE AFFIDAVIT. 55 35.3 IT WAS ARGUED THAT THE ASSESSEE WAS ENTITLED T O ASSUME THAT THE AUTHORITIES WERE SATISFIED WITH THE AFFIDAVIT AS SU FFICIENT PROOF ON THIS POINT. IT WAS ARGUED THAT THE ASSESSEE HAS DI SCHARGED HIS BURDEN OF PROOF BY FILING AFFIDAVIT BY SHRI GOPAL GORTE. IT WAS SUBMITTED THAT THE CONCLUSION DRAWN BY THE ASSESSING OFFICER IS QUITE CONTRADICTORY, I.E. ON THE ONE HAND HE IS ALLEGING THAT THE ENTIRE INVESTMENT IS MADE BY SHRI JALKOTE, AND ON THE OTHE R HAND, BY MAKING ADDITION OF SHARE OF SHRI GOPAL GORTE IN THE HANDS OF THE ASSESSEE, THAT TOO ON PROTECTIVE BASIS. HE IS THUS INDIRECTLY ACC EPTING THE FACT THAT THE INVESTMENT IN THE SAID LAND IS MADE BY THE ASSESSEE , OTHERWISE HE WOULD HAVE RETAINED THE AMOUNT OFFERED IN THE BLOCK RETUR N BY THE ASSESSEE I.E. RS. 16,30,000/- ON 'PROTECTIVE BASIS' WHICH GO ES TO PROVE THAT THE ASSESSING OFFICER HIMSELF IS NOT SURE WHO IS THE RE AL OWNER OF THE SAID PROPERTY. 35.4 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSE E THE LD.CIT(A) DIRECTED THE AO TO CONVERT THE ADDITION O F RS.23,23,000/- AS UNDISCLOSED INCOME OF THE ASSESSEE ON SUBSTANTIV E BASIS BY OBSERVING AS UNDER : 10.5 I HAVE CAREFULLY GONE THROUGH THE RELEVANT PA RT OF THE ASSESSMENT ORDER, SUBMISSION OF THE APPELLANT, REMAND REPORT OF THE ASSESSING OFFICER AND REJOINDER OF THE APPELLANT AN D ALSO THE ARGUMENTS MADE BY THE LEARNED A.R. IT IS A FACT THAT ALL THE RELEVANT PROPERTY DOCUMENTS I.E., PURCHASE DEED, 7/12 EXTRACTS ETC. ARE IN THE NAME OF THE APPELLANT ALONGWITH OTHER 3 PERSONS AND, THEREFO RE, SHRI N.H.JALKOTE WAS NOT THE LEGAL OWNER OF SUCH PROPERTY. I WOULD LIKE TO REFER TO THE APPELLATE ORDER IN THE CASE OF SHRI N.H .JALKOTE, GROUND NO.4 WHEREIN I HAVE GIVEN CLEAR FINDING THAT THE IN VESTMENT IN THE MITMITA LAND CANNOT BE ASSESSED AS UDI IN HIS HAND ON ACC OUNT OF DETAILED REASON MENTIONED IN THE ORDER. THEREFORE, R ELYING ON THE SAID APPELLATE ORDER OF SHRI N.H.JALKOTE, IT IS IMPERATI VE THAT THE UNEXPLAINED INVESTMENT IN THE SAID PROPERTY HAD TO BE TAXED ON SUBSTANTIVE BASIS IN THE HANDS OF THE APPELLANT AND OTHE R CO-OWNERS OF THE SAID PROPERTY. THE ASSESSING OFFICER HAS NO WHERE PROVED THAT THE APPELLANT AND OTHERS ARE BENAMIDARS OF MR. JALKOTE. IN VIEW OF THE FACT THAT TITLE PAPERS OF THE PROPERTY IS IN THE NAME OF T HE APPELLANT WHICH 56 HAS BEEN OFFERED AS HIS UNDISCLOSED INVESTMENT IN T HE BLOCK RETURN AND IN THE ABSENCE OF CONTRARY EVIDENCE ON RECORD TO PR OVE THAT THE SAID PROPERTY DID NOT BELONG TO THE APPELLANT, I AM TO H OLD THAT THE UNEXPLAINED INVESTMENT IN THE SAID PROPERTY NEEDS TO BE TAXED AS UDI IN THE HANDS OF THE APPELLANT ON SUBSTANTIVE BASIS. IT I S PERTINENT TO MENTION HERE THAT THE APPELLANT IN HIS STATEMENT U/ S. 132(4) DT. 22-11- 2001 AT QUE. NO. 41 HAS CATEGORICALLY STATED THAT HE HAD PURCHASED THE SAID MITMITA LAND IN THE NAME OF FOUR PERSONS AND TH E PAYMENT TOWARDS SUCH PURCHASE WAS MADE BY HIM. 10.6 AS FAR AS THE INVESTMENT BY SHRI GOPAL GORTE GOES, I FIND THAT HE WAS SIMPLY A NAME LENDER WITHOUT HAVING MADE ANY INV ESTMENT IN THE SAID PROPERTY. THE AFFIDAVIT FILED BY SHRI GOPAL GOR TE STATING THAT HE HAS INVESTED IN THE SAID PROPERTY OUT OF HIS FATHERS H UF INCOME WAS PERUSED WHICH