DCIT, Chandigarh V. Sh. Rajesh Popli, Shimla

ITA 84/CHANDI/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6201 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-06-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 17-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR AMA RVEER SINGH
• Keywords: Unexplained investment; Business income; Income from undisclosed sources; Cost of acquisition; Revised return
• Section: 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS. 77 TO 81/CHD/2014 ASSESSMENT YEARS: 2005-06 TO 2009-10 THE DCIT, VS. SHRI RAJESH POPLI, CENTRAL CIRCLE-II, SHIMLA CHANDIGARH PAN NO. ABLPP3283G C.O.NOS. 13 TO 17/CHD/2014 (IN ITA NOS. 77 TO 81/CHD/2014) ASSESSMENT YEARS: 2005-06 TO 2009-10 SHRI RAJESH POPLI, VS. THE DCIT, CENTRAL CIRCLE-I I, SHIMLA CHANDIGARH ITA NOS. 84 & 85/CHD/2014 ASSESSMENT YEARS: 2010-11 & 2011-12 THE DCIT, VS. SHRI RAJESH POPLI, CENTRAL CIRCLE-II, SHIMLA CHANDIGARH PAN NO. ABLPP3283G ITA NOS. 94 & 95/CHD/2014 ASSESSMENT YEARS: 2010-11 & 11-12 SHRI RAJESH POPLI, VS. THE DCIT, CENTRAL CIRCLE-I I, SHIMLA CHANDIGARH PAN NO. ABLPP3283G (APPELLANT) (RESPONDENT) DEPARTMENT BY : DR. AMARVEER SINGH ASSESSEE BY : SHRI VISHAL MOHAN DATE OF HEARING : 17.06.2014 DATE OF PRONOUNCEMENT : 11.072014 ORDER PER BENCH THE APPEALS FILED BY THE REVENUE AND CROSS OBJECTIO NS FILED BY THE ASSESSEE ARE AGAINST THE ORDER DATED 12.11.2013 OF CIT(A)(CENTRAL),GURGAON 2 2. SINCE IDENTICAL GROUNDS HAVE BEEN RAISED IN THES E APPEALS AND THE CASES WERE HEARD TOGETHER, THEREFORE, WE PROCEED TO DECIDE THE ISSUES THROUGH THIS CONSOLIDATED ORDER FOR THE SAKE OF BRE VITY. ITA NO. 77/CHD/2014 3. IN THIS CASE A SURVEY AS WELL AS SEARCH WAS COND UCTED IN THE PREMISES OF NEW SHIMLA HARDWARE AND WELDING WORKS. DURING THE SEARCH IT WAS FOUND THAT ASSESSEE WAS UNDER RECORDING THE PURCHASE VALUE OF THE GOODS AS WELL AS SALE VALUE OF THE GOODS. A QUE STION WAS ALSO ASKED WHICH CONFIRMED THIS POSITION. THE RELEVANT QUESTIO N NO. 5 AND ANSWER THERETO READS AS UNDER:- Q.5. PLEASE STATE IF YOU BOOK PURCHASE AND SALES O UT OF BOOKS. ANS. YES, WE BOOK PURCHASE & SALES OUT OF BOOKS. T HE PURCHASE OF SALE OF PAINTS IN ACCOUNTS FOR AND THE PURCHASE ARE MADE FROM HIGH REPUTED COMPANIES. HOWEVER, IN CASE OF HARDWARE ITEMS WE BO OK THE PURCHASE FROM PARTIES IN DELHI. THE PURCHASE ARE UNDER VALUED IN BILLS TO AVOID VAT PAYMENTS AND THE ACTUAL VALUE-PURCHASE BILL IN PAID OUT OF B OOKS. FOR EXAMPLE POLISHING STONE IS BEING PURCHASED FROM DELHI. THE ACTUAL COS T PRICE IS RS. 55 BUT THE PURCHASE BILL SIS MADE FOR RS. 42/- ONLY. RS. 13/- IS THEM PAID OUT OF BOOKS WHICH COMES TO AROUND 20-25/-. WE THUS WHILE MAKING SALES MADE THE SALE VOUCHER FOR RS. 54/- BUT IN ACTUAL SALE IT FOR RS. 65/- TO RS. 70/-. THE DIFFERENCE OF SALE IS NOT ACCOUNTED. SOME OF THE ITEMS WHERE THIS MODUS OPERANDI IS FOLL OWED IN TABULATED BELOW : DESCRIPTION OF ITEM ACTUAL VALUE PURCHASE BILL VALUE SALE BILL VALUE ACTUAL SALE PRICE 1. MACHINES CUTTER RS. 900/- RS. 700/- RS. 850/- RS. 1050/- 2. MACHINE- DRILL RS. 500/- RS. 350/- RS. 500/- RS. 650 3. NAILS (PER KG) RS. 40/- RS. 32/- RS. 40/- RS. 45/- 4. CUTTER BLADES RS. 50/- RS. 35/- RS. 40/- RS. 60/- 5. CHANNELS (DRAWER) RS. 4/- RS. 3.20/- RS. 4/- RS. 4.70 TO RS. 4.80 6. IRON TOOLS- HAMMER (PER KG) RS. 60/- RS. 52/- RS. 55/- TO 60/- RS. 67/- TO 70/- 3 THE HARDWARE ITEMS WHICH ARE TAX FREE DOES NOT REQU IRE MY BUSINESS TO ADOPT SUCH MODUS OPERANDI. BRANDED HARDWARE ITEM TOO DOES NOT REQUIRE SALES / PURCHASES OUT OF BOOKS. SOME OF SUCH ITEM ARE THINN ERS FROM SRP JALANDHAR, TOOLS WITH MAKE PYE, TAPARIA, J.K. & ELECTRICS, HIN GES, TOWER BOTHS, ALDROPS, SCREWS, NUT BOTH ETC. THE TAX FREE ITEMS INCLUDES A GRICULTURE IMPLEMENT, BAAN (COCONUT HIMP), OLD & NOT ETC. ON THE BASIS OF ABOVE STATEMENT, THE ASSESSING OFFI CER PREPARED THE FOLLOWING TABLE:- TABLE-1 SL.NO. NAME OF THE ITEMS ACTUAL VALUE PURCHASE BILL VALUE (SHOWN IN BOOKS (IN RS. ) DIFFERENCE DEFLATION % 1 MACHINE CUTTER 900 700 200 28.50% 2 MACHINE DRILL 550 350 200 57.14% 3 NAILS (PER KG) 40 32 8 25% 4 CUTTER BALDES 50 35 15 42.86 5 CHANNEL (DRAWER) 4 3.20 0.80 25% 6 IRON TOOLS- HAMMER 60 52 8 15.38% AVERAGE UNDERVALUATION DEFLATION % 32.30% 4. IN THE ABOVE BACKGROUND AND IN VIEW OF THE CALCU LATION DONE IN TABLEI IT WAS CONCLUDED THAT ASSESSEE HAS DEFLATED ITS PURCHASES BY 32.30%. THE ASSESSING OFFICER FOLLOWED THE DECISION OF HYDERABAD BENCH OF THE TRIBUNAL IN CASE OF DR. SURENDRANATH R EDDY V ACIT [2000] 72 ITD WHEREIN IT WAS HELD AS UNDER:- IN THE CASE WHERE A REGULAR PATTERN OF SUPPRESSION IS ESTABLISHED, IT MAY BE PRESUMED THAT THERE IS SUPPRESSION FOR WH OLE OF THE YEAR WHICH MAY BE ESTIMATED FOR THE PERIOD FOR WHICH DIR ECT EVIDENCES ARE NOT AVAILABLE. ON THE BASIS OF ABOVE, THE UNDER RECORDING IN THE P URCHASES FOR VARIOUS YEARS WAS CALCULATED IN TABLE 2 WHICH IS AS UNDER:- TABLE II ASST. YEAR TOTAL PURCHASES MADE DURING THE YEAR (IN RS. ) PURCHASES MADE OUTSIDE BOOKS (IN RS. )- PURCHASES SHOWN IN THE BOOKS / (100-32.30) X 32.30 (1) (2) (3) 2005-06 34,26,938 16,35,009 4 2006-07 24,74,614 11,80,650 2007-08 41,79,382 19,94,004 2008-09 40,67,653 19,40,697 2009-10 53,63,925 25,59,155 2010-11 59,92,660 28,59,127 2011-12 49,91,977 23,81,601 TOTAL 3,04,96,949 1,45,50,243 A SHOW CAUSE NOTICE WAS ISSUED WHY THESE UNDER REPO RTED PURCHASES SHOULD NOT BE ADDED AS HIS UNEXPLAINED INVESTMENT I N STOCK ETC. UNDER SECTION 69. IN RESPONSE, THE ASSESSEE REPLIED VIDE LETTER DATED 1.2.2013 AS UNDER:- THE PERUSAL OF THE TABLE CHART IN RESPONSE OF PAR A 5 REPRODUCED BY YOU WOULD GO TO REVEAL THAT THOUGH THE ASSESSEE ADMITS VARIATION IN THE PURCHASE PRICE AS WELL AS SALE PRI CE BUT THE PROFIT ON THE MOST ITEMS REMAIN THE SAME LEADING TO NO EFF ECT IN THE PROFITABILITY. IF THE PROFITABILITY IS COMPUTED ON HIGHER SALES FIGURE THE SAME SHALL DECREASE IN PERCENTAGE TERMS. THAT M OST OF SALE AND PURCHASE OF THE ASSESSEE ARE IN RESPECT OF THE PRODUCTS OF MULTI NATIONAL COMPANY OF WHICH ADMITTEDLY EVEN UND ER THE STATEMENT RECORDED WITHIN THE MEANING OF SECTION 13 2(4) OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAS CATEGORICALL Y MENTIONED THAT THE SAME ARE BILLED ON THE ACTUAL SELLING PRIC E AND SO ARE THE PURCHASE MADE. THE COPY OF THE INVENTORY PREPARED D URING THE COURSE OF SURVEY WOULD ALSO GO TO REVEAL THAT APART FROM 2,3 ITEMS IN RESPECT OF THE LIST DETAILED IN THE REPLY TO THE QUESTIONNAIRE STANDS FOUND AND AS SUCH NO ADVERSE I NFERENCE CAN BE MADE THAT THE 32.3% OF THE ENTIRE PURCHASES WERE DEFLATED. IT IS FURTHER SUBMITTED THAT THE CALCULAT ION MADE BY YOU IN TABLE 2 IN TOTAL AGGREGATING TO 1,45,50,243/- IS ABSOLUTELY HYPOTHETICAL BASED ON NO PROOF AND NOT SUSTAINABLE IN THE EYES OF LAW. MOREOVER IT HAS SUBMITTED SUPRA ONLY ON A FEW ITEMS FOR WHICH THE ASSESSEE HAS MADE A STATEMENT THE ENTIRE PURCHASES CANNOT BE LINKED UP WITH. IT IS FURTHER MOST RESPEC TFULLY SUBMITTED THAT EVEN IF FOR THE SAKE OF ARGUMENTS IT IS ADMITT ED THAT CERTAIN PERCENTAGE OF THE SALES WERE NOT RECORDED AND SO WE RE THE SALES THE SAME CANNOT BE TERMED AS UNEXPLAINED INVESTMENT IN THE STOCKS ATTRIBUTING THE VIGOURS OF SECTION 69B OF TH E INCOME TAX ACT, 1961 AS THE PURCHASES HAVE BEEN MADE AFTER MAK ING THE SALES AT THE MOST THE DIFFERENCE IN GP CAN BE ADDED BACK. IT IS ONCE AGAIN REITERATED THAT AS NO UNEXPLAINED INVEST MENT HAS BEEN MADE AND THE SAME HAS NOT BEEN FOUND EVEN IN T HE INVENTORY MADE THE SAME CANNOT BE ADDED BACK TO THE INCOME OF THE ASSESSEE MORE SO UNDER SECTION 69 B OF THE INCO ME TAX ACT, 1961. 5. THE ASSESSING OFFICER AFTER EXAMINING THESE SUBM ISSIONS DID NOT ACCEPT THE SAME BECAUSE THE ASSESSEE HAS CATEGORICA LLY GIVEN A STATEMENT ON OATH AT THE TIME OF SURVEY THAT PURCHA SES / SALES HAVE BEEN CONDUCTED OUTSIDE THE BOOKS. THE ONUS WAS ON THE AS SESSEE TO PROVE THAT NO PURCHASES OR SALES WERE UNDER REPORTED. TH EREAFTER, THE ASSESSING OFFICER MADE ADDITION OF RS. 16,35,009/- BEING PURCHASES 5 MADE BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT I N THIS YEAR. SAME KIND OF ADDITIONS OF VARIOUS AMOUNTS HAVE BEEN MADE IN OTHER YEARS. 6. ON APPEAL, IT WAS SUBMITTED THAT ASSESSING OFFI CER HAS MAINLY RELIED ON THE STATEMENT GIVEN BY THE ASSESSEE AND O NLY PART OF THE STATEMENT HAS BEEN RELIED. THE COMPLETE PERUSAL OF THE STATEMENT WOULD CLEARLY SHOW THAT ASSESSEE HAS MADE PURCHASES AND U NDER REPORTED ONLY IN RESPECT OF HARDWARE ITEMS WHICH WERE TAXABLE / V ETABLE. THE SAME SITUATION WAS THERE FOR THE SALES. THE ASSESSEE WAS HAVING MORE THAN 50% TURN OVER IN PAINTS WHICH BELONG TO REPUTED CO MPANIES AND IT WAS CATEGORICALLY STATED IN THE STATEMENT THAT ACTUAL BILL AMOUNT HAVE BEEN ENTERED IN RESPECT OF THE PAINT ITEMS. SIMILARLY, WHERE HARDWARE ITEMS WERE TAX FREE OR VAT FREE, THE ACTUAL BILLS HAVE BE EN ENTERED. IT WAS FURTHER EXPLAINED THAT IN ANY CASE THE SIMILAR ITEM S HAVE BEEN SOLD AND AT BEST REASONABLE PROFIT COULD HAVE BEEN ESTIMATED ON SUCH UNRECORDED SALES. THE LD. CIT(A) ADJUDICATED THIS ISSUE VIDE PARA 5.3 WHICH IS AS UNDER;- 5.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSES SEE AND THE IMPUGNED ORDER. THE ASSESSEE HAS ADMITTED, AS EVIDE NT FROM QS. 2,5,9 AND 10 OF THE STATEMENT RECORDED ON 08.10.201 0, COPY OF WHICH WAS FURNISHED IN THE PAPER-BOOK, THAT OVER 50 % OF THE SALES WERE OF PAINTS; PURCHASES AND SALES ARE BOOKED OUT OF BOOKS; PURCHASES UNDERVALUED IN BILLS TO AVOID VAT PAYMENT S AND THE ACTUAL VALUE-PURCHASES BILL PAID OUT OF BOOKS; SEIZ ED DOCUMENTS A1 AND A2 ARE ENTRIES OF SALES (PERTAINING TO AY 20 10-11) NOT RECORDED IN THE BOOKS. BOOKS ARE ALSO ADMITTEDLY NO T WRITTEN UP- TO-DATE. IT IS HOWEVER NOT CLEAR FROM THE STATEMENT WHETHER ONLY THE HARDWARE TERMS FROM DELHI ARE UNDER BILLED. IT IS A LSO NOT CLEAR THAT PURCHASES OF PAINTS OTHER THAN FROM REPUTED CO MPANIES HAVE NOT BEEN UNDERVALUED. IT IS SEEN THAT THE AO HAD SP ECIFICALLY ASKED THE ASSESSEE TO PROVE IF PURCHASE PRICE OR SA LE PRICE OF ANY OF THE OTHER ITEMS HAVE NOT BEEN UNDERVALUED. THE U NDISPUTED FACT BEING ASSESSEE RESORTS TO UNDER-BILLING TO AVOID PA YMENTS OF VAT ETC. THE AO ALSO NOTED THAT DESPITE ADMITTING TO SA LES/PURCHASES MADE OUTSIDE THE BOOKS, ASSESSEE HAS NOT OFFERED AN Y ADDITIONAL INCOME IN THE RETURNS OF INCOME FILED. THE SURRENDE R MADE U/S 132(4) WAS THEREFORE NOT HONORED BY THE ASSESSEE. O N ONE SIDE, THE CONTENTION OF THE ASSESSEE IS THAT THE STATEMEN T SHOULD BE READ AS A WHOLE. THUS THERE IS A CLEAR DICHOTOMY. BE THAT AS IT MAY, I HAVE CONSIDERED THE FACT THAT UNACCOUNTED PURCHASES AND SALES WERE MADE BY THE ASSESSEE. HOWE VER ONE HAS TO ALSO CONSIDER THE FACT THAT THE PURCHASES AN D SALES IF TAKEN TOGETHER WOULD BECOME NEUTRAL. THIS HAS BEEN ARTICU LATED BY THE ASSESSEE HIMSELF. THUS I AM CONSCIOUS THAT THEY BOT H CANNOT BE 6 TAKEN TOGETHER AS UNACCOUNTED. HOWEVER THE ASSESSEE CANNOT ESCAPE THE ELIGIBILITY OF TAXATION, WHICH HAS ALSO BEEN ACCEPTED BY HIM IN THE STATEMENT RECORDED VIS--VIS UNACCOUNTED PURCHASES AND UNACCOUNTED SALES. IT WOULD BE THUS SCIENTIFIC TO TAKE THE PERCENTAGE OF UNACCOUNTED SALES (TURNOVER) AS THE UNACCOUNTED INCOME OF THE A SSESSEE. IN THE DISCLOSED PROFIT AND LOSS ACCOUNT, THE PERCENTA GE WORKS OUT BETWEEN 9.03 TO 8.52% AS POINTED OUT BY THE AO. IN FACT I FIND THAT THE AO HAS WORKED OUT THE UNDISCLOSED PROFIT ON SAL ES MADE OUTSIDE THE BOOKS IN TABLE-IV OF THE IMPUGNED ORDER FOR ALL THE ASSESSMENT YEARS INVOLVED. THUS THE GROSS PROFIT ON SALES MADE OUTSIDE THE BOOKS AS GIVEN IN COLUMN 5 OF TABLE I V FOR AY 2005- 06 TO AY 2011-12 WOULD BE THE ADDITIONS THAT CAN BE SUSTAINED. 7. BEFORE US, LD. DR STRONGLY SUPPORTED THE ORDER OF ASSESSING OFFICER. 8. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND C IT(A). HE FURTHER EMPHASIZED THAT WHATEVER PURCHASES WERE RECORDED IN THE BOOKS HAVE BEEN ULTIMATELY SOLD AND, THEREFORE, AT BEST ONLY N ET PROFIT ON SUCH UNRECORDED SALES COULD HAVE BEEN ADDED TO THE INCOM E WHICH HAS BEEN DONE BY THE LD. CIT(A). HE ALSO SUBMITTED THAT CHAN DIGARH BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. AJIT BOOT HOUSE, I N ITA NO. 850/CHD/1996 FOR THE ASSESSMENT YEAR 1993-1994 CLEA RLY HELD THAT NO ADDITION IS REQUIRED TO BE MADE SEPARATELY FOR UNDI SCLOSED INVESTMENT IN SALES AND PURCHASES CONDUCTED OUTSIDE THE BOOKS OF ACCOUNT. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. IT IS ADMITTED POSITION THAT ASSESSEE HAS UNDER RECORDED CERTAIN P URCHASES AND SALES IN THE BOOKS OF ACCOUNT I.E. FULL PRICE OF PURCHASE AND SALES HAVE NOT BEEN RECORDED. HOWEVER, THE MOOT QUESTION IS WHETHE R SEPARATE ADDITIONS CAN BE MADE FOR SUCH UNRECORDED PURCHASES AND SALES. NO DOUBT WHATEVER HAS BEEN PURCHASED HAVE BEEN SOLD AL SO AND ASSESSEE WAS TRYING ONLY TO UNDERREPORT THE PURCHASES AND SA LES. THIS WOULD MEAN THAT PURCHASES AND SALES HAVE BEEN CONDUCTED O UTSIDE THE BOOKS OF ACCOUNT. THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF ITO 7 VS. AJIT BOOT HOUSE, IN ITA NO. 850/CHD/1996 (SUPR A) HAS OBSERVED AT PARA 8 & 9 AS UNDER:- 8. WE HAVE GIVEN CAREFUL THOUGHT TO RIVAL SUBMIS SIONS OF THE PARTIES. THERE IS NO DISPUTE THAT THE ASSESSEE MADE PURCHASES AND SALES OUTSIDE THE BOOKS OF ACCOUNTS AND ITS INC OME FOR RELVANT PERIOD HAS BEEN COMPUTED BY TAKING SALES AT RS. 25. 00 LACS AGAINST RS. 19,23,648/- DISCLOSED IN THE BOOKS. THU S UNACCOUNTED FOR SALES AND PURCHASES HAVE BEEN TAKEN INTO ACCOUN T IN THE ESTIMATED INCOME. THE QUESTION THAT NOW ARISES IS WHETHER SEPARATE ADDITION ON ACCOUNT OF UN-EXPLAINED INVEST MENT WAS JUSTIFIED OR NOT ? ON THE FACTS OF THE CASE WE ARE INCLINED TO AGREE WITH THE VIEW TAKEN BY THE COMMISSIONER OF INCOME T AX (APPEALS). 9. IT IS A MATTER OF COMMON KNOWLEDGE THAT THE INVESTMENT IS NOT REQUIRED FOR EVERY SALE AND PURCHASE MADE BY A TRADER. A LIMITED CAPITAL IS ROTATED TIME AND AGAIN TO EARN P ROFIT. THIS IS MORE THAN DEMONSTRATED FROM THE DISCLOSED SALES SHO WN AT RS. 19,23,648/- WITH ADMITTED CAPITAL OF PARTNERS AT RS . 1,23,735/-. THUS WHEN WITH DISCLOSED CAPITAL A SLIGHTLY MORE TH AN RS. 1,20,000/- SALES AND PURCHASES TO THE EXTENT OF RS. 19,23,648/- COULD BE MADE WHY NOT ADDITIONAL PURCHASE OF RS. 1, 36,994/-. EVEN IF WE ASSUME THAT SOME UNDISCLOSED INVESTMENT WAS MADE THAT SHOULD BE TAKEN AS FULLY COVERED BY ADDITION O F RS. 1,70,170/- SEPARATELY SUSTAINED. THERE IS NEITHER ANY EVIDENCE NOR DO WE SURE ANY JUSTIFICATION TO SUPPORT SEPARATE ADDITION OF RS. 1,36,994/-. IN OUR CONSIDERED VIE THE ABOVE ADDITIO N HAS BEEN RIGHTLY DELETED. WE CONFIRM THE ACTION OF THE COMMI SSIONER OF INCOME TAX (APPEALS). 10. THE ABOVE CLEARLY SHOWS THAT ASSESSEE HAD INVE STMENT OF RS. 1,20,000/- ON WHICH RECORDED SALES WERE OF RS. 19,2 3,648/- AND THAT IS WHY TRIBUNAL HELD THAT THE SAME INVESTMENT WAS USED TO CARRY OUT FURTHER PURCHASES OF RS. 1,36,994/-. HOWEVER, IN THE CASE BEFORE US ALMOST 50% PURCHASES HAVE BEEN MADE OUTSIDE THE BOOKS OF ACCOU NT BECAUSE IN THE BOOKS OF ACCOUNT ONLY PURCHASES OF RS. 34,26,938/- HAVE BEEN MADE WHEREAS THE PURCHASES OUTSIDE THE BOOKS ARE RS. 16, 35,009/-. THIS IN TURN MEANS THAT ASSESSEE WOULD REQUIRE SOME INVESTM ENT TO HOLD SUCH STOCK AND ALSO SOME SUNDRY DEBTORS WHEREVER CREDIT SALES HAVE BEEN MADE. SINCE THE AMOUNT OF RS. 16,35,009/- PERTAINS TO FULL YEAR, IN OUR OPINION, AN ADDITION OF RS. 3 LAKHS WOULD MEET THE ENDS OF JUSTICE BECAUSE THAT WOULD MEAN INVENTORY FOR ALMOST TWO MO NTHS PLUS SOME CREDIT SALES. HOWEVER, AT THE SAME TIME ONCE THIS A DDITION IS MADE THEN NO FURTHER ADDITION IS REQUIRED TO BE MADE IN THE S UBSEQUENT YEARS BECAUSE THE SAME INVESTMENT WOULD BE SUFFICIENT FOR HOLDING THE 8 INVENTORY AND SUNDRY DEBTORS IN THE LONG RUN. THERE FORE, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE ASSESSING OFFICE R TO MAKE ADDITION OF RS. 3 LAKHS. 11. IN ASSESSMENT YEAR 2006-07 I.E. ITA NO. 78/CHD/ 2014, ASSESSMENT YEAR 2007-08 IN ITA NO. 79/CHD/2014, ASSESSMENT YEA R 2008-09 IN 80/CHD/2014, ASSESSMENT YEAR 2009-10 IN ITA NO. 81/ CHD/2014, ASSESSMENT YEAR 2010-11 IN ITA NO. 84/CHD/2014 AND FOR ASSESSMENT YEAR 2011-12 IN ITA NO. 85/CHD/2014 REVENUE HAS RAI SED THE SIMILAR ISSUE. AS OBSERVED EARLIER ONLY THE INITIAL ADDITI ON OF RS. 3 LAKHS WOULD BE SUFFICIENT TO COVER THE INVENTORY AND SUNDRY DEB TORS OF UNRECORDED PURCHASES AND, THEREFORE, NO ADDITION IS REQUIRED T O BE MADE IN THESE YEARS. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO MAKE ADDITION OF RS. 3 LAKHS IN ASSESSMENT YEAR 2005-06 AND NO ADDIT ION IS REQUIRED TO BE MADE IN ASSESSMENT YEAR 2006-07 TO 2011-12. 12. IN THE RESULT APPEAL OF THE REVENUE IN ITA NO. 77/CHD/2014 IS PARTLY ALLOWED AND IN ITA NOS. 78 TO 81/CHD/2014 AN D 84/CHD/2014 TO 85/CHD/2014 ARE DISMISSED. CROSS OBJECTIONS NO. 13/CHD/2014 13. IN THIS CROSS OBJECTION THE ASSESSEE HAS RAISED THE FOLLOWING GROUND:- THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A)IS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS. 124635/- MADE ON ACCOUNT OF ALLEGED PROFIT EARNED ON ALLEGED UNACCOUNTED SALES. 14. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER AFTER DETERMINING THE UNDER RECORDED PURCHASES AND SALES WENT ON TO WORK OUT THE PROFIT ON UNRECORDED SALES. A COMPUTATION HAS BEEN DONE IN TABLE NO.4, WHICH IS AS UNDER;- 9 ASST. YEAR TOTAL SALES MADE DURING THE YEAR (IN RS.) SALES MADE OUTSIDE BOOKS (IN RS.)- SALES SHOWN IN THE BOOKS / (100- 25.55) X 25.55 GROSS PROFIT RATE ADOPTED BY THE ASSESSEE GROSS PROFIT ON SALES MADE OUTSIDE BOOKS (IN RS.) (1) (2) (3) 2005-06 40,35,255 13,84,832 9.00% 1,24,635 2006-07 29,36,804 10,07,862 9.01% 90,808 2007-08 43,36,341 14,88,160 9.03% 1,34,381 2008-09 46,52,250 15,96,575 8.96% 1,43,053 2009-10 59,50,809 20,42,218 8.52% 1,73,997 2010-11 64,97,417 22,29,805 8.59% 1,91,540 2011-12 59,06,022 20,26,848 8.76% 1,77,552 TOTAL 3,43,14,898 1,17,76,300 10,35,966 15. IN THIS BACKGROUND A SHOW CAUSE NOTICE WAS GIVE N TO THE ASSESSEE AS TO WHY PROFIT AMOUNTING TO RS. 10,35,966/- FROM ASSESSMENT YEAR 2005-06 TO 2011-12 SHOULD NOT BE ADDED RESPECTIVELY IN THE DIFFERENT YEARS AS SHOWN IN TABLE IV. IN RESPONSE, IT WAS MAI NLY STATED THAT AS EXPLAINED EARLIER IN RESPECT OF ADDITION OF UNRECOR DED PURCHASES ASSESSEE WAS NOT UNDER RECORDING ALL THE ITEMS BECA USE MAJOR ITEMS IN WHICH ASSESSEE WAS DEALING WAS PAINT WHICH WAS BEIN G PROCURED FROM MULTINATIONAL COMPANIES AND IT WAS NOT POSSIBLE TO RECORD LOWER PRICE FOR SUCH PURCHASE AND LOWER SALE PRICE ALSO. FURTHER, I T WAS CONTENDED THAT STATEMENT RECORDED U/S 132(4) CANNOT BE BASIS FOR S UCH ADDITION. THE ASSESSING OFFICER DID NOT AGREE WITH THESE SUBMISSI ONS BY OBSERVING THAT ASSESSEE HAS CATEGORICALLY ADMITTED ON OATH THAT AS SESSEE HAD INDULGED IN PURCHASE AND SALES OUTSIDE THE BOOKS OF ACCOUNT OF THE ASSESSEE AND ONUS WAS ON THE ASSESSEE TO SHOW THAT NO SUCH TRANS ACTION HAS BEEN DONE BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT. ACCORDINGLY HE ADDED A SUM OF RS. 1,24,635/- TOWARDS PROFITS OF UN DISCLOSED SALES IN THIS YEAR. 10 16. ON APPEAL BEFORE CIT(A), THE SUBMISSION MADE BE FORE ASSESSING OFFICER WERE REITERATED. THE LD. CIT(A) AFTER EXAMI NING THE SUBMISSIONS DECIDED THE ISSUE VIDE PARA 5.3 WHICH WE HAVE ALREA DY REPRODUCED WHILE ADJUDICATING THE REVENUES APPEAL. THE RELEVANT PO RTION RELATING TO THE CONFORMATION OF ADDITION ON ACCOUNT OF PROFITS READ S AS UNDER:- BE THAT AS IT MAY, I HAVE CONSIDERED THE FACT THA T UNACCOUNTED PURCHASES AND SALES WERE MADE BY THE ASSESSEE. HOWEVER ONE HAS TO ALSO CONSI DER THE FACT THAT THE PURCHASES AND SALES IF TAKEN TOGETHER WOULD BECOME NEUTRAL. THIS HAS BE EN ARTICULATED BY THE ASSESSEE HIMSELF. THUS I AM CONSCIOUS THAT THEY BOTH CANNOT BE TAKEN TOGETHER AS UNACCOUNTED. HOWEVER THE ASSESSEE CANNOT ESCAPE THE ELIGIBILITY OF TAXATION, WHICH HAS ALSO BEEN ACCEPTED BY HIM IN THE STATEMENT RECORDED VIS--VIS UNACCOUNTED PURCHASES AND UNACCOUNTED SALES. IT WOULD BE THUS SCIENTIFIC TO TAKE THE PERCENTAGE OF UNACCOUNTED SALES (TURNOVER) AS THE UNACCOUNTED INCOME OF THE ASSESSEE. IN THE DISCLOSE D PROFIT AND LOSS ACCOUNT, THE PERCENTAGE WORKS OUT BETWEEN 9.03 TO 8.52% AS POINTED OUT BY T HE AO. IN FACT I FIND THAT THE AO HAS WORKED OUT THE UNDISCLOSED PROFIT ON SALES MADE OUTSIDE TH E BOOKS IN TABLE-IV OF THE IMPUGNED ORDER FOR ALL THE ASSESSMENT YEARS INVOLVED. THUS THE GRO SS PROFIT ON SALES MADE OUTSIDE THE BOOKS AS GIVEN IN COLUMN 5 OF TABLE IV FOR AY 2005-06 TO A Y 2011-12 WOULD BE THE ADDITIONS THAT CAN BE SUSTAINED. 17. BEFORE US SUBMISSIONS MADE BEFORE ASSESSING OFF ICER AND CIT(A) WERE REITERATED BY THE LD. COUNSEL FOR THE ASSESSEE . 18. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTE D THE ORDER OF CIT(A). 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. WE HAVE ALREADY DISCUSSED IN DETAIL THE ASPECT RELATING TO UNRECORDED PURCHASES AND SALES AND PRACTICALLY DELETED WHOLE OF THAT ADD ITION EXCEPT FOR THE SUM OF RS. 3 LAKHS WHICH WAS REQUIRED AS INVESTMENT IN THE FORM OF INVENTORY. IT WAS ALSO OBSERVED THAT AT BEST ONLY PROFIT COULD BE ESTIMATED ON SUCH UNDISCLOSED SALES. THE UNDISCLOSE D SALES WAS CLEARLY ADMITTED DURING THE SURVEY/SEARCH OPERATION BY THE ASSESSEE HIMSELF AND THEREFORE, THE SAME CANNOT BE DENIED NOW. AT LEAST PROFITS ON ALL SUCH TRANSACTIONS HAVE TO BE ASSESSED TO TAX. THE ASSESS ING OFFICER HAS BEEN MORE THEN REASONABLE TO ASSESS THE PROFIT AT THE GP RATE DECLARED BY THE ASSESSEE IN VARIOUS YEARS AND THE SAME HAS BEEN CON FIRMED BY LD. 11 CIT(A), THEREFORE, WE FIND NOTHING WRONG WITH THE O RDER OF LD. CIT(A) AND CONFIRM THE SAME. 20. IN THE RESULT, CROSS OBJECTION IS REJECTED. 21. IN CROSS OBJECTIONS NOS. 14/CHD/2014 TO 17/CHD/2014 , IDENTICAL ISSUE HAVE BEEN RAISED IN RESPECT OF ADDITION ON AC COUNT OF PROFIT OF UNDISCLOSED SALES WHICH WE HAVE ADJUDICATED UPON IN THE ABOVE NOTED CROSS OBJECTION NO.13/CHD/2014. SINCE THE FACTS AR E IDENTICAL, THEREFORE, APPLYING THAT DECISION WE CONFIRM THE AD DITION ON ACCOUNT OF PROFIT ON UNACCOUNTED SALES, THEREFORE, THESE CROSS OBJECTIONS ARE REJECTED. 22. IN THE RESULT, CROSS OBJECTION NOS. 13/CHD/2014 TO 17/CHD/2014 OF THE ASSESSEE AS DISMISSED. ITA NO. 94/CHD/2014 23. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS:- 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN SUSTAIN ING THE ADDITION OF RS. 191540/- ON ACCOUNT OF ALLEGED PROFIT EARNED ON UNA CCOUNTED SALES. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN UPHOLDI NG THE ADDITION OF A SUM OF RS. 3,00,000/- ON ACCOUNT OF ALLEGED CAPITAL GAINS SHORT DISCLOSED. 24. GROUND NO.1 : THROUGH THIS GROUND THE ASSESSEE HAS CHALLENGED THE ADDITION ON ACCOUNT OF PROFIT ON UNACCOUNTED SA LES. THIS ISSUE HAS BEEN DISCUSSED BY US IN DETAIL WHILE ADJUDGING THE CROSS OBJECTIONS IN C.O.NOS.13/CHD/2014 TO 17/CHD/2014. SINCE THE FACT S ARE IDENTICAL, THEREFORE FOLLOWING THE ORDER IN C.O. NO. 13/CHD/20 14, WE DECIDE THIS ISSUE AGAINST THE ASSESSEE. 25. GROUND NO.2: AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT ASSESSEE 12 SOLD A FLAT AT A-147, SECTOR III, NEW SHIMLA. THE A SSESSEE HAS SHOWN CAPITAL GAIN OF RS. 11 LAKHS AS PER FOLLOWING DETAI LS:- SALE CONSIDERATION RS. 11,00,000/- LESS: COST OF ACQUISITION RS. 7,00,000/- COST OF IMPROVEMENT RS. 3,00,000/- RS. 10,00,000 /- RS. 1,00,000/- 26. THE ASSESSEE FAILED TO FILE ANY DOCUMENTARY EVI DENCE WITH REGARD TO THE COST OF IMPROVEMENT, THEREFORE, THE ASSESSIN G OFFICER DID NOT ALLOW THE SAME AND COMPUTED THE CAPITAL GAIN AFTER REDUCING ONLY THE COST OF ACQUISITION. IN THIS BACKGROUND A SUM OF R S. 3 LAKHS WAS ADDED TO THE INCOME OF THE ASSESSEE. 27. BEFORE LD. CIT(A), COPY OF THE CASH FLOW STATEM ENT WAS FILED AND IT WAS SUBMITTED THAT COST OF IMPROVEMENT IS DULY SHOW N IN THE CASH FLOW STATEMENT. THE LD. CIT(A) DID NOT FIND FORCE IN TH E SAME AND DECIDED THE ISSUE AGAINST THE ISSUE VIDE PARA 5.1, WHICH IS AS UNDER:- I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND THE IMPUGNED ORDER, THE RELEVANT PARA WHICH THE ASSESSE E HAS REPRODUCED IN HIS SUBMISSIONS. THE ISSUE OF PURCHASE AND SALE OF THE FLAT A-147, SEC- III, NEW SHIMLA FOR RS. 7 LAKHS IN 2008 WHICH WAS S OLD FOR RS. 11 LAKHS IS NOT IN DISPUTE. WHAT IS IN DISPUTE IS THE CALCUL ATION OF SHORT TERM CAPITAL GAIN ON THE SALE. IT IS AOS CASE THAT IN T HE YEAR UNDER CONSIDERATION THE ASSESSEE SOLD THE SAID PROPERTY F OR A SUM OF RS. 11,00,000/- AND HAD SHOWN SHORT TERM CAPITAL GAIN I N THE REVISED RETURN U/S 153 A, AFTER INCLUDING A SUM OF RS. 3,00,000/- TO THE COST OF ACQUISITION. AS THE ASSESSEE HAD NOT FILED THE EVID ENCE WITH REGARD TO COST OF IMPROVEMENT OF RS. 3,00,000/- CLAIMED AS DE DUCTION, THE SHORT TERM CAPITAL GAIN ON SALE OF THE SAID PROPERTY WAS WORKED OUT AT RS. 4,00,000/-. THE DIFFERENCE OF RS. 3,00,000/- (4,00, 000-1,00,000) WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE ON A CCOUNT OF SHORT DISCLOSURE OF SHORT TERM CAPITAL GAIN ON SALE OF TH E SAID PROPERTY IN THE RETURN. ASSESSEES CONTENTION IS THAT RS. 3 LAKHS WAS SPENT ON MAKING THE PROPERTY WORTHY OF SALE AND THAT THE EXPENSES WERE CLEARLY REFLECTED IN THE CASH FLOW STATEMENT / BANK ACCOUNT FILED DURING THE ASSESSMENT PROCEEDINGS. COPIES OF THE DEEDS WERE ALSO FILED BE FORE ME. THE AO HAS CLEARLY STATED THT DOCUMENTARY EVIDENCES WERE NOT F ILED FOR THE EXPENSES CLAIMED TOWARDS THE ALLEGED DEVELOPMENT CHARGES. EV EN BEFORE ME NO SUCH EVIDENCES HAVE BEEN FILED. THE CASH FLOW AND B ANK STATEMENTS ARE ALSO DO NOT HELP THE ASSESSEE AS THE FORMER IS NOT SELF SPEAKING HAVING NO DATES AND PROPER NARRATIONS, WHILE THE OSTENSIBL E STATEMENTS OF BANK ACCOUNT IS JUST A NARRATION OF DEBIT ENTRIES AND CR EDIT ENTRIES BY THE ASSESSEE. BY MERELY SHOWING SOME AMOUNTS OF RS. 1.6 0 LAKHS AS TOWARDS CONSTRUCTION AND RS. 1.80 LAKHS AS PERSONAL EXPENSES DO NOT PROVE ANYTHING, OTHER THAN PERHAPS RAISING A QUESTI ON OF HOW THE ASSESSEE, IN SUCH CIRCUMSTANCES IS MEETING HIS PERS ONAL AND HOUSEHOLD EXPENSES ? NO DOCUMENTARY EVIDENCES IN SUPPORT OF D EVELOPMENT EXPENDITURE CLAIMED HAVE BEEN FURNISHED BY THE ASSE SSEE. THUS, I HAVE NO HESITATION IN CONFIRMING THE ACTION OF THE AO. A SSESSEE FAILS ON THIS GROUND. 13 28. BEFORE US, LD. COUNSEL FOR THE ASSESSEE REFERRE D TO PAGE 30 OF THE PAPER BOOK WHICH IS CASH FLOW STATEMENT FOR THE YEA R WHERE CLEARLY THE AMOUNT OF RS. 1,60,000/- IS SHOWN TOWARDS CONSTRUCT ION. HE ALSO REFERRED TO PAGE 32 TO 33 OF THE PAPER BOOK AND POINTED OUT THAT RS. 44,333/- WAS PAID TO HIMUDA AS TRANSFER CHARGES ON 8.4.2008 AND FURTHER A SUM OF RS. 28,550/- WAS SPENT TOWARDS PURCHASE OF WOOD ETC. TH ESE ITEMS CLEARLY SHOW THAT ASSESSEE HAS INCURRED EXPENDITURE IN IMP ROVEMENT. 29. ON THE OTHER HAND, THE LD. DR WHILE STRONGLY SU PPORTED THE ORDER OF CIT(A) AND SUBMITTED THAT ASSESSEE HAS NOT FILED AN Y DOCUMENTARY EVIDENCE TO SHOW THAT DEVELOPMENT EXPENDITURE WAS I NCURRED FOR THE SAID PROPERTY BECAUSE THE ASSESSEE WAS HOLDING MANY PROP ERTIES AND, THEREFORE, IT CANNOT BE SAID THAT TRANSFER CHARGES ETC. RELATED TO THIS PARTICULAR PROPERTY. 30. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND SOME FORCE IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. DUR ING THE YEAR A SUM OF RS. 1,60,000/- HAS BEEN SHOWN TOWARDS CONSTRUCTION AND FURTHER A SUM OF RS. 44,333/- IS SHOWN FOR TRANSFER CHARGES AND RS. 28,550/- FOR PURCHASE OF WOOD ETC. THEREFORE, IT CAN BE SAID THAT ASSESSE E HAS INCURRED SOME EXPENDITURE FOR COST OF IMPROVEMENT. HOWEVER, AT TH E SAME TIME NO DOCUMENTARY EVIDENCE HAS BEEN PLACED AND SINCE ADMI TTEDLY THE ASSESSEE IS HOLDING MANY PROPERTIES, THEREFORE, IT CANNOT BE SAID THAT ALL THE EXPENSES HAVE BEEN INCURRED FOR IMPROVEMENT OF THIS PROPERTY. IN THESE CIRCUMSTANCES, IN THE INTEREST OF JUSTICE WE ARE OF THE OPINION THAT IF A SUM OF RS. 1 LAKHS IS ESTIMATED TOWARDS COST O F IMPROVEMENT, THEN THE SAME WOULD MEET THE ENDS OF JUSTICE. ACCORDINGL Y, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE ASSESSING OFFIC ER TO ALLOW A SUM OF RS. 1 LAKH TOWARDS COST OF IMPROVEMENT. 14 31. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. ITA NO. 95/CHD/2014:- 32. IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWIN G GROUNDS:- 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN SUSTAIN ING THE ADDITION OF RS. 177552/- ON ACCOUNT OF ALLEGED PROFIT EARNED ON UNA CCOUNTED SALES 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX(APPEALS) IS NOT JUSTIFIED IN UPHOLDIN G THE ADDITION OF RS. 24,21,754/- ON ACCOUNT OF AS ALLEGED UNEXPLAINED IN VESTMENT IN STOCKS UNDER SECTION 69 B OF THE INCOME TAX ACT, 1961. 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN UPHOLDI NG THE ADDITION OF RS. 800503/- ON ACCOUNT OF ALLEGED UNACCOUNTED CASH FOU ND AT THE TIME OF SEARCH. 4. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED MAKING THE ADDITION OF RS. 1085530/- ON ACCOUNT OF ALLEGED INVESTMENT IN JEWELLERY SUBST ANTIVE IN THE CASE OF ASSESSEE APPELLANT. 5. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME (APPEALS) IS NOT JUSTIFIED IN UPHOLDING T HE ADDITION OF RS. 350000/- MADE ON ACCOUNT OF ALLEGED UNDISCLOSED CAPITAL GAIN S. 33 GROUND NO. 1 THIS ISSUE IS IDENTICAL TO THE IS SUE RAISED BY THE ASSESSEE IN CROSS OBJECTIONS WHICH WE HAVE DECIDED VIDE PARA 19 OF THIS ORDER. FOLLOWING THAT ORDER WE DECIDE THIS ISSUE A GAINST THE ASSESSEE. 34. GROUND NO.2: AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING THE SURVEY OPERATION THE STOCK WAS INVENTORISED AND THE DETAIL OF STOCK WAS AS UNDER:- A) AT BCS, SECTOR-I, NEW SHIMLA: RS. 9,92,244/- B) AT BASEMENT, SHARMA SHOPPING COMPLEX, NEAR POLICE CHOWKI, NEW SHIMLA. RS. 1,84,850/- C) AT B-1, LANE-I, SECTOR-1 NEW SHIMLA. RS. 12,55,460/- RS. 24,32,554/- 35. THE ASSESSEE WAS ASKED TO RECONCILE THE STOCK W ITH THE BOOKS OF