NIRMAL KUMAR AGARWAL, Jaipur V. ACIT, Jaipur

ITA 828/JPR/2013

• Counselvise Citation: 82823114 RSA 2013
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 01-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K KHANDELWAL
• Assessee Lawyers: O P AGARWAL; MANISH AGARWAL
• Keywords: Unexplained investment; Business income; Depreciation; Search and seizure; Loose papers; Document seized; Source of fund; Corroborative evidences; Documents seized
• Section: 131; 69C; 143(3); 153A; 234B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI HARI OM MARATHA AND SHRI N.K. SAI NI) ITA NO. 828/JP/2013 ASSESSMENT YEAR : 2009-10 PAN: ABIPA 1098 B SHRI NIRMAL KUMAR AGARWAL VS. THE ACIT 304, 3 RD FLOOR, RIDHI SIDHI APARTMENT CENTRAL CIRCLE- 1 AHINSA CIRCLE, C-SCHEME, JAIPUR JAIPUR (APPELLANT) (RESPONDENT) ITA NO. 906/JP/2013 ASSESSMENT YEAR : 2009-10 PAN: AAAHB 7862 D THE DCIT VS. SHRI NIRMAL KUMAR AGARWAL CENTRAL CIRCLE- 1 304, 3 RD FLOOR, RIDHI SIDHI APARTMENT JAIPUR AHINSA CIRCLE, C-SCHEME, JAIPUR (APPELLANT) (RESPONDENT) ITA NO. 829/JP/2013 ASSESSMENT YEAR : 2010-11 PAN: ABIPA 1098 B SHRI NIRMAL KUMAR AGARWAL VS. THE ACIT 304, 3 RD FLOOR, RIDHI SIDHI APARTMENT CENTRAL CIRCLE- 1 AHINSA CIRCLE, C-SCHEME, JAIPUR JAIPUR (APPELLANT) (RESPONDENT) ITA NO. 847/JP/2013 ASSESSMENT YEAR : 2010-11 PAN: AAAHB 7862 D THE DCIT VS. SHRI NIRMAL KUMAR AGARWAL CENTRAL CIRCLE- 1 304, 3 RD FLOOR, RIDHI SIDHI APARTMENT JAIPUR AHINSA CIRCLE, C-SCHEME, JAIPUR (APPELLANT) (RESPONDENT) 2 ASSESSEE BY : SHRI O.P.AGARWAL & SHRI MANISH AGA RWAL DEPARTMENT BY: SHRI A.K. KHANDELWAL DATE OF HEARING: 15-01-2014 DATE OF PRONOUNCEMENT: 26-02-2014 ORDER PER HARI OM MARATHA, JM:- THIS BUNCH OF 04 CROSS APPEALS PERTAINING TO ASSE SSMENT YEARS 2009- 10 AND 2010-11 FILED AGAINST SEPARATE ORDERS OF THE LD. CIT(A), CENTRAL, JAIPUR DATED 16-09-2013 AND 17-09-2013, RESPECTIVEL Y. FOR THE SAKE OF CONGRUENCE, CONVENIENCE AND BREVITY, WE ARE PROCEE DING TO DECIDE THEM BY A COMMON ORDER ITA NOS. 828/JP/2013- ASSESSEE & 906/JP/2013 REVEN UE (A.Y.2009-10) 2.1 THESE ARE THE CROSS APPEALS FILED AGAINST THE O RDER OF THE LD. CIT(A) DATED 16-09-2013. BRIEFLY STATED , THE FACTS OF THE CASE ARE THAT THE ASSESSEE, IS AN INDIVIDUAL AND DERIVES HIS INCOME FROM BUSINE SS OF FINANCE BROKERAGE. A SEARCH AND SEIZURE OPERATION U/S 132(1) OF THE I. T. ACT, 1961 (THE ACT FOR SHORT) WAS CARRIED OUT ON 24-08-2009 AT THE BUSINES S AND RESIDENTIAL PREMISES OF THE ASSESSEE AND ITS GROUP. DURING THE COURSE O F SEARCH, CERTAIN INCRIMINATING DOCUMENTS/ LOOSE PAPERS WERE FOUND AN D SEIZED. CONSEQUENTLY, THE NOTICE U/S 153A OF THE ACT WAS IS SUED ON 15-01-2010 AND SERVED ON THE ASSESSEE ON 21-10-2010. THE ASSESSEE FURNISHED HIS RETURN OF INCOME ON 31-03-2010 DECLARING TOTAL INCOME OF RS. 8,34,120/-. A DETAILED 3 ENQUIRY WAS MADE BY THE AO AND ASSESSMENT WAS COMPL ETED AT A TOTAL INCOME OF RS. 1,27,47,305/- ON 23-11-2005. FOR ARRI VING AT THE ABOVE TAXABLE INCOME, THE AO HAS MADE FOLLOWING ADDITIONS . 1. ADDITION ON A/C OF UNDISCLOSED CASH ADVANCE AS DISC USSED RS. 3,81,500/- 2. ADDITION ON A/C OF UNEXPLAINED INVESTMENT IN HOU SE RS. 1,11,00,000/- 3. EXPENSES DISALLOWED RS. 1,50,00 0/- 4. INTEREST EXPENSES DISALLOWED RS. 2,81,685/- TOTAL TAXABLE INCOME RS. 1,27,4 7,305/- ROUNDED OFF RS. 1,27,47,300/- 2.2 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL AND TH8E LD. CIT(A) HAS GIVEN PART RELIEF TO THE ASSESSEE. THAT IS WHY BOTH THE PARTIES ARE AGGRIEVED BEFORE US. 2.3 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING AN ADDITION O F RS. 31,500/- BY HOLDING SAID AMOUNT AS UNEXPLAINED EXPE NDITURE U/S 69C OF THE I.T. ACT, 1961 WITHOUT APPRECIATING THE FACTS THAT THE AMOUNT REPRESENTED THE SUM PAYABLE TO AN EMPLOYEE A ND THE DRAWINGS OF THE YEAR WAS MORE THAN SUFFICIENT TO CO VER THE SAID EXPENSES. HENCE, THE ADDITION OF RS. 31,500/- SO UP HOLD DESERVES TO BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING AN ADDITION O F RS. 62,62,049/- BY HOLDING THE SAME AS UNDISCLOSED INVE STMENT IN THE CIRCUMSTANCES OF HOUSE BY IGNORING THE EXPLANAT ION FURNISHED AND EVIDENCES ADDUCED DURING THE COURSE O F APPELLATE PROCEEDINGS, THIS BEING SO THE ADDITION OF RS. 62,6 2,049/- DESERVES TO BE DELETED. 2.1 THAT THE LD. CIT(A) HAS FURTHER GROSSLY ERRED I N CONSIDERING THE AO AS A TECHNICAL PERSON WHO CAN CO MMENT ON TECHNICAL ISSUE LIKE VALUATION OF IMMOVABLE PROPERT Y INSTEAD OF THE AVO AND THE DVO WHO HAS TRIED TO MAKE A NEW VAL UATION 4 REPORT WHICH HAD SOME EXTRACTIONS OF THE REPORT OF AVO AND SOME OF DVO WITHOUT HAVING ANY LOGICAL CONCLUSION O F SUCH REPORT, HENCE THE ADDITION OF RS. 626,62,049/- SO U PHOLD DESERVES TO BE DELETED. 2.2 THAT THE LD. CIT(A) HAS FURTHER ERRED IN WORKIN G OUT A NEW THEORY OF CALCULATING THE DIFFERENCES BETWEEN T HE REPORT OF THE AO AND THAT OF THE AVO AND DVO BY FURTHER ADJU STING IT WITH CERTAIN ITEMS ALLEGED TO BE NOT FORMING PART O F THE CONSTRUCTION VALUE AS PER SWEET WILLS. HENCE, THE A DDITION OF RS. 62,62,049/- AS UPHOLD DESERVES TO BE DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS GROSSLY ERRED IN DISALLOWING THE CLAIM O F INTEREST OF RS. 2,81,685/- BEING EXCESS OF INTEREST PAID OVER T HE INTEREST RECEIVED BY THE ASSESSEE BY GROSSLY IGNORING THE FA CT THAT NO SUCH EXPENSE WAS CLAIMED BY THE APPELLANT OUT OF TO TAL INCOME DECLARED THUS THE DISALLOWANCE OF RS. 2,81,685/- DE SERVES TO BE DELETED BEING NEVER CLAIMED. 4. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDI NG THE CHARGING OF INTEREST U/S 234A, 234B AND 234D BY IGN ORING THE FACT THAT SUFFICIENT AMOUNTS WERE LYING PENDING IN PD A/C AND REQUEST FOR APPROPRIATION AGAINST TAX LIABILITY WAS MADE WITHIN STIPULATED TIME, THUS NO INTEREST BE CHARGED TO THE EXTENT THE AMOUNT LYING DEPOSIT IN PF A/C. 5. THE APPELLANT CRAVES THE RIGHT TO ADD, DELETE OR AMEND ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR AT TH E TIME OF HEARING OF APPEAL. 2.4 THE REVENUE HAS RAISED FOLLOWING GROUNDS IN ITS APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) , CENTRAL, JAIPUR HAS ERRED IN DELETING THE ADDITION OF RS. 3.50 LACS MADE ON THE BASIS OF SEIZED DOCUMENTS (PA GE 1 OF ANNEXURE AS EXHIBIT-1) EVEN THOUGH THE ASSESSEE WAS NOT ABLE TO PROVE THE ENTRIES AS EXPENDITURE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A), CENTRAL, JAIPUR HAS ERRED IN DELETING THE A DDITION OF RS. 5 48,37,951/- OUT OF TOTAL ADDITION OF RS. 1,11,00,00 0/- MADE U/S 69C ON ACCOUNT OF UNDISCLOSED INVESTMENT IN THE HO USE WITHOUT GIVING A FINDING AS TO WHY AND HOW THE COMPUTATION MADE BY THE AO WAS INCORRECT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A), CENTRAL, JAIPUR HAS ERRED IN DELETING THE A DDITION OF RS. 1.50 LACS MADE ON ACCOUNT OF PERSONAL AND UNVERIFI ABLE EXPENDITURE WITHOUT THE ASSESSEE PROVING THEM TO BE OTHERWISE. 4. THE APPELLANT CRAVES THE RIGHT TO AMEND ALTER OR ADD TO ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE. 2.5 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CA REFULLY PERUSED ENTIRE RECORD. WE HAVE ALSO GONE THROUGH THE PAPER BOOK FI LED BY THE PARTIES INCLUDING THE WRITTEN SUBMISSIONS, SYNOPSIS OF SUBM ISSIONS. WE HAVE ALSO CAREFULLY CIRCUMSPECTED THE RELEVANT PROVISIONS AND THE PRECEDENTS APPLICABLE TO THE CONTENTIOUS ISSUES. 3.1 THE FIRST GROUND IN ASSESSEE'S APPEAL AS WELL A S THE DEPARTMENTAL APPEAL IS COMMON. THE FACTS OF THIS ISSUE ARE THAT THE AO MADE AN ADDITION OF RS. 3,81,500/- ON ACCOUNT OF UNDISCLOSED CASH A DVANCE WHICH HAS BEEN REDUCED TO RS. 31,500/- BY THE LD. CIT(A). DURING S EARCH, THE LOOSE PAPERS MARKED AS ANNEXURE AS EXHIBIT 1 WAS FOUND AND AS PE R PAGE NO. 1, WHICH IS THE LOOSE COPIES ENCLOSED WITH THE ASSESSMENT OR DER AT PAGE 15, THIS ADDITION HAS BEEN MADE. ON THIS PAGE, CERTAIN NOTIN GS ARE FOUND MADE AS UNDER:- 6 PAGE NO.1 S.N. TRANSACTION AMOUNT REPRESENTING REMARKS 1. 13 TH APRIL TO 13 TH JANUARY, 2009 = 9 MONTHS 31500(3500*9) -7000 24500 3,50,000 (1) TO EXPLAIN WHETHER THESE ARE SHOWN IN REGULAR BOOKS OF ACCOUNTS. (2) TO PRODUCE RELEVANT CASH BOOK EXTRACT FOR VERIFICATION. TOTAL 3,50,000 THE AO ASKED THE ASSESSEE TO EXPLAIN THE NATURE OF THE TRANSACTIONS JOTTED DOWN ON THIS PAGE AND TO EXPLAIN WITH RESPECT TO RE GULAR BOOKS OF ACCOUNT. THE ASSESSEE STATED THAT THESE ENTRIES PERTAINING T O ROUGH WORKING HAVE NO FINAL IMPLICATION BUT IN VIEW OF THE AO THESE ENTRI ES REFERRED TO INTEREST CHARGED FOR SPECIFIC PERIOD AND WHEN THESE ENTRIES ARE DECODIFIED, IT IS NOTICED THAT TWO ZEROS HAVE BEEN OMITTED AND THIS F ACT HAS BEEN ADMITTED BY THE ASSESSEE IN HIS STATEMENT RECORDED DURING SEARC H U/S 132(4) OF THE ACT AND ALSO DURING POST SEARCH PROCEEDINGS. SUBSEQUENT LY, THE ASSESSEE STATED THAT THESE NOTINGS/ ENTRIES REPRESENTED THE SALARY PAID TO SOME OF HIS EMPLOYEES WHEN THEY WERE LIVING THEIR RESPECTIVE JO BS BUT THE NAMES ETC OF THESE EMPLOYEES DID NOT CORRESPOND WITH THE ENTRIES MADE IN THE REGULAR BOOKS OF ACCOUNT. THEREFORE, THE AO TREATED ENTIRE AMOUNT OF UNACCOUNTED 7 RECEIPTS OF INTEREST OF RS. 31,500/- ON UNEXPLAINED INVESTMENT OF RS. 3.50 LACS . DURING FIRST APPEAL, THE ASSESSEE MADE FOLL OWING EXPLANATION. IN THIS GROUND OF APPEAL THE APPELLANT HAS CHALLE NGED THE ACTION OF THE LD. AO IN MAKING ADDITION OF RS. 3,81,500/- ON ACCOUNT OF UNDISCLOSED CASH ADVANCE WITHOUT CONSID ERING THE SUBMISSIONS MADE BY THE ASSESSEE, ARBITRARILY. IN THE MATTER, IT IS SUBMITTED THAT A LOOSE PAPER M ARKED AS ANNEXURE AS EXHIBIT-1 PAGE 1 CONTAINED CERTAIN NOTI NGS ON THE BASIS OF WHICH THE LD AO HAS MADE AN ADDITION OF RS . 3,81,500/- BY OBSERVING THAT THE SAID ENTRIES PERTAINS TO THE CALCULATION OF INTEREST ON ADVANCE GIVEN AND AS A RESULT OF ADVANC E OF RS. 3,50,000/- AND INTEREST OF RS. 31,500/- TOTALING TO RS. 3,81,500/- IS MADE. SNAP SHOT OF THE SAID PAGE IS AS UNDER:- 13 TH APRIL TO 13 TH JANUARY, 2009 = 9 MONTHS 3500 X 9 = 31,500 (-) 7,000 24,500 FURTHER THE OBSERVATION OF THE LD. AO AT PAGE 2 PAR A 6.2 OF HIS ORDER IS AS UNDER:- .FIRSTLY THE ASSESSEE TRIED TO EXPLAIN ABOVE EN TRIES AS ROUGH WORKING NO FINANCIAL IMPLICATION, WHEREAS THE ENTRY ARE CLEAR REPRESENTING INTEREST CHARGED FOR SPECIFI C PERIOD AND IN TERMS OF SPECIFIC AMOUNT WITH OMISSION AND TWO ZERO S AS ADMITTED BY THE ASSESSEE IN THE STATEMENTS RECORDED DURING SEARCH. FROM THE PERUSAL OF THE ABOVE OBSERVATION AND THE S NAP, IT IS BEYOND UNDERSTANDING AS TO WHO THE ADDITION H AS BEEN MADE BY THE LD. AO. THE LD. AO HAS APPLIED TWO ZERO S ON THE FIGURE WRITTEN IN THE LOOSE PAPER AS 3500 AND H AS FAILED TO APPLY THE TWO ZEROS ON THE FIGURE WRITTEN AS 3150 0 THIS MEANS THE LD. AO HAS ADOPTED THE THEORY OF USING TW O ZEROS WHEREVER IT SUITS HIM ACCORDING TO HIS SWEET WILL A ND EVERY 8 SINGLE ENTRY FOUND NOTED IN THE DOCUMENTS SEIZED DU RING THE COURSE OF SEARCH COULD NOT BE EXTRAPOLATED BY ADDIN G THE ZEROS OF THE CHOICE OF DEPARTMENT. IT IS FURTHER SUBMITTED THAT THE ALLEGATION AS MADE BY THE LD AO REGARDING THE ENTRIES CONTAINED IN THE SAID P APERS IS IN RELATION TO THE INTEREST CALCULATION IS TOTALLY MIS PLACED AND BASED ON THE WRONGFUL APPRECIATION OF THE SAME AS IN THE PAPER ITSELF THERE IS NEITHER ANY MENTION OF INTEREST NOR THE EN TRIES SUGGEST ANY SUCH CALCULATION. DURING THE COURSE OF ASSESSME NT PROCEEDINGS, IT WAS EXPLAINED THAT THE ENTRIES CONT AINED IN THE SAID PAPER IS WORKING OF THE SALARY PAID TO THE OFF ICE STAFF FOR THE PERIOD FROM 13-04-2008 TO 31-01-2009 @ 3500/- P .M. AND 7000/- HAS BEEN TAKEN BY HIM AS ADVANCE. THE SAID C ALCULATION WAS MADE POSSIBLY AT THE TIME WHEN THE STAFF LEFT T HE JOB SO AS TO CLEAR HIS ACCOUNT. IF FOR THE ARGUMENT SAKE, IT IS PRESUMED THAT THE ENTRIES NOTED REPRESENTS THE CALCULATION OF INT EREST IN SUCH A SITUATION VARIOUS INFORMATION SUCH AS THE PRINCIPAL AMOUNT, NAME OF BORROWER, PERIOD OF LOAN AND RATE OF INTERE ST THEREOF ARE NOT MENTIONED WITHOUT WHICH A TRANSACTION OF LOAN C ANNOT EXIST AND THERE BEING NO CORROBORATIVE MATERIAL TO SUPPLY FOUNDATION TO THE ASSUMPTIONS OF THE LD. AO, IT WOULD BE A GRO SS INJUSTICE TO MAKE SUCH AN ASSUMPTION WHICH SERIOUSLY INCRIMINATE S THE ASSESSEE WITHOUT ANY MATERIAL ON RECORD. IT IS FURTHER SUBMITTED THAT LD. AO APPLIED TWO ZER OS WITHOUT ANY MATERIAL SUGGESTING FOR SUCH EXTRAPOLAT ION MORE PARTICULARLY WHEN NO ADMISSION/ ASSERTION WHATSOEVE R WAS MADE BY THE ASSESSEE IN ANY STATEMENTS RECORDED DURING T HE COURSE OF SEARCH OR IN POST SEARCH PROCEEDINGS. IT IS, THEREFORE, HUMBLY PRAYED THAT THE SAME MAY B E INTERPRETED IN THE CORRECT PERSPECTIVE AS SUBMITTED AND THE ADDITION OF RS. 3,81,500/- AS MADE BY THE LD. AO BE DELETED. THIS CASE WAS CAREFULLY CONSIDERED BY THE LD. CIT(A ) AND HE HAS FINALLY FOUND WITH REFERENCE TO THE STATEMENT OF THE ASSES SEE THAT AN AMOUNT OF 31,500/- IS UNEXPLAINED INVESTMENT U/S 69C OF THE A CT AND HAS TO BE ADDED TO 9 THE ASSESSEE'S INCOME OF THE YEAR. IT WAS ARGUED BY THE LD. AR THAT THIS AMOUNT HAS BEEN WRONGLY ADDED AND SUSTAINED IN THE HANDS OF THE ASSESSEE. 3.2 ON THE OTHER HAND, THE LD. DR HAS SUPPORTED THE FINDINGS OF THE AO AND HAS FURTHER DEMANDED THAT ENTIRE AMOUNT OF RS. 3.50 LACS INSTEAD OF RS. 31,500/- NEEDS TO BE ADDED IN THE HANDS OF THE ASSE SSEE. 3.3 AFTER CONSIDERING THE RIVAL SUBMISSIONS VIS-A-V IS THE EVIDENCE ON RECORD, IT IS NOTICED THAT LOOSE PAPER MARKED AS AN NEXURE AS EXHIBIT-1 CONTAINS CERTAIN NOTINGS AS DISCUSSED ABOVE . ON TH E BASIS OF THIS NOTINGS, AN ADDITION OF RS. 3,81,500/- HAS BEEN MADE BY ALLEGIN G THAT THESE ENTRIES PERTAIN TO THE CALCULATION OF INTEREST ON SOME ADVA NCE GIVEN AND THEREFORE, HE HAS WORKED OUT THE PRINCIPAL AMOUNT OF RS. 3.50 LAC S AS ADVANCE AFTER INCLUDING INTEREST AMOUNT OF RS. 31.500/- AND THUS HE HAS MADE ADDITION OF RS. 3,81.500/-. ON SCRUTINY OF PAGES, 2,16 AND 17 OF ANNEXURE AS-1, IT IS NOTICED THAT THE NOTINGS ON PAGE NO. 1 ARE ENTIRELY DIFFERENT FROM THE NOTINGS ON THE FORMER PAGES. AT PAGES, 2,16 AND 17, THE DET AILS OF LOCKERS IN WHICH CASH AMOUNT HAS BEEN DEPOSITED WITH REFERENCE TO UN ACCOUNTED FINANCE BUSINESS OF THE ASSESSEE IS FOUND MENTIONED. THE AS SESSEE HAS ALSO ADMITTED THAT PAGES, 2,16 AND 17 BELONGED TO THEM. HOWEVER, SUCH AN ANALOGY CANNOT BE DRAWN SO THAT PAGE 1 CAN BE TREATED ON THE SAME LINES WITH REFERENCE TO ASSESSEE'S ADMISSION BUT THE FACTS REMAINS THAT THE ASSESSEE HAS NOT BEEN ABLE TO GET THESE AMOUNTS VERIFIED WITH REFERENCE TO HIS REGULAR BOOKS OF ACCOUNT. 10 ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE FI NDINGS OF THE LD. CIT(A) WHICH DESERVES TO BE UPHELD. RESULTANTLY, WE DISMIS S GROUND NO. 1 OF THE ASSESSEES APPEAL AND GROUND NO. 1 OF THE REVENUES APPEAL AS WELL. 4.1 THE GROUND NO. 2 TO 2.2 OF THE ASSESSEE'S APPEA L AND GROUND NO. 2 OF THE REVENUES APPEAL ARE IN RELATION TO THE ADDITIO N OF RS. 1.11 CRORES MADE ON ACCOUNT OF ALLEGED UNDISCLOSED INVESTMENT IN TH E CONSTRUCTION OF THE HOUSE PROPERTY. 4.2 THE LD. CIT(A) HAS DELETED A SUM OF RS. 48,37, 951/- AND HAS SUSTAINED THE REMAINING AMOUNT. 4.3 THE FACTS APROPOS TO THIS GROUND ARE THAT THE A SSESSEE HAD CONSTRUCTED A HOUSE PROPERTY JOINTLY OWNED WITH HIS WIFE SMT. H EMA AGARWAL. SHE IS SEPARATELY ASSESSED TO INCOME TAX. THE CONSTRUCTION WAS COMPLETED DURING THE YEAR AND THE ASSESSEE HAD INCURRED THE TOTAL CO ST OF RS. 2,77,55,360/- INCLUDING CERTAIN PAYMENTS MADE IN THE SUCCEEDING Y EAR, WHICH IS DULY RECORDED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE IN THE REGULAR COURSE. THE AO, NEVERTHELESS REFERRED THIS MATTER F OR VALUATION TO DVO WHO AFTER PHYSICAL INSPECTION AND MEASUREMENT OF THIS H OUSE HAS ESTIMATED THE COST OF CONSTRUCTION AT RS. 3,05,27,260/-. THE COPY OF WHICH IS ENCLOSED AT ASSESSEE'S PAPER BOOK PAGE 31. THE ASSESSEE ALSO SU BMITTED A COPY OF HIS VALUER REPORT WHO HAS APPROVED THE COST OF CONSTRUC TION AT RS. 2,71,85,900/-, THE COPY OF THIS APPROVED VALUER REPORT IS ENCLOSED AT PAGES 72 TO 73 OF THE 11 ASSESSEE'S PAPER BOOK. HOWEVER, IGNORING THE DVOS REPORT AS WELL AS AVOS REPORT, THE AO MADE AN ADDITION OF RS. 1.11 C RORES. THE AO ALSO IGNORED COST OF CONSTRUCTION AS ADMITTED BY THE AS SESSEE. THE AO HAS BASED HIS OPINION BY ALLOTTING THE RATES OF DIFFERENT ARE AS AND RELYING ON CERTAIN OBSERVATIONS IN THE REPORT WHERE IT IS SUITED TO HI M. AGAINST THE RELIEF GIVEN BY THE LD. CIT(A) TO THE ASSESSEE, THE REVENUE IS I N APPEAL AND AGAINST THE SUSTENANCE OF ADDITION, THE ASSESSEE IS IN APPEAL. 4.4 WE HAVE HEAD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED ENTIRE RECORD. BOTH PARTIES HAVE REITERATED THEIR EARLIER STAND WHICH IS EVIDENT FROM THE APPELLATE ORDER ITSELF. AFTER CONSIDERING THE O RAL SUBMISSIONS AND THE WRITTEN SUBMISSION ALONGWITH PAPER BOOKS OF THE PAR TIES, WE HAVE FOUND THAT THE AO HAS PROCEEDED IN THE WRONG DIRECTION AND HAS NOT RELIED UPON DVOS REPORT EVEN AFTER MAKING REFERENCE TO HIM AND THE D VO ALSO MADE AVAILABLE HIS REPORT DURING THE ASSESSMENT PROCEEDINGS. THE A O HAS ALSO NOT RELIED ON EVEN THE APPROVED VALUERS REPORT FILED BY THE ASSE SSEE. WE MAY ALTHOUGH NOT CONSIDER IN THE MANNER IN WHICH IT HAS BEEN ALL EGED BY THE LD. AR THAT THE AO HAS HAVING PRE-CONCEIVED NOTION OF MAKING AD DITION OF RS. 1.11 CRORE IN THIS ITEM OF INCOME BUT WE CANNOT APPROVE THE ACTION OF THE AO IN THE WAY HE HAS PURSUED. THE SUBMISSION OF THE LD. A R IS THAT FROM THE DVOS REPORT WHICH IS BASED ON CPWD RATES, IF A SE TTLED REDUCTION ON ACCOUNT OF LOCAL PWD RATES, IS ALLOWED AND ON ACCO UNT OF SELF SUPERVISION 12 IS ALLOWED. NO FURTHER ADDITION IS REQUIRED TO BE M ADE. WE ARE IN AGREEMENT WITH THE LD. AR THAT LOCAL POSITION IS WELL SETTL ED REGARDING ADOPTION OF LOCAL PWD RATES FOR VALUATION OF THE COST OF CONSTR UCTION ETC BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. HOTEL JOSHI, 242 ITR 478 WHEREIN IT HAS BEEN CLEARLY HELD THAT INSTE AD OF CPWD RATES FOR VALUATION OF PROPERLY ONLY LOCAL PWD RATES SHOULD B E ADOPTED. THIS ISSUE STANDS SETTLED ON VARIOUS DECISIONS OF HON'BLE DEL HI HIGH COURT AND CONSECUTIVE DECISIONS OF VARIOUS BENCHES OF THE TRI BUNAL. OTHERWISE ALSO, FOR SELF SUPERVISION, DEDUCTION UPTO 20% IS ALLOWABLE D EPENDING UPON DIFFERENT CIRCUMSTANCES OF A CASE. IN THIS CASE, THE ASSESSEE HAS CLAIMED 20% DEDUCTION ON ACCOUNT OF DIFFERENCE IN PWD RATES AS MENTIONED ABOVE AND 15% ON ACCOUNT OF SELF SUPERVISION. THE WORKING IN THIS WAY AS CANVASSED BY THE LD. AR THROUGH HIS WRITTEN SUBMISSION AT PAG E 6 IS AS UNDER:- VALUE AS PER DVO 3,05,27,260.00 LESS: 20% FOR CPWD RATES 61,05,452.00 2,44,21,808.00 LESS: 15% FOR SELF SUPERVISION 36,63,272.00 2,07,58,536.00 ADD: COST OF AC & LIFT 34,31,714.00 2,41,90,250.00 THEREFORE, IN VIEW OF THE ABOVE, NO FURTHER ADDITIO N NEEDS TO BE MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) EVEN IF DEDUCTIO N ON ACCOUNT OF SELF SUPERVISION @ 10% IS ALLOWED INSTEAD OF 15% CALCULA TED BY THE LD. COUNSEL 13 FOR THE ASSESSEE . FOR READY REFERENCE, THE DECISIO NS RELATING TO VALUATION BY THE DVO ON CPWD RATES ARE AS UNDER:- I) SMT. PREM KUMARI MURDIA VS. ACIT 211 CTR 500 (RA J.) II) CIT VS. DINESH TALWAR 265 ITR 344 (RAJ.) III) SANDEEP LAMBA VS. ACIT 26 TAX WORLD 288 IV) RAVI MATHUR VS. ACIT 22 TAX WORLD 245 V) RAM RAJ SONI VS. ACIT 21 TAX WORLD 667 VI) MUSTAQ AHMAD VS. ACIT 22 TAX WORLD 44 VII) INCOME TAX OFFICER VS. TEK CHAND 52 ITD 167 VIII) SMT. REKHA DEVI VS. ACIT [1995] 78 TAXMAN 30 (JP.) (MAG.) IX) CIT VS. RAJ KUMAR 182 ITR 436 IN VIEW OF OUR FOREGOING DISCUSSIONS, WE DELETE ENT IRE ADDITION MADE BY THE AO IN THIS ACCOUNT. RESULTANTLY, THE ADDITION OF RS . 62,62,049/- UPHELD BY THE LD. CIT(A) ON ACCOUNT OF UNEXPLAINED INVESTMEN T IN THE CONSTRUCTION OF HOUSE PROPERTY IS HEREBY DELETED. THUS GROUND NO. 2 TO 2.2 OF THE ASSESSEE'S APPEAL STANDS ALLOWED AND GROUND NO. 2 OF THE REVEN UES APPEAL STANDS DISMISSED. 5.1 IN ASSESSEE'S APPEAL, THE GROUND NO. 3 PERTAINS TO DISALLOWANCE OF RS. 2,81,685/- CLAIMED ON ACCOUNT OF INTEREST WHICH AS PER THE AO HAS NOT INCURRED BY THE ASSESSEE FOR BUSINESS PURPOSES. THE LD. CIT(A) HAS ALSO CONFIRMED THIS ADDITION. 5.2 THE FACTS OF THIS GROUND ARE THAT THE AO OBSERV ED IN THE PROFIT AND LOSS ACCOUNT THAT THE ASSESSEE HAS CLAIMED INTEREST PAY MENT OF RS. 2,89,542/- ON UNSECURED LOANS IN HIS PROPRIETARY BUSINESS AS WEL L AS IN THE PERSONAL ACCOUNT. THE INTEREST RECEIPTS ARE SHOWN AT RS. 4,6 37/- FROM BANK; RS., 14 1,855/- ON FDR AND RS. 1,365/- IN PROPRIETARY CONC ERN AND THUS A NET DEBIT OF RS. 2,81,685 HAS BEEN CLAIMED ON ACCOUNT OF INT EREST. THE AO VERIFIED THIS CLAIM WITH REFERENCE TO BALANCE SHEET OF THE A SSESSEE AND FOUND THAT ASSESSEE HAD MADE SUBSTANTIAL INVESTMENT IN SHARES OF VARIOUS PRIVATE LIMITED COMPANIES, PARTNERSHIP FIRM, SHARES, PPF ET C. AND SOME OF THEM BEING INCOME WHICH IS EXEMPT UNDER THE ACT. THE AO HAS FOUND THAT ALL THE INTEREST BEARING LOANS CANNOT BE CONSIDERED FOR THE PURPOSE OF THE BUSINESS ACTIVITIES OF THE ASSESSEE. THE ASSESSEE HAS CLAMOR ED THAT LOANS WERE TAKEN FOR THE BUSINESS ONLY. THE BASIC NATURE OF THE BUS INESS OF THE ASSESSEE DID NOT REQUIRE ANY LOANS AS HE IS A FINANCE BROKER WH O WOULD ONLY CHARGE BROKERAGE. THE BALANCE SHEET FILED BY THE ASSESSEE REVEALS THAT HE WAS HAVING INVESTMENT IN SHARES OF VARIOUS PRIVATE COMPANIES / GROUPS AND THAT INVESTMENT HAD NOT RESULTED ANY TAXABLE INCOME AGAI NST CLAIM OF INTEREST . HE ALSO FOUND THAT THE ASSESSEE HAD FAILED TO LINK THE RECEIPT OF LOAN AND ITS USE FOR THE PURPOSES OF BUSINESS. THEREFORE, THE NET DE BIT BALANCE OF INTEREST OF RS. 2,18,685/- HAS BEEN DISALLOWED. 5.6 THE LD. CIT(A) HAS ALSO CONFIRMED THE SAID ADDI TION. 5.7 WE HAVE HEARD BOTH THE PARTIES WHO HAVE REITERA TED THEIR EARLIER STAND ON THIS ISSUE. THE SUBMISSION OF THE LD. AR IS THAT THE AO HAS WRONGLY APPRECIATED THE FACTS OF THIS ISSUE. HE ASSERTED TH AT THE EXPENSES WERE NOT CLAIMED BY THE ASSESSEE EITHER OUT OF INCOME DECLAR ED UNDER THE HEAD 15 INCOME FROM BUSINESS OR PROFESSION OR UNDER THE H EAD INCOME FROM OTHER SOURCES. TO SUPPORT THE ABOVE SUBMISSION, HE HAS RE FERRED TO COMPUTATION OF INCOME AND A COPY OF WHICH IS ENCLOSED AT PAGES 75 TO 77 OF THE ASSESSEE'S PAPER BOOK. HE FURTHER STATED THAT PROFIT EARNED BY THE ASSESSEE FROM ITS PROPRIETARY CONCERN M/S.MANNALAL SURAJMAL AT RS. 9, 32,726/- WAS CONSIDERED FOR COMPUTING THE INCOME FROM BUSINESS AND PROFESSI ON AND THE INTEREST RECEIVED AND CREDITED IN THE PERSONAL PROFIT AND LO SS ACCOUNT, COPY OF WHICH IS ENCLOSED AT PAGE 79 OF THE ASSESSEE'S PAPER BOOK , HAS BEEN SEPARATELY DISCLOSED UNDER THE HEAD INCOME FROM OTHER SOURCES . 5.8 AFTER CONSIDERING THIS FACTS, WE ARE CONVINCED THAT THE ASSESSEE HAS NEVER CLAIMED THE EXPENSES OUT OF THE INCOME COMPUT ED FOR PAYMENT OF TAX FOR THE YEAR UNDER APPEAL. THEREFORE, THIS DISALLOW ANCE CANNOT BE MADE AND DESERVES TO BE DELETED. 6.1 THE GROUND NO. 3 OF THE DEPARTMENTAL APPEAL IS REGARDING LUMPSUM DISALLOWANCE OF RS. 1.50 LACS OUT OF VARIOUS EXPENS ES CLAIMED IN THE PROFIT AND LOSS ACCOUNT ON ACCOUNT OF PERSONAL USER WHIC H HAS BEEN DELETED BY THE LD. CIT(A). 6.2 AGAINST, THIS REVENUE HAS COME IN APPEAL. 6.3 AFTER CONSIDERING BOTH THE SIDES, WE HAVE FOUND THAT THE ASSESSEE HAS CLAIMED THE EXPENSES UNDER VARIOUS HEADS AS UNDER:- 16 S.NO. NAME AMOUNT 1. TELEPHONE EXPENSES 67,541.00 2. CONVEYANCE EXP. 2,62,591.00 3. GENERAL EXP. 38,475.00 4. REPAIR & MAINTENANCE 77,794.00 5. INSURANCE EXP. 47,623.00 6. INTEREST ON VEHICLE LOAN 55,802.00 7. DEPRECIATION 2,41,402.00 TOTAL 7,91,228.00 THE AO HAS MADE LUMPSUM DISALLOWANCE ON THE REASONI NG THAT THE EXPENSES ARE NOT PROPERLY VOUCHED AND SOME ELEMENT OF PERSON AL USAGE IS ALSO INVOLVED IN THESE EXPENSES. IN OUR CONSIDERED OPINI ON, THE ACTION OF THE AO IS NOT BASED ON ANY SPECIFIC LOGIC BUT BASED ON LOO SE SUBJECTIVE INFERENCE THE AO HAS NOT BROUGHT ON RECORD ANY EVIDENCE THAT EXP ENSES CLAIMED ARE BOGUS AND INFLATED FOR NON-BUSINESS PURPOSES. ACCORDINGLY , WE FIND FORCE IN DELETION OF ADDITION WHICH IS SUPPORTED BY THE HON' BLE RAJASTHAN HIGH COURT RENDERED IN THE CASE OF JAIN STEEL (INDIA) VS . ACIT, 88 DTR 1 IN WHICH IT HAS BEEN HELD THAT NO ADDITION CAN BE MADE WITHO UT SUPPORTING EVIDENCE ONLY. THUS WE CANNOT ALLOW THIS GROUND OF APPEAL O F THE DEPARTMENT 7.1 THE GROUND NO. 4 OF THE ASSESSEE'S APPEAL IS PE RTAINING TO CHARGING OF INTEREST U/S 234B AND 234D. HOWEVER, NO ARGUMENTS W ERE ADVANCED BY THE ASSESSEE ON THIS ISSUE. WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). HENCE, THE GROUND NO. 4 OF THE ASSESSEE IS DISMISSE D. 17 8.1 THE GROUND NO. 5 OF THE ASSESSEE IS GENERAL IN NATURE WHICH NEEDS NO ADJUDICATION. ITA NOS. 829/JP/2013- ASSESSEE & 847/JP/2013 REVEN UE (A.Y.2010-11) 9.1 THESE ARE THE CROSS APPEALS FILED AGAINST ORDER OF THE LD. CIT(A), CENTRAL, JAIPUR DATED 17-09-2013. 9.2 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS. 61,49,219/- ON ACCOUNT OF JEWELLERY AND SILVER BY O VERSTRETCHING THE STATEMENTS RECORDED OF THE ASSESSEE AND FURTHER WITHOUT LINKING THE AVAILABLE JEWELLERY WITH THE TOTAL JEWE LLERY HOLD AND THE ACCEPTED NORM OF IMPURITY FOR THE PURPOSE OF VA LUATION AND FURTHER WITHOUT CONSIDERING THE OVERALL CIRCUMSTANC ES OF THE CASE AND THE ENTIRETY OF THE STATEMENTS RECORDED IN THE MATTER, THIS BEING SO THE ENTIRE ADDITIONS DESERVES TO BE D ELETED. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS. 7,47,00,000/- AS UNDISCLOSED CASH ADVANCES AND CASH TRANSACTIONS WITHOUT ANY MATERIAL ON RECORD AND FUR THER WITHOUT CONSIDERING THE SUBMISSIONS MADE DURING THE APPELLA TE PROCEEDINGS AND ALSO WITHOUT PROPERLY APPRECIATING THE NATURE OF DOCUMENTS AND PLAUSIBLE INTERPRETATION IN THE MA TTER AND THE TOTALITY OF THE STATEMENTS RECORDED DURING THE SEAR CH, THIS BEING SO THE ADDITION DESERVES TO BE DELETED. 2.1 THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS FURTHER ERRED IN SUSTAINING THE ADDITION BASED UPON THE ASSUMPTIONS AND PRESUMPTIONS MADE BY THE A.O. IN WORKING OUT THE CASH DEPOSIT AND WITHDRAWA L FROM THE LOCKERS AND FURTHER ASSUMING THE PERIOD OF ADVANCE WITHOUT ANY BASIS. HENCE THE ADDITION SO MADE BEING WITHOUT ANY MATERIAL ON RECORD AND ANY SEIZED RECORD WHICH COULD BE LINK ED WITH THE GIVING OF ADVANCES TO A THIRD PARTY, THE ADDITION O F RS. 7,47,00,000/- SO MADE DESERVES TO BE DELETED. 18 2.2 THAT THE LD. CIT(A) HAS FURTHER ERRED IN NOT PROPERLY APPRECIATING THE FACT THAT THE ASSESSEE HA S ACTED AS BROKER AND THE ADVANCES MADE ARE IN RELATION TO THE BROKERAGE ACTIVITY WHERE ASSESSEE IS NEVER BE THE OWNER OF TH E SAID SUM AND THE AMOUNT FOUND AVAILABLE WITH ASSESSEE HAS D ULY BEEN DISCLOSED FOR TAXATION. THUS THE ADDITION OF RS. 7, 47,00,000/- AS UPHOLD BY LD. CIT(A) DESERVES TO BE DELETED. 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS GROSSLY ERRED IN SUSTAINING AN ADDIT ION OF RS. 3,65,070/- AS UNDISCLOSED INVESTMENT IN THE HOUSE P ROPERTY BY IGNORING THE EXPLANATION FURNISHED AND EVIDENCES A DDUCED DURING THE COURSE OF APPELLATE AS WELL AS ASSESSMEN T PROCEEDINGS AND THE PAYMENT AS ALLEGED TO BE UNREC ORDED IS DULY APPEARING IN THE BOOKS OF ACCOUNTS AND THE PAY MENT WERE MADE THROUGH PAYEES ACCOUNT CHEQUES, THIS BEING SO THE ENTIRE ADDITION DESERVES TO BE DELETED. 4. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS GROSSLY ERRED IN SUSTAINING THE DISA LLOWANCE OF THE LOSS OF RS. 9,06,470/- UNDER THE HEAD INCOME F ROM OTHER SOURCES WITHOUT CONSIDERING THE REPLIES FURNISHED AND LEGAL POSITION IN THE MATTER AND FURTHER WITHOUT IN ANY M ANNER BRINGING ON RECORD ANY EVIDENCE CONTRARY TO THE SUB MISSIONS MADE, THIS BEING SO THE ENTIRE ADDITION DESERVES TO BE DELETED. 5. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS GROSSLY ERRED IN NOT SUO MOTO CONSID ERING THE TELESCOPING, RECYCLING AND SET OFF OF ONE INCOME F ROM THE OTHER WHICH IS A LEGALLY PERMISSIBLE COURSE IN COMPLETING THE ASSESSEE AND THE SAME BEING MANDATORY TO TAX THE REAL INCOME IN THE HANDS OF THE APPELLANT ASSESSEE. HENCE THE SET OFF AS PERMISSIBLE DESERVES TO BE ALLOWED. 6. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDI NG THE CHARGING OF INTEREST U/S 234-A, 234-B, 234-C AN D 234-D BY IGNORING THE FACT THAT SUFFICIENT AMOUNTS WERE LYIN G PENDING IN PD A/C AND REQUEST FOR APPROPRIATION AGAINST TAX LI ABILITY WAS MADE WITHOUT STIPULATED TIME, THUS NO INTEREST BE C HARGED TO THE EXTENT THE AMOUNT LYING DEPOSIT IN PF A/C. 19 7. THE APPELLANT CARVES THE RIGHT TO ADD, DELETE OR AMEND ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF APPEAL. 9.3 THE DEPARTMENT HAS RAISED FOLLOWING GROUND:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A), CENTRAL, JAIPUR HAS ERRED IN DELETI NG THE ADDITION OF RS. 7,17,25,495/- OUT OF TOTAL ADDITION OF RS. 1 4,64,25,495/- ON ACCOUNT OF CASH ADVANCES AND TRANSACTIONS. 9.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CA REFULLY PERUSED THE RECORD. 10.1 THE GROUND NO.1 OF THE ASSESSEE IN ASSESSEE'S APPEAL IS REGARDING ADDITION OF RS. 59,70,358/- MADE ON ACCOUNT OF GOL D JEWELLERY WORTH RS. 56,99,767/- AND SILVER JEWELLERY WORTH RS. 2,70,591 /-. AGGRIEVED, THE ASSESSEE FILED AN APPEAL AND THE LD. CIT(A) HAS ENH ANCED THE ADDITION ON ACCOUNT OF SILVER JEWELLERY ACCOUNT TO RS. 4,49,45 2/-. 10.2 THE FACTS APROPOS TO THIS GROUND ARE THAT DURI NG THE COURSE OF SEARCH TOTAL GOLD AND DIAMOND JEWELLERY WEIGHING 10798.530 GMS AND SILVER JEWELLERY ARTICLES WEIGHING 70.287 GMS WERE FOUND O UT OF WHICH THE GOLD AND DIAMOND JEWELLERY WEIGHING 6576.480 GMS AND SIL VER ARTICLES WEIGHING 56.95 KGS WERE ACCEPTED AS EXPLAINED BECAUSE THIS J EWELLERY HAD BEEN DECLARED IN THE WEALTH TAX RETURNS BY THE ASSESSEE AND BY HIS FAMILY MEMBERS. THE INVESTMENT IN THE BALANCE JEWELLERY WA S HELD TO BE UNDISCLOSED AND ADDED IN THE HANDS OF THE ASSESSEE. THE STATEMENT OF THE 20 ASSESSEE HAD BEEN RECORDED U/S 132(4) OF THE ACT IN WHICH HE HAD ADMITTED THE ALLEGED UNEXPLAINED INVESTMENT IN THE ACQUISITI ON OF GOLD AND SILVER JEWELLERY WORTH RS. 59,70,358/- THAT IS WHY THIS AD DITION WAS MADE. THE LD. CIT(A) HAS CONFIRMED THE ADDITION OF RS. 56,99,767/ - AND HAS FURTHER ADDED THE SUM BY WAY OF ENHANCEMENT IN THE CASE OF SILVER JEWELLERY BY INCREASING INVESTMENT FROM RS. 2,70591/- TO RS. 4,49,452/-. TH E ASSESSEE IS FURTHER AGGRIEVED. 10.3 AFTER HEARING BOTH THE SIDES, WE HAVE FOUND TH E CONTENTION OF THE ASSESSEE REGARDING TAKING WEIGHT OF JEWELLERY DURIN G SEARCH IS NOT CORRECT INASMUCH AS IN THE VALUATION SHEETS/ INVENTORY PREP ARED DURING SEARCH AND GROSS WEIGHT AND NET WEIGHT OF JEWELLERY FOUND WERE TAKEN BUT WHILE CONSIDERING THE INVESTMENT SOME CONFUSION HAD OCCUR RED. THE DISCREPANCY IN THE WEIGHT TAKEN IS TABULATED BY THE ASSESSEE IN HIS WRITTEN SUBMISSION AT PAGE 2 AS UNDER:- GROSS WEIGHT AS PER VALUATION SHEETS NET WEIGHT AS PER VALUATION SHEETS CONVERSION TO 18/20/22 AVERAGE 20 LD. CIT(A). DEDUCTION FOR IMPURITY ETC. (15%) NET WEIGHT OF JEWELLERY FOUND NET WEIGHT OF JEWELLERY AS DECLARED IN THE W.T. RETURNS OF THE FAMILY FOR THE YEAR ENDED ON 31.03.2008 FILED ON 31.07.2008 I.E. MUCH BEFORE THE SEARCH 10810.33 9803.81 7843.048 1176.457 6666.591 6315.120 REMARKS REMARKS REMARKS REMARKS REMARKS REMARKS IT IS THE TOTAL WEIGHT OF THE ITEM FOUND VALUED AND INVENTORIZED. TO CLARIFY IT IS SUBMITTED THAT THESE ITEMS CONTAINED DORI, THIS WEIGHT IS AFTER REDUCING THE FACTOR OF DORI, WAX, LACK, THREADS, STEEL WIRES, PLASTIC BUSHES AND STONES WHICH THE WEIGHT IN COLUMN 2 IS REQUIRED TO BE REDUCED TO ITS PURITY MARK TO ARRIVE AT THE NET WEIGHT OF GOLD CONTENT. IN CASE OF DIAMOND JEWELLERY, IT IS IMPOSSIBLE TO MAKE IT MORE THAN 18 CT. GOLD CONTENT IN THE TOTAL WEIGHT. IN OTHER CASES, AS PER IT IS A DEDUCTION LEGALLY AVAILABLE AS WHENEVER THE JEWELLERY IS MELTED TO CONVERT INTO PURE GOLD, 15% THEREFORE, THIS IS THE NET WEIGHT WHICH IS REQUIRED TO BE CONSIDERED FOR VALUING THE AVAILABLE JEWELLERY. THIS IS TO BE ADDED BY 261.360 GMS. AS CONSIDERED BY THE DEPARTMENT FOR ARRIVING AT THE UNEXPLAINED WEIGHT OF JEWELLERY, THUS BY 21 WAX, LACK, THREADS, STEEL WIRES, PLASTIC BUSHES ALL OF WHICH HAVE NO GOLD CONTENT, HOWEVER THE STONES STUDDED ARE INCLUSIVE IN THIS WEIGHT FOR WHICH SEPARATE DEDUCTION HAS BEEN GIVEN. HAVE BEEN SEPARATELY VALUED, THUS IT IS THE GROSS WEIGHT OF THE JEWELLERY ITEMS. PAST PRACTICE THE JEWELLERY WITH THE ASSESSEE IS 20 OR 22 CT. IT MAY KINDLY BE NOTED THAT NO JEWELLERY COULD BE MADE AT 24 CT. PURITY WHICH IS AN ESTABLISHED FACT IN JEWELLERY MAKING, THEREFORE, TAKING AN AVERAGE OF THREE I.E. 18, 20, 22 AN AVERAGE OF 20% HAS BEEN APPLIED TO REACH AT THE JEWELLERY NET WEIGHT BEFORE CONSIDERING IMPURITY. IS THE MINIMUM LOSS OF WEIGHT ON ACCOUNT OF MIXING COPPER, SILVER AND CADMIUM. THESE ARE THE NECESSARY ALLOYS TO BE USED IN MAKING GOLD JEWELLERY. CONSIDERING THIS 261.360 GMS. IT COMES TO 6576.480 GMS. IT IS NOTICED THAT A NET WEIGHT CONSIDERED FOR ARRI VING AT THE IMPUGNED ADDITION IS, IN FACT, A GROSS WEIGHT. THIS FACT IS CLEARLY VISIBLE FROM PAGES ENCLOSED AT PAGES NO. 19 TO 22 OF ASSESSEE'S WRITT EN SUBMISSION WHERE VALUATION DONE AS ON 25-08-2009 BY THE SEARCH PARTY IS ENCLOSED. IN THE COLUMN OF GROSS WEIGHT IN GRAMS I.E. THE COLUMN SU BSEQUENT TO COLUMN OF THE DESCRIPTION OF TOTAL WEIGHT OF THE ITEMS SEIZE D OR FOUND. IN THE SUBSEQUENT COLUMN, NET WEIGHT APPROXIMATELY IS GIVE N. THE NET WEIGHT OF THE JEWELLERY HAS BEEN SHOWN AFTER REDUCING THE WEIGHT OF THREADS, DORI (SARRAFA), CHAPDI, PLASTIC BUSHES, STEEL WIRE, WAX ETC. HAVING ZERO METAL CONTENT AND NIL VALUE. WE HAVE FOUND THAT THIS OBSE RVATION OF THE LD. CIT(A) AS ASSERTED BY THE LD. DR SUPPORTING THE REASONS GI VEN BY BOTH AO AND THE LD. CIT(A) ARE NOT CORRECT. IN FACT, THERE IS NO DI FFERENCE IN THE JEWELLERY DECLARED AND FOUND. THE ASSESSEE HAS TWO SONS WHO A RE NOT ASSESSED UNDER WEALTH TAX ACT AND IN VIEW OF THE CBDT INSTRUCTION DATED 11-05-1994, CREDIT HAS TO BE GIVEN IN THEIR HANDS ALSO. THIS DE DUCTION COMES TO 200 GMS OF JEWELLERY BEING 100 GMS FOR EACH MALE MEMBERS IN THE WEALTH TAX ACT 22 FILED UPTO ASSESSMENT YEAR 2008-09 AND SEARCH TOOK PLACE ON 24-08-2009 WHICH IS ALMOST AFTER EXPIRY OF 17 MONTHS. WE ARE I N AGREEMENT WITH THE LD. AR THAT DURING THIS PERIOD OF 17 MONTHS, THE ACQUIS ITION OF SOME JEWELLERY IN SOCIAL CEREMONIES AND OTHER LIKE OCCASIONS LOOKI NG TO THE FAMILY OF THE ASSESSEE IS NOT RULED OUT. AS PER CBDT INSTRUCTION STATED ABOVE, THE OTHER FAMILY MEMBERS ALSO GET CREDIT UPTO 1800 GMS AS THE RE ARE TWO MARRIED LADIES AND TWO MALE MEMBERS. FOR EACH MARRIED LADY, 250 GMS AND EACH MALE MEMBERS 100 GMS CREDIT HAS TO BE GIVEN. THERE IS SOME DISPUTE REGARDING GIVING CREDIT AS PER INSTRUCTION OF CBDT IN QUESTION. HOWEVER, THE HON'BLE RAJASTHAN HIGH COURT HAS CLEARLY SPELLED O UT THIS BENEFIT IN THE CASE OF PATTI DEVI VS. ITO 240 ITR 727. THE HON'BLE KAR NATAKA HIGH COURT AND GUJARAT HIGH COURT HAVE ALSO TAKEN SIMILAR VIEW. TH EREFORE, AFTER CONSIDERING THE DEDUCTION ON ACCOUNT OF PURITY, TH E CBDT INSTRUCTION AND THE VALUE OF THE PRECIOUS AND SEMI PRECIOUS STONES JEWELLERY AVAILABLE WITH THE ASSESSEE CAN BE TREATED AS EXPLAINED. THEREFORE , THE ADDITION OF RS. 56,99,767/- MADE ON ACCOUNT OF UNEXPLAINED INVEST MENT IN THE ACQUISITION OF JEWELLERY IS DELETED. THUS WE ALLOW GROUND NO. 1 OF THE ASSESSEE TO THAT EXTENT. 10.4 REGARDING ADDITION OF RS. 4,49,452/- IN RESPEC T OF INVESTMENT IN SILVER JEWELLERY, THE FACTS ARE THAT DURING SEARCH TOTAL S ILVER JEWELLERY AND ARTICLES AT 70.487 KGS AND AFTER REDUCING ARTICLES OF 48.002 KG S WHICH IS DECLARED BY THE 23 ASSESSEE AND HIS FAMILY MEMBERS IN THEIR RESPECTIVE WEALTH TAX RETURNS WERE TREATED AS EXPLAINED AND REMAINING JEWELLERY OF 22. 485 KGS HAS BEEN TREATED AS UNEXPLAINED. THIS JEWELLERY IS VALUED AT RS. 4,4 9,452/-. THE EXPLANATION OF THE ASSESSEE IN THIS REGARD IS THAT THE TOTAL SI LVER JEWELLERY AND ARTICLES DECLARED BY THE ASSESSEE AND OTHER FAMILY MEMBERS O F THE ASSESSEE IN THEIR WEALTH TAX RETURNS IS AS UNDER:- S. NO. NAME RELATION QTY. APB UTENSILS & JEWELLERY [KGS.] SILVER COINS (NOS.) 1. SOBHAG AGARWAL MOTHER 5.280 482 65 2. DAMODAR DASS AGARWAL FATHER 14.232 - 67 3. D.N. MODI & SONS HUF FAMILY HUF 16.350 - 69 4. NIRMAL KR AGARWAL SELF 4.840 508 71 5. HEMA AGARWAL SPOUSE 7.300 - 73 TOTAL 48.002 990 THIS CHART HAS NOT BEEN CONTROVERTED BY THE LD. DR. AFTER CONSIDERING THE SAME, WE HAVE FOUND THAT 99.10 GRMS WERE IN POSSESS ION WITH THE ASSESSEE AND HIS FAMILY MEMBERS. THE TOTAL WEIGHT COMES TO 9 9.9 KGS. IT IS FOUND THAT CREDIT OF THIS SILVER JEWELLERY WAS NEITHER GIVEN D URING THE COURSE OF ASSESSMENT PROCEEDINGS NOR BY THE LD. CIT(A). IF TH IS WEIGHT OF SILVER JEWELLERY IS TREATED AS EXPLAINED AND REDUCED, THE BALANCE SILVER JEWELLERY 22.485 KGS WOULD REMAIN. IT WAS FURTHER NOTICED TH AT WEALTH TAX RETURNS WERE FILED UPTO 31-03-2008 AND SEARCH HAD HAD TAKEN PLAC E ON 24-08-2009 I.E. AFTER 17 MONTHS OF ACQUISITION OF SILVER JEWELLERY AND LIKE IN GOLD JEWELLERY THE POSSESSION OF SOME AMOUNT OF SILVER JEWELLERY O N VARIOUS SOCIAL 24 OCCASIONS AS WE HAVE DISCUSSED IN THE CASE OF THE G OLD IS NOT RULED OUT. THEREFORE, REMAINING 12.585 KGS OF SILVER ARTICLES / JEWELLERY ALSO STAND EXPLAINED AND IS LIABLE TO BE DELETED. ACCORDINGLY, THE ADDITION OF RS. 4,49,452/- IN SILVER JEWELLERY AND ARTICLES CANNOT SURVIVE AND IS THEREFORE, DELETED. THUS THE GROUND NO. 1 OF THE ASSESSEE'S AP PEAL IS ALLOWED. 11.1 THE GROUND NO. 2 TO 2.2 OF THE ASSESSEE'S APP EAL AND GROUND NO. 1 OF THE DEPARTMENTAL APPEAL ARE IN RELATION TO ADDITION RS. 14,64,25,495/- WHICH WAS MADE BY THE AO ALLEGEDLY ON THE BASIS OF THE UN DISCLOSED CASH ADVANCES MADE BY THE ASSESSEE. THIS ADDITION HAS BEEN REDUCE D TO RS. 7.47 CRORES BY THE LD. CIT(A). THE ASSESSEE HAS CHALLENGED THIS AD DITION AS WELL BEFORE US AND THE REVENUE IS IN APPEAL AGAINST THE DELETED AD DITION OF RS. 7,17,25,495/-. 11.2 WE HAVE HEAD THE RIVAL SUBMISSIONS ON THIS ISS UE AS WELL. IT WAS ARGUED BY THE LD. AR THAT ADMISSION MADE BY THE ASS ESSEE IS A RESULT OF ATMOSPHERE, CIRCUMSTANCES AND THE PRESSURE CREATED AND HEAT GENERATED DURING THE COURSE OF SEARCH. THE SEARCH AT THE RESI DENCE OF THE ASSESSEE STATED AT 10.00 AM 24-08-2009 AND THE ADMISSION WAS MADE U/S 132(4) OF THE ACT AFTER ALMOST 42 HOURS IN THE MIDNIGHT OF 25 TH AND 26 TH AUG. 2009 WHEN THE SEARCH WAS FINALLY CONCLUDED. DURING THE COURSE OF SEARCH ON 24- 08-2009 IN THE LATE MIDNIGHT OF 25/26/08/2009 WHEN THE SEARCH WAS CONCLUDED AFTER REPEATED PHYSICAL SEARCH AND VERIFI CATION OF ENTIRE HOUSE AND 25 BUSINESS PLACES OF THE ASSESSEE. DURING SEARCH, THE STATEMENTS OF THE ASSESSEE WERE RECORDED SEVERAL TIMES FIRSTLY AT THE TIME OF INITIATION OF SEARCH ON24- 08-2009 AND LAST IN THE LATE MID NIGHT OF 25/26/08- 2009 WHEN SEARCH WAS CONCLUDED AFTER REPEATED PHYSICAL SEARCH AND VERIFI CATION OF THE ENTIRE HOUSE AND BUSINESS PLACES OF THE ASSESSEE. IT IS IN THIS BACK GROUND THAT IT HAS BEEN STATED BY THE LD. AR THAT ENTIRE STATEMENTS OF THE ASSESSEE AND HIS FAMILY MEMBERS AND EMPLOYEES WERE RECORDED AND A FORCED SU RRENDER OF RS. 22,81,84,264/- WAS OBTAINED IN A CHARGED ATMOSPHERE . AFTER CONSIDERING THE OVERALL SCENARIO DURING SEARCH, THE ASSESSEE DECLAR ED ADDITIONAL INCOME OF RS. 10,00,35,045/- IN THE RETURN OF INCOME FILED FO R THE YEAR UNDER APPEAL. THE ASSESSMENT WAS COMPLETED U/S 153A READ WITH SEC TION 143(3) OF THE ACT WHEREIN THE ADDITION OF RS. 15,36,67,393/- WAS MADE WHICH INCLUDES THE ADDITION OF RS. 14,64,25,495/- MADE ON ACCOUNT OF ALLEGED UNEXPLAINED ADVANCES AS PER SEIZED PAPERS OF ANNEXURE AS-EXHIBI T1 WHICH ARE TABULATED AT PAGE 33 OF ASSESSMENT ORDER AS UNDER:- S.NO. PAGE NO. AMOUNT OF UNDISCLOSED DVANCES 1 4 1,12,60,000.00 2 5 3,88,03,145.00 3 6 81,00,000.00 4 7 11,00,000.00 5 8 5,78,00,000.00 6 19 2,93,62,350.00 TOTAL 14,64,25,495.00 IT WAS ARGUED BEFORE US BY THE LD. AR THAT IMPUGNED ADDITION IS BASED ON LOOSE PAPERS AT SERIAL NO. 1 TO 3 IN THE ABOVE TABL E VIA PAGES 4,5, AND 6 26 WHICH ARE RECONSTRUCTED PAGES PASTED ON PLAIN PAPER WHICH WERE FOUND IN THE TORN OUT CONDITION AND TREATED BY THE ASSESSEE AS D EAF AND DUMB AND ROUGH PIECES OF PAPERS LYING IN THE DUSTBIN KEPT IN THE H OUSE OF THE ASSESSEE. THESE PAPERS ARE MARKED AS ANNEXURE AS-1 PAGES NO. 4 TO 6 AND 8. IT WAS FURTHER ARGUED THAT CERTAIN ENTRIES WERE ALSO FOUND NOTED O N THE BACK SIDE OF THESE PAPERS. THIS FACT IS NOT DENIED BY THE AO BUT THE S AME HAS NOT BEEN TAKEN INTO CONSIDERATION. WHEN THE QUERY WAS RAISED TO TH E LD. DR IN THIS REGARD, HE FAIRLY SUBMITTED THAT THESE WERE FOUND IN TORN C ONDITIONS FROM THE DUST BIN AND WERE PASSED AS STATED ABOVE. AFTER CONSIDERING THE STATE OF THESE PAPERS, WE HAVE FOUND THAT THE AO IN HIS ORDER HAS CLEARLY IGNORED THIS CONTENTION OF THE ASSESSEE. IN THIS REGARD, PAGES 27 AT PARA 7.1 3 OF THE ASSESSMENT ORDER IS RELEVANT. WE HAVE FOUND FROM RECORDS AND SUBMISSIO NS OF THE LD. AR THAT DURING COURSE OF SEARCH, NO INCRIMINATING DOCUMENTS DISCLOSING THE ALLEGED ADVANCES MADE BY THE ASSESSEE TO VARIOUS PERSONS WA S FOUND OR SEIZED. THE REVENUE FOUND AND SEIZED CASH LYING IN THE PRIVATE LOCKERS AND THE SAME HAVE ALREADY BEEN OFFERED BY THE ASSESSEE AS AN ADD ITIONAL INCOME IN THE RETURN FILED FOR THE YEAR UNDER CONSIDERATION WHICH ALSO COVERS WITH THE WITHDRAWAL OF DEPOSITS OF CASH IN THESE LOCKERS WHI CH IS SUPPORTED BY PASTED PAPERS IF THEY ARE TAKEN INTO CONSIDERATION. IT IS FOUND THAT THE NATURE OF ENTRIES CONTAINED AT PAGES, 4,5,6 AND 8 CAN BE TREA TED AS COVERED BY SURRENDERED INCOME AS APART FROM BUSINESS OF FINANC E BROKERAGE IN WHICH 27 ASSESSEE IS ENGAGED, NO OTHER SOURCE OF INCOME HAS BEEN ATTRIBUTED OR FOUND BY THE AO HIMSELF AND HENCE ONLY INFERENCE CAN BE D RAWN IS THAT UNDISCLOSED INCOME DECLARED BY THE ASSESSEE CAN BE ONLY OUT OF ACTIVITY REGULARLY CARRIED ON BY HIM I.E. FINANCE, BROKERAGE ETC. IT WAS STATED THAT NOTING ON THE LEFT HAND SIDE OF THESE PAPERS REPRES ENTED THE SOURCE OF FUNDS (RECEIPT SIDE) AND RIGHT HAND SIDE REPRESENTED THE APPLICATION (PAYMENT SIDE). ALL THESE FUNDS AND THE FIGURES APPEARING ARE TO BE COMPREHENDED AFTER SUFFIXING TWO ZERO AND THIS FACT HAS BEEN CLEARLY A DMITTED BY THE ASSESSEE AND IS STILL MAINTAINED EVEN BEFORE US. IT WAS FURT HER STATED THAT IT HAS BEEN CONSISTENT STAND OF THE ASSESSEE THAT ENTRIES JOTTE D DOWN ON THESE LOOSE PAPERS BEARING NOS.AS-1 PAGES2,3,4,5,6,7,16 & 17 AR E THE REPEATED ENTRIES AND THE SUMMARY OF SUCH ENTRIES IS FINALLY CALCULAT ED OR NOTED DOWN AT PAGE NO. 8 OF THE WRITTEN SUBMISSION OF THE ASSESSEE. T HIS FACT WAS ALSO EXPLAINED THREAD BARE BEFORE LD. CIT(A) VIDE LETTER DATED 21- 11-2009, THE COPY OF WHICH IS ENCLOSED AT PAGES 1 TO 5 OF THE ASSESSEE'S PAPER BOOK. THIS FACT WAS ASSERTED BY THE ASSESSEE IN HIS STATEMENT RECORDED ON 21-11-2009 BY THE ADIT IN THE POST SEARCH ENQUIRIES WHEREIN IN THE RE PLY TO Q.NO.25, THE ASSESSEE HAS STATED THESE FACTS. THE LD. CIT(A) HAS PARTLY ACCEPTED THE CONTENTION OF THE ASSESSEE. REGARDING THESE ENTRIES BEING REPETITIVE IN NATURE BUT HE HAS GIVEN PART RELIEF WITH REFERENCE TO MATC HING PRINCIPLE TO THE EXTENT 28 OF RS. 7,05,86,000/-. THE ACTION OF THE AO AND THE LD. CIT(A) IS DEPICTED IN THE FOLLOWING CHART MENTIONED AT PAGE 8 OF THE ASSE SSEE'S WRITTEN SUBMISSION. ANNEXURE AS-1 PAGE NO. BY AO BY CIT(A) 4 1,12,60,000.00 53,00,000.00 5 3,88,03,145.00 6,00,000.00 6 81,00,000.00 - 7 11,00,000.00 1,10,000.00 8 5,78,00,000.00 5,78,00,000.00 19 2,93,62,350.00 67,76,000.00 TOTAL 14,64,25,495.00 7,05,86,000.00 IT WAS ARGUED BY THE LD. DR THAT TOTAL WITHDRAWN FR OM THE LOCKERS AT RS. 7.47 CRORES WOULD BE THE SAME IN MAKING ADVANCES AND SO IT IS NOT POSSIBLE BY THE ASSESSEE TO HAVE RECEIVED BACK THESE AMOUNTS AND TH IS AMOUNT BEING HIGHER THAN THE AMOUNT OF ADVANCES AS CALCULATED ABOVE, ON THE ENTRIES CONTAINED IN EACH INDIVIDUAL PAPER, SHE HAS UPHELD THE ADDITION OF RS. 7.74 CRORES BASED ON THE ENTRIES FOUND NOTED AT PAGES 16 AND 17 WHICH IS CASH BALANCES AVAILABLE AT A PARTICULAR POINT OF TIME IN SAFE DEP OSIT VAULTS. 11.3 THE LD. AR HAS EXPLAINED PAGEWISE POSSESSIN OF ALL THE PAPERS SEIZED AS UNDER:- SEIZED PAGES ANNEXURE AS-1, 4 TO 6: AS SUBMITTED ABOVE, IN THE POST SEARCH PROCEEDINGS ASSESSEE HAS EXPLAINED THE NATURE OF TRANSACTIONS RECORDED IN THESE PAGES IN THE STATEME NTS RECORDED U/S 131 OF THE INCOME TAX ACT, 1961 DATED 21.11.2009 RECORDED WHERE, IN REPLY TO QUESTION NO. 25 (APB 102-103) ASKED TO ASSESSEE TO EXPLAIN THE NATURE OF TRANSACT IONS RECORDED IN THE SEIZED PAPERS VIDE ANNEXURE NO. AS-1 FROM THE RESIDENTIAL PREMISES AT D-32, C-SCHEME, JAIPUR, ASSESSEE HAS CATEGORICALLY STATED THAT THE ENTRIES CONTAINED IN THE LOOSE PAPERS NO. 2, 3, 4, 5, 6, 7, 16 & 17 OF THE SAID ANNEXURE ARE THE SAME TRANSACTIONS W HICH HAVE BEEN REPRODUCED AT PAGE NO. 8 OF THE SAID ANNEXURE AND EXCEPTING PAGE NO. 8 THE REMAINING PAGES ARE IN THE HANDWRITING OF THE EMPLOYEE OF THE ASSESSEE. 29 THE LD. CIT(A) HELD THAT TWO ENTRIES AT PAGE 4 I.E. VIVEK ` 50.00 LACS AND RICHA ` 3.00 LACS ARE NOT APPEARING AT PAGE 8. IN THIS REGARD AT TENTION OF HONBLE BENCH IS INVITED TO CHART SUBMITTED ( APB-6 & 12 ) WHERE THESE ENTRIES ARE RE-APPEARING AT PAGE 8, T HEREFORE, THE OBSERVATIONS OF THE LD. CIT(A) DESERVES TO BE H OLD CONTRARY TO THE FACTS AND DESERVES NO CREDENCE. PAGE NO. 7: ATTENTION OF YOUR KIND HONOURS IS ALSO INVITED TO T HE STATEMENTS OF THE ASSESSEE RECORDED U/S 132(4) ON 25.08.2009 WHEREIN IN REPLY TO QUESTI ON NO. 18 (APB 82) THE ASSESSEE HAS CATEGORICALLY ADMITTED THAT HE HAS OMITTED TWO ZERO S OUT OF THE AMOUNTS FOUND RECORDED IN THE PAGES FOUND AND SEIZED FROM HIS RESIDENCE DURIN G THE COURSE OF SEARCH, HOWEVER, WHILE MAKING THE ADDITIONS AO AT HIS OWN SWEET WIL L AND WITHOUT ANY BASIS OR REASONS HAS INFLATED THE FIGURES BY ADDING 2, 3, 4 OR 5 ZER OS FOR ARRIVING AT THE FANCIFUL FIGURES TO MAKE SUCH HIGH PITCHED ADDITIONS, E.G. AT PAGE NO. 7 OF ANNEXURE AS-1, THE TOTAL OF THE ENTRIES MADE ON VARIOUS DATES IN THE MONTH OF JUNE STATED AT 1100 [TOTAL UPTO 1/7] AND IF TWO ZEROS AS PER THE PRACTICE OF THE ASSESSEE ARE A DDED, THE RESULTANT FIGURE COMES TO RS. 1,10,0 00 /-, HOWEVER AO WHILE DEALING WITH THIS PAPER HAS A DDED THREE ZEROS MAKING THE FIGURE TO RS.11,00, 000 /- (AO PAGE 31 PARA 3). THE LD. CIT(A) ACCEPTED THI S CONTENTION HOWEVER HAS FAILED TO APPRECIATE THE FACT THAT THE AMOUNT OF RS. 1,10,000/- APPEARING IN THE NAME OF G RANA IN PAGE 7 OF ANNEXURE AS-1 IS DU LY APPEARING AT PAGE 8 IN SL. NO. 10 LEFT HAND SIDE, THEREFORE, NO SEPARATE ADDITION ON THIS SCORE COULD BE MADE. PAGE NO. 8: AN ADDITION OF RS. 5,78,00,000/- WAS MADE BY LD. AO BY ALLEGING THAT THE ASSESSEE HAS MADE UNEXPLAINED ADVANCES WHICH WERE FOUND RECORDED ON THIS PAGE. ENTRY-WISE OBSERVATIONS OF THE AO ON THIS SEIZED PAPER ARE AT PAGE 31 OF THE ASSESSMENT ORDER. WHILE MAKING THE ADDITION THE AO HIMSELF WAS NOT SURE WHE THER HE IS MAKING ADDITION ON ACCOUNT OF ADVANCE GIVEN OR ADVANCE TAKEN OR THE PA YMENTS MADE OR FOR THE PAYMENTS RECEIVED AND HAS PLAYED BLOW HOT AND BLOW COLD. DUR ING THE COURSE OF APPELLATE PROCEEDINGS VIDE LETTER DATED 21.08.2013 ( APB 1- 5) ASSESSEE EXPLAINED EACH INDIVIDUAL ENTRY OF THIS PAGE BUT LD. CIT(A) IGNORED THE SAME AND CONFIRMED THE AMOUNT OF ADVANCES WORKED OUT AT RS. 5,78,00,000/- BY LD. AO . IN THIS REGARD IT IS SUBMITTED THAT THE LD. AO WHIL E WORKING OUT THE ADDITION HAS READ THE PAPERS IN THE MANNER THAT HE HAS CONSIDERED THE ENT RIES FOUND NOTED AT THE LEFT SIDE OF THE PAPER AS THE SOURCE / RECEIPT AND THE ENTRIES FOUND NOTED AT THE RIGHT SIDE OF THE PAPER AS THE APPLICATION / PAYMENT BUT WHEN THE PRECISE CALC ULATION WAS MADE FOR THE FIRST SEVEN ENTRIES AT THE RIGHT SIDE OF PAGE 8 OF ANNEXURE AS- 1, THE AO BY TAKING DIVERGENT STAND FOR NO REASONS BROUGHT ON RECORD HAS HELD THE AMOUNTS M ENTIONED THEREIN AS THE RECEIPT OF INTEREST ON THE ADVANCES GIVEN (BY IGNORING THE FAC T THAT THE RIGHT HAND SIDE ENTRIES ARE IN RELATION TO THE PAYMENTS / APPLICATION OF THE FUNDS ) WHICH IS CLEARLY EVIDENT FROM HIS OWN WORKING WHERE HE HAS WORKED OUT THE PRINCIPAL AMOUN T BY FIRSTLY ADDING THREE ZEROS TO THE FIGURES APPEARING IN FIRST SEVEN ENTRIES (INSTE AD OF TWO ZEROS) AND FURTHER BY EXTRAPOLATING THEM FOR THE PRINCIPAL AMOUNT BY APPL YING INTEREST RATE OF 12% AND HELD THAT THE ASSESSEE HAS GIVEN ADVANCES OF RS. 4.00 CRORES ON WHICH INTEREST OF RS. 48.00 LACS WAS RECEIVED. THE ENTRY-WISE WORKING DONE BY THE AO IS AS UNDER:- 30 S.NO. OF ENTRY AMOUNT MENTIONED AMOUNT AS PER ASSESSEE AMOUNT TAKEN BY AO PRINCIPAL CALCULATED ADDITION MADE 1. 1,080.00 1,08,000.00 10,80,000.00 90,00,000.00 1,00,80,000.00 2. 960.00 96,000.00 9,60,000.00 80,00,000.00 89,60,000.00 5. 420.00 42,000.00 4,20,000.00 35,00,000.00 39,20,000.00 3. 60.00 6,000.00 60,000.00 5,00,000.00 5,60,000.00 4. 360.00 36,000.00 3,60,000.00 45,00,000.00 48,60,000.00 6. 480.00 48,000.00 4,80,000.00 40,00,000.00 44,80,000.00 7. 1,260.00 1,26,000.00 12,60,000.00 1,05,00,000.00 1,17,60,000.00 TOTAL 4,620.00 4,62,000.00 46,20,000.00 4,00,00,000.00 4,46,20,000.00 ACCORDINGLY, THE ADDITION OF RS.4,47,00,000/-(CORRE CT TOTAL RS.4,46,20,000/-) [5,78,00,000 1,31,00,000] WAS MADE BASED ON THESE ENTRIES AS A GAINST THE ACTUAL AMOUNTS AT RS. 4,62,000/- WHEN HE ADDED THREE ZEROS TO THE AMOUNTS . IN CASE THE ABOVE CALCULATION IS REWORKED BY ADDING TWO ZEROS TO THE AMOUNT OF INTER EST APPEARING IN THE SAID PAPER, THE RESULTANT AMOUNT OF ADVANCES COMES TO RS.38,50,000/ - AND INTEREST OF RS. 4,62,000/- TOTALING TO RS. 43,12,000/- AS AGAINST THE ADDITION OF RS. 4.00 CRORES MADE BY LD. AO AND ACCEPTED BY LD. CIT(A). IT IS FURTHER SUBMITTED THAT THE AO PRESUMED THAT T HE ASSESSEE HAS RECEIVED INTEREST ON THE AMOUNT ADVANCED AND THUS MADE THE ADDITION ON BOTH THE COUNTS I.E. THE INTEREST AS WELL AS PRINCIPAL WHEREAS THESE ENTRIES ARE APPEARING IN TH E RIGHT SIDE OF PAPER AND IN NO CASE COULD BE CONSIDERED AS RECEIPT AND ACTUALLY THESE A RE THE PAYMENT MADE. EVEN FOR THE ARGUMENTS SAKE, IF THE ALLEGATION OF THE AO IS ACCE PTED THAT IT IS THE AMOUNT OF INTEREST, IN SUCH A SITUATION IT IS THE PAYMENT OF INTEREST ON T HE ADVANCES RECEIVED BY THE ASSESSEE AND NOT THE ADVANCES GIVEN AS HAS BEEN ALLEGED BY THE A O. TO PROVE THE CONTRADICTORY APPROACH AND IN ADDITION TO ABOVE, ON THE REMAINING ENTRIES APPEARING AT THE RIGHT SIDE OF THE PAPER I.E. ANNEX URE AS-1, PAGE 8, THE AO HAS ADDED TWO ZEROS TO THE FIGURES APPEARING AGAINST EACH IND IVIDUAL ENTRY AND MADE THE ADDITION OF RS. 1,31,00,000/- MAKING THE TOTAL ADDITION TO RS. 5,78,00,000/- ON THE BASIS OF THIS PAPER, THUS SUCH AN APPROACH BEING BASED ON NO MATERIAL AN D RATIONAL, DESERVES TO BE HOLD BAD IN LAW. PAGE NO. 19 OF ANNEXURE AS-1: AN ADDITION OF RS. 2,93,62,350/- WAS MADE ON THE BA SIS OF THE ENTRIES NOTED IN THE SAID PAPER WHICH ARE ASCRIBED BY THE AO AT PAGE 17 AND 1 8 OF THE ASSESSMENT ORDER WHEREIN HE HAS EXTRAPOLATED THE FIGURES MENTIONED BY ADDING 2, 3 OR 5 ZEROES TO THE FIGURES APPEARING IN THE SAID PAPER WITHOUT ASSIGNING ANY REASON FOR DOING SO. THE LD. CIT(A) HAS REDUCED THE SAME TO RS. 67,76,000/- ON HER WHIMS AND FANCIE S WITHOUT APPRECIATING THE TRUE NATURE OF THE ENTRIES APPEARING IN THE SAID PAGE. IN THIS REGARD IT IS SUBMITTED THAT THIS PAPER NEIT HER REFLECTS THAT WHETHER THE AMOUNTS MENTIONED ARE RECEIPTS OR PAYMENTS AND THESE ARE TH E SIMPLE MEMORANDA ENTRIES MADE BY SOME STAFF MEMBER FOR HIS / HER OWN USE WITHOUT HAV ING ANY FINANCIAL IMPLICATION. THUS 31 THIS PAPER IS NOTHING BUT A DUMB DOCUMENT. THE MAJO R DISCREPANCIES IN THE APPROACH TAKEN BY THE LD. AO AS WELL AS BY THE LD. CIT(A) AR E AS UNDER: IN THE SAID PAPER NO. 19 OF ANNEXURE AS-1 SOME AMOU NTS ARE APPEARING BELOW THE VEHICLE NOS. AND ALL THESE FIGURES ARE EXTRAPOLATED BY AO BY ADDING TWO ZEROS GIVING IMPRESSION THAT THESE VEHICLES HAVE VALUE OF FEW LA CS EACH ( AO PAGE 17 & 18 ENTRIES AT SL. NO. 19 TO 22 ) WHEREAS ALL THESE VEHICLES ARE TWO WHEELERS HAVING VALUE NOT MORE THAN 40,000/- EACH. TO PROVE THE VEHICLES AS TWO WH EELERS COPIES OF REGISTRATION CERTIFICATE AND OTHER DOCUMENTS WERE SUBMITTED BEFO RE LD. CIT(A) (APB 16-21) WHO THOUGH ACCEPTED THE CONTENTION OF THE ASSESSEE PART LY AND WORK OUT THE TOTAL ADVANCE AT RS. 67,76,000/-. WHILE DOING SO LD. CIT(A) HAS ADO PTED PICK AND CHOOSE METHOD AND PICKED THE PRODUCT CALCULATED AT THE BOTTOM OF THE PAGE WHERE FROM THE FIGURE OF 33,880/- APPEARING AGAINST THE VEHICLE NO. 8495, AN AMOUNT O F RS. 26,475/- APPEARING AGAINST THE VEHICLE NO. 9368 WAS DEDUCTED AND THE RESULTED FIGU RE OF 7,750/- WAS CALCULATED. LD. CIT(A) HAS ADDED ALL THESE THREE FIGURES AND HELD T HAT THE TOTAL OF RS. 67,760/- BEING THE PRODUCT IS THE UNEXPLAINED ADVANCE AS PER THIS PAGE . THE FIGURE APPEARING AGAINST THE VEHICLE NOS. WERE THE TOTAL KILOMETERS PER VEHICLE RUN WHICH FACT WAS GROSSLY IGNORED BY LD. CIT(A). FOR THE REMAINING FIGURES APPEARING ON THE SAID PAG E, IT IS SUBMITTED AS UNDER: 1. FOR A FIGURE APPEARING ON 17/8 AT 862/18, THE AO HAS EXTRAPOLATED THE SAME AS 8,62,000/- AND 18,00,000/- [ENTRY NO. 25 AND 26 OF PAGE 18 OF ASSESSMENT ORDER] AS AGAINST THE ACTUAL AMOUNT OF ` 862.18. 2. FURTHER A SUM OF RS. 7,40,500/- [SL. NO. 24 AT P AGE 18] WAS ADDED WHICH IS APPEARING AS THE PRODUCT OF 33880 26475 APPEARING AT THE BOTTOM OF THE PAGE WITHOUT CONSIDERING THE FACT THAT BOTH THE AMOUNTS OF RS. 33,880/- AND 26475/- ARE BEING SEPARATELY ADDED BY EXTRAPOLATING AT RS. 33,8 8,000/- [SL. NO. 21] AND RS. 26,47,500/- [SL. NO. 23]. 3. FURTHER THE TOTAL OF THE TABLE AS MENTIONED IN T HE ASSESSMENT ORDER AT PAGE 18 HAS BEEN DONE AT RS. 2,93,62,350/- INSTEAD OF THE CORR ECT TOTAL OF RS.2,54,97,300/- THEREBY MAKING AN EXTRA ADDITION OF RS. 38,65,050/- ON ACCOUNT OF TOTALING MISTAKE. FROM THE ABOVE SUBMISSION, IT IS SUBMITTED THAT THE AO WHILE COMPLETING THE ASSESSMENT ORDER HAS PROCEEDED IN ARBITRARY MANNER AND AS PER HIS SWEET WILL WITHOUT HAVING BASED HIS CONCLUSIONS ON ANY LOGICAL GROUNDS RESULTING IN TO THE HUGE ADDITION OF RS. 14,64,25,495/- MADE TOWARDS THE ENTRIES FOUND NOTED IN PAGES NO.4 TO 8 AND 19 OF ANNEXURE AS-1 SEIZED FROM THE RESIDENCE OF THE ASSE SSEE, BY IGNORING THE FACT THAT THE ASSESSEE HAS ALREADY ADMITTED AND OFFERED AN ADDITI ONAL INCOME OF RS.10,00,35,045/- WHICH DULY COVERS THE AMOUNTS FOUND NOTED IN THESE PAPERS. PAGE 16 & 17: WITH REGARD TO THE ENTRIES CONTAINED IN THE PAGES N O. 16 & 17 OF ANNEXURE AS-1, IT IS SUBMITTED THAT THESE PAGES CONTAINED ENTRIES OF THE MOVEMENT OF CASH FROM THE PRIVATE LOCKERS FROM TIME TO TIME. THE LOCKER IN BIRANI SAF E IS DENOTES BY J AND LOCKER AT GANPATI PLAZA IS DENOTED BY P. IT IS PERTINENT TO MENTION HERE THAT THE ASSESSEE IN ITS RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERA TION HAVE DECLARED TOTAL ADDITIONAL UNDISCLOSED INCOME OF RS. 10,00,35,045/- WHICH IS THE CASH FOUND AND SEIZED FROM THE 32 AFORESAID LOCKERS AND AVAILABLE WITH THE ASSESSEE A T HIS RESIDENCE AND BUSINESS PREMISES. THE CLOSING BALANCE OR THE LAST BALANCE APPEARING I N THE SAID PAGES I.E. FOR P RS. 5,67,000/- [5,67,00,000 AFTER ADDING TWO ZEROS] AND FOR J RS. 3,64,000/- [3,64,00,000 AFTER ADDING TWO ZEROS]. A CHART CONTAINING THE DAY TO DAY INFLOW AND OUTFLO W OF THE FUNDS FROM THE SAID LOCKERS IS REPRODUCED HEREIN BELOW, A PERUSAL OF WHICH WOULD R EVEAL THAT THE BALANCE AS ON THE DATE OF SEARCH IS MATCHING WITH THE CASH PHYSICALLY FOUN D AND SEIZED AND INCLUDED IN THE ADDITIONAL INCOME DISCLOSED. EXTRACT OF ANNEXURE AS-1 PAGE 17 MARKED AS 'P' ADDITION DEDUCTION BALANCING 5,60,000.00 5,60,000.00 60,000 5,00,000.00 50,000 4,50,000.00 55,000 5,05,000.00 31,000 5,36,000.00 73,000 4,63,000.00 20,000 4,83,000.00 28,000 4,55,000.00 25,000 4,30,000.00 59,000 4,89,000.00 28,000 5,17,000.00 50,000 5,67,000.00 MARKED AS 'J' 1,25,000.00 1,25,000.00 10,000 1,15,000.00 20,000 95,000.00 55,000 1,50,000.00 45,000 1,05,000.00 14,000 1,19,000.00 66,000 53,000.00 15,000 68,000.00 8,000 60,000.00 72,000 1,32,000.00 37,000 95,000.00 5,000 1,00,000.00 45,000 1,45,000.00 1,95,000 3,40,000.00 THE AFORESAID TWO TABLES ARE FURTHER REPRODUCED AS PAGE 17 OF ANNEXURE AS-1 AND ARE DULY MERGED IN THE TABLES NARRATED BELOW REGARDING THE ENTRIES CONTAINED IN PAGE 16. BIRANI SAFE 2,99,000.00 2,99,000.00 10,000 2,89,000.00 33 50,000 2,39,000.00 15,000 2,54,000.00 31,000 2,85,000.00 10,000 2,95,000.00 10,000 2,85,000.00 30,000 3,15,000.00 26,000 2,89,000.00 1,00,000 1,89,000.00 89,000 1,00,000.00 25,000 1,25,000.00 30,000 95,000.00 55,000 1,50,000.00 45,000 1,05,000.00 14,000 1,19,000.00 66,000 53,000.00 15,000 68,000.00 8,000 60,000.00 45,000 1,05,000.00 27,000 1,32,000.00 37,000 95,000.00 5,000 1,00,000.00 45,000 1,45,000.00 1,95,000 3,40,000.00 24,000 3,64,000.00 5,36,00,000 4,71,00,000 GANPATI PLAZA 2,54,000.00 2,54,000.00 16,000 2,70,000.00 1,01,000 3,71,000.00 30,000 4,01,000.00 1,75,000 5,76,000.00 24,000 6,00,000.00 40,000 5,60,000.00 60,000 5,00,000.00 50,000 4,50,000.00 55,000 5,05,000.00 6,000 5,11,000.00 25,000 5,36,000.00 73,000 4,63,000.00 28,000 4,35,000.00 20,000 4,55,000.00 25,000 4,30,000.00 59,000 4,89,000.00 28,000 5,17,000.00 50,000 5,67,000.00 5,89,00,000 2,76,00,000 34 ATTENTION OF YOUR HONOURS IS INVITED TO THE PAPER B OOK PAGE 15 WHEREIN IT IS EXPLAINED THAT THE ENTRIES APPEARING IN PAGE 17 OF ANNEXURE A -7 ARE REPRODUCED AT PAGE 16 OF ANNEXURE AS-1 AND THE ENTRIES APPEARING AT PAGE 16 ARE APPEARING AT PAGES 4, 5 AND 6 OF ANNEXURE AS-1 AND ENTRIES CONTAINED IN PAGES 4, 5 & 6 THUS STOOD MERGED IN PAGE 8 OF ANNEXURE AS-1, THEREFORE, IT IS SUBMITTED THAT THE PAGE 8 OF ANNEXURE AS-1 CONTAINS ALL THE ENTRIES AS WERE FOUND NOTED IN OTHER PAGES I.E. PAGES 4, 5, 6, 7, 16 & 17 AND THEREFORE PAGE 8 IS REQUIRED TO BE CONSIDERED FOR WORKING OUT THE UNDISCLOSED INCOME OF THE ASSESSEE. THE PERUSAL OF THE PAGE 8, WOULD REVEAL T HAT THE TOTAL OF LEFT HAND SIDE COMES TO RS.10,96,651/- [ACTUAL FIGURE 10,96,65,100/-] AND R IGHT HAND SIDE TOTAL COMES TO RS. 1,35,620/- [ACTUAL FIGURE 1,35,62,000] AND THE BALA NCE AMOUNT OF RS. 9,61,031/- [ACTUAL FIGURE 9,61,03,100/-] COULD AT THE MOST BE AVAILABL E WITH THE ASSESSEE AS AGAINST WHICH THE TOTAL EXCESS CASH WAS FOUND AT RS. 10,00,35,045/- W HICH WAS DECLARED IN THE RETURN OF INCOME FILED, THEREFORE, THERE REMAINED NO UNDISCLO SED INCOME IN THE HANDS OF THE ASSESSEE EVEN AFTER CONSIDERING ALL THE ENTRIES IN THE SEIZED PAPERS BASED ON WHICH THE ADDITION WAS MADE IN THE ASSESSMENT ORDER. IN THE CIRCUMSTANCES, IT IS HUMBLY SUBMITTED THAT T HE ENTIRE ADDITION MADE ON INCORRECT AND IMPROPER APPRECIATION OF THE FACTS AND MERELY O N ASSUMPTION AND PRESUMPTION WITHOUT HAVING ANY CORROBORATIVE MATERIAL BROUGHT O N RECORD DESERVES TO BE DELETED, MORE PARTICULARLY WHEN THE LD. AO HAS NEITHER APPRECIATE D THE STATEMENTS OF THE ASSESSEE IN ITS TRUE SPIRIT NOR HAS APPRECIATED THE ADDITIONAL INCO ME OFFERED BY THE ASSESSEE. 11.4 AFTER CONSIDERING CAREFULLY ABOVE EXPLANATION AND FURTHER CONSIDERING THAT THE ASSESSEE HAS DULY SHOWN THE CASH FOUND AND ADMITTED AS HIS BUSINESS INCOME FROM HIS REGULAR BUSINESS ACTIVITIES AND FUR THER HAVING PAID TAX AND EXPLAINING THE MODE AND MANNER OF ACQUISITION OF SU CH INCOME IN HIS RETURN OF INCOME AND DURING THE ASSESSMENT PROCEEDINGS, T HE ENTIRE ADDITION MADE ON THE BASIS OF APPRECIATION OF THESE DOCUMENTS WHI CH ARE MAINLY ON PRESUMPTION AND ASSUMPTIONS WITHOUT THERE BEING ANY CORROBORATIVE MATERIAL ON RECORD DESERVES TO BE DELETED, ESPECIAL LY WHEN THE AO HAS NEITHER APPRECIATED THE STATEMENTS OF THE ASSESSEE PROPERLY AS WELL AS ADDITIONAL INCOME OFFERED BY HIM. ACCORDINGLY , WE ARE LEFT WITH NO OPTION BUT TO DELETE THIS ENTIRE ADDITION WHICH HAS BEEN F OUND TO HAVE BEEN MADE 35 BASED ON NO CORROBORATIVE MATERIAL THEREBY WE ALL OW GROUND NO. 2 TO 2.2 OF THE ASSESSEE AND DISMISS GROUND NO. 1 OF THE REV ENUES APPEAL. 12.1 THE GROUND NO. 3 OF THE ASSESSEES APPEAL IS R ELATING TO CONFIRMATION OF ADDITION OF RS. 3,65,070/- MADE ON ACCOUNT OF U NDISCLOSED INVESTMENT IN THE HOUSE. 12.2 THE FACTS APROPOS TO THIS GROUND ARE THAT THE ASSESSEE HAD CONSTRUCTED A HOUSE ON THE PROPERTY SITUATED AT D-32, SUBHASH M ARG, C-SCHEME, JAIPUR WHEREIN THE CONSTRUCTION WAS STARTED IN FINANCIAL Y EAR 2006-07 AND WAS COMPLETED BY MARCH 2009. THE BREAK UP OF THE SAME A S UNDER:- FINANCIAL YEAR AMOUNT 2006-07 16,90,597.00 2007-08 1,09,26,483.00 2008-09 1,51,38,280.00 TOTAL 2,77,55,360.00 THE CASE OF THE ASSESSEE IS THAT ENTIRE BILLS AND V OUCHERS RELATING TO THIS CONSTRUCTION OF THE PROPERTY ARE MAINTAINED AND WER E PRODUCED BEFORE THE AO AS WELL AS BEFORE DVO WHO DULY CONSIDERED THE SA ME WHILE VALUING THE PROPERTY . HOWEVER, THE AO FOUND THAT SOME OF THE BILLS PERTAIN TO ASSESSMENT YEAR 2010-11 FOR WHICH PAYMENT IS NOT AP PEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THEREFORE, HE HAS MADE ADDITION OF RS. 3,65,070/- . THE AO HAS GIVEN THE DETAILS IN THIS REGARD AT PA GE NO. 4 PARA 6.1 & 6.2 OF THE ASSESSMENT ORDER AS UNDER:- 36 S.NO. NAME OF THE PARTY BILL NO. DATE AMOUNT 1 M/S AMITEK SECURITIES PVT. LTD. 1705 20.04.2009 4 ,362.00 2 M/S AMITEK SECURITIES PVT. LTD. 1691 14.04.2009 8 3,131.00 3 M/S AMITEK SECURITIES PVT. LTD. 1690 14.04.2009 9 0,947.00 4 M/S AMITEK SECURITIES PVT. LTD. 1689 14.04.2009 6 8,165.00 5 ALPHA INFOTECH SYSTEM 2009-10/01 10.04.2009 55,12 0.00 6 JBS 3829 18.04.2009 1,84,149.00 7 JBS 3830 18.04.2009 1,12,001.00 8 JBS 3831 19.04.2009 5,598.00 TOTAL 6,03,473.00 LESS: AMOUNT APPEARING IN THE BOOKS OF APPELLANT AS PER LD. AO 2,38,403.00 NET AMOUNT AS PER LD. AO WHICH HAS NOT BEEN DISCLOSED BY THE APPELLANT 3,65,070.00 THE EXPLANATION OF THE ASSESSEE IN THIS REGARD IS T ABULATED AS UNDER:- S. NO. NAME OF THE PARTY BILL NO. DATE AMOUNT AS PER BOOKS OF ACCOUNTS DATE AMOUNT 1 M/S AMITEK SECURITIES PVT. LTD. [APB-120] 1705 20.04.09 4,362.00 18.03.09 & 04.05.09 1,00,000.00 [APB-138] & 1,70,783.00 [APB-139] 2 M/S AMITEK SECURITIES PVT. LTD. [APB-121] 1691 14.04.09 83,131.00 3 M/S AMITEK SECURITIES PVT. LTD. [APB-122] 1690 14.04.09 90,947.00 4 M/S AMITEK SECURITIES PVT. LTD. [APB-123] 1689 14.04.09 68,165.00 5 ALPHA INFOTECH SYSTEM [APB-124] 2009-10/01 10.04.09 55,120.00 04.05.09 55,120.00 [APB-139] 6 JBS [APB-125] 3829 18.04.09 1,84,149.00 03.10.08 3,00,000.00 [APB-136] 7 JBS [APB-126] 3830 18.04.09 1,12,001.00 8 JBS [APB-127] 3831 19.04.09 5,598.00 TOTAL 6,03,473.00 IT IS NOTICED THAT THE ENTRIES MENTIONED ABOVE ARE ALSO FOUND MENTIONED IN THE BILLS/ VOUCHERS WHICH WERE PRODUCED BEFORE THE AO. THESE ENTRIES ARE DULY APPEARING IN THE LEDGER ACCOUNT RELATED TO THE CONS TRUCTION OF THE PROPERTY. 37 THEREFORE, IN OUR CONSIDERED OPINION, THIS ADDITION IS NOT CALLED FOR AND HENCE THE SAME IS DELETED. HENCE, WE ALLOW GROUND N O. 3 OF THE ASSESSEE 13.1 IN GROUND NO. 4 OF THE ASSESSEE IS AGGRIEVED T HAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF THE LOSS OF RS. 9,06,470/- UNDER THE HEAD INCOME FROM OTHER SOURCES. 13.2 THE FACTS OF THIS CASE ARE THAT THE ASSESSEE H AS CLAIMED LOSS OF RS. 9,06,470,- UNDER THE HEAD INCOME FROM OTHER SOURCE WHICH WAS DISALLOWED BY THE LOWER AUTHORITIES. 13.3 WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE T HROUGH THE ORDERS OF THE LOWER AUTHORITIES AND PERUSED THE MATERIALS AVA ILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAS CLAIMED PAYMENT OF INTEREST P AID AS EXPENSES AND THE LOSS UNDER THE HEAD INCOME FROM OTHER SOURCES AT RS. 9,06,470/- WHICH IS TO BE ADJUSTED AGAINST OTHERS HEADS OF INCOME. THE ASSESSEE IS ENGAGED IN THE FINANCE BROKERAGE ACTIVITIES AND THE INCOME FRO M SUCH ACTIVITIES IS REFLECTED UNDER THE HEAD INCOME FROM BUSINESS AND THE INTERST CLAIMED UNDER THE HEAD INCOME FROM OTHER SOURCES,IS OF SIM ILAR NATURE. THEREFORE, WE ARE IN AGREEMENT WITH THE SUBMISSIONS ADVANCED B Y THE LD. AR AND THE SAME SHOULD HAVE BEEN ALLOWED AS BUSINESS EXPENDITU RE. HENCE, THIS GROUND NO. 4 OF THE ASSESSEE IS ALLOWED. 14.1 THE GROUND NO. 5 OF THE ASSESSEE IS PERTAINING TO ALLOWING THE BENEFIT OF RECYCLING AND TELESCOPING OF THE ADDITIONS MAD E AND UPHELD. SINCE WE 38 HAVE ALREADY DEALT WITH EACH ISSUE SEPARATELY AND H AS NOT SUSTAINED ANY ADDITIONS OUT OF WHICH THE BENEFIT OF RECYCLING AND TELESCOPING COULD BE GIVEN. HENCE, THIS GROUND OF THE ASSESSEE IS DISMIS SED. 15.1 GROUND NO. 6 OF THE ASSESSEE IS PERTAINING TO CHARGING OF INTEREST U/S 234A, 234B, 234C AND 234D OF THE ACT. 15.2 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. BEFORE US, THE LD. AR SUBMITTED THAT DURING THE COURSE OF SEARCH CONDUCTED ON 24-08-2009, A SUM OF RS. 10.00 CRORES WERE SEIZED BY THE DEPARTMENT WHICH WAS LYING IN THE PD A/C OF THE COM MISSIONER AND ASSESSEE HAS MADE REQUEST FOR THE ADJUSTMENT OF ADV ANCE TAX INSTALMENT FALLEN DUE AFTER SEARCH WHICH WERE NOT ACCEPTED BY THE DEPT AND INTEREST WAS CHARGED U/S 234B AND 234C, COPY OF REQUEST LETTERS SUBMITTED ARE ALSO FILED IN THE PAPER BOOK OF THE ASSESSEE. THE LD. AR OF TH E ASSESSEE HAS RELIED ON FOLLOWING DECISIONS. 1. CIT VS. K.K. MARKETING, 278 ITR 596 (DEL.) 2. ANAND SHANKAR MITTAL VS. DCIT 43 TW 1 (ITAT JAIPUR ) 3. CIT VS. PRANOY ROY, 222 CTR 6 (SC) 15.3 THE LD. DR HAS SUPPORTED THE ORDERS OF THE AUT HORITIES BELOW. 15.4 AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE SIDES, WE FOUND THAT THE DEPARTMENT IS IN POSSESSION OF CASH LYING IN THE P. D A/C OF THE COMMISSIONER SEIZED DURING THE COURSE FROM THE ASSE SSEE WHICH IS AVAILABLE FOR MAKING APPROPRIATION TOWARDS THE ADVANCE TAX IN STALMENTS AND THEREFORE, 39 FOLLOWING THE DECISIONS OF ABOVE COURTS (SUPRA), DI RECTLY DEALING WITH THIS ISSUE WHICH ALSO INCLUDES THE DECISION OF THIS BENC H ALSO, INTEREST U/S 234B AND 234C OF THE ACT CANNOT BE CHARGED WITHOUT ADJ USTING THE AMOUNT LYING IN THE PD A/C AS PRAYED BY THE ASSESSEE AND THE AO IS DIRECTED TO ADJUST THE SAME AS REQUESTED AND THEN CHARGE INTEREST U/S 234B AND 234C, IF ANY. WITH REGARD TO CHARGING OF INTEREST U/S 234A AND 234D, N O ARGUMENTS WERE ADVANCED, THEREFORE, THE SAME SHOULD BE CHARGED AS PER LAW. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DISMI SSED AND THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26-02-2014 SD/-/- SD/-/- (.N.K. SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMEBR JAIPUR DATED: 26 TH FEB. 2014 *MISHRA COPY FORWARDED TO:- BY ORDER 1. SHRI NIRMAL KUMAR AGARWAL,JAIPUR 2. THE ACIT, CENTRAL CIRCLE- 1 / DCIT, CENTRAL CIRC LE-1JAIPUR 3. THE LD. CIT(A) 4. THE LD. CIT 5. THE DR 6. THE GUARD FILE (IT NO.828/JP/13) A.R., ITAT, JAIPUR 40 41 42