SHOWS THAT IT IS QUITE VAGUE AND DOES NOT SPECIFY THE AMOUNT INVESTED IN THE SAID PROPERTY NOR DOES IT EXPL AIN THE SOURCE OF FATHER'S HUF INCOME. THE EVIDENTIARY VALUE OF SUCH I NCOMPLETE AFFIDAVIT CANNOT BE TAKEN COGNIZANCE IN SUCH INCOME TAX PROCEEDINGS. THE AO WAS, THEREFORE, RIGHT IN HOLDING THAT THE CRE DIT WORTHINESS OF SHRI GOPAL GORTE AND THE GENUINENESS OF HIS CONTRIBUT ION TOWARDS PURCHASE OF SUCH PROPERTY DOES NOT STAND PROVED. THEREF ORE, IN THE LIGHT OF ADMISSION MADE BY THE APPELLANT AT Q.NO.41 & 51, THE SO CALLED INVESTMENT OF RS.5,70,000/- MADE BY SHRI GOPAL GORTE BEEN RIGHTLY CLUBBED AS UNEXPLAINED INVESTMENT IN THE HANDS OF THE APPELLANT. CONSIDERING THE FACT THAT OUT OF THE TOTAL INVESTMENT OF RS.34.30 LACS, SHRI PRASHANT MAHAJAN HAS OFFERED RS.11.07 LACS AS HIS UN EXPLAINED INVESTMENT IN THE MITMITA LAND AND WHICH HAS BEEN CON FIRMED ON SUBSTANTIVE BASIS IN THE APPELLATE ORDER IN HIS CASE, TH E BALANCE AMOUNT OF RS.23.23 LACS AS INVESTMENT IN THE SAID MITMI TA LAND IS HELD TO BE UNDISCLOSED INCOME OF THE APPELLANT ON SUBSTANTI VE BASIS. 35.5 AGGRIEVED WITH SUCH ORDER OF CIT(A) THE REVENU E IS IN APPEAL BEFORE US. 36. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE ISSUE HAS ALREADY BEEN DISCUSSED IN ASSESSEES APPEAL IN GROUND OF AP PEAL NO.17. IT HAS ALREADY BEEN HELD THAT SINCE THE RELEVANT PROPERTY DOCUMENTS, I.E. PURCHASE DEED, 7/12 EXTRACTS ETC ARE IN THE NAME OF THE ASSESSEE ALONG WITH 2 OTHER PERSONS THE SAME HAS TO BE ADDED IN TH E RESPECTIVE HANDS ON SUBSTANTIVE BASIS AND CANNOT BE ADDED IN THE HAN DS OF SHRI N.H. JALKOTE ON SUBSTANTIVE BASIS. IN VIEW OF THE ABOVE AND IN VIEW OF THE DETAILED REASONING GIVEN BY THE LD.CIT(A) ON THIS I SSUE WE FIND NO INFIRMITY IN HIS ORDER IN HOLDING THAT THE ADDITION CANNOT BE MADE IN 57 THE HANDS OF SHRI N.H, JALKOTE ON SUBSTANTIVE BASIS . ACCORDINGLY, THE SAME IS UPHELD AND THE GROUNDS RAISED BY THE REVENU E ARE DISMISSED. 37. GROUNDS OF APPEAL NO. 8 BY THE REVENUE READS AS UNDER : 8. ON THE FACTS AND IN THE CIRCUMSTANCES, THE CIT(A) IS NOT JUSTIFIED IN DELETING THE SURCHARGE LEVIED ON THE TAX ON UNDISC LOSED INCOME. 38. AFTER HEARING BOTH SIDES WE FIND THE SEARCH IN THE INSTANT CASE TOOK PLACE ON 21-11-2001. THE SURCHARGE LEVIED BY THE ASSESSING OFFICER ON TAX COMPUTED ON UNDISCLOSED INCOME WAS D ELETED BY LD.CIT(A) BY RELYING ON VARIOUS DECISIONS. WE FIND THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RAJIV BHATARA REPORTED IN 310 ITR 105 HAS HELD THAT EVEN IN RESPECT OF SEARCH PRI OR TO IST JUNE, 2002, THE PROVISIONS OF THE FINANCE ACT, 2001 WOULD BE AP PLICABLE AND SURCHARGE WOULD BE LEVIABLE ON TAX PAYABLE U/S.113. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD.CIT(A) ON THIS ISSUE AND THE GROUND RAISED BY THE REVENUE IS ALLOWED. 39. GROUNDS OF APPEAL NOS. 9 AND 10 BEING GENERAL I N NATURE ARE DISMISSED. 40. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E AS WELL AS THE REVENUE ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 12-05-2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED : 12 TH MAY, 2014 SATISH 58 COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-I, NAGPUR 4. THE CIT-I, NAGPUR 5. D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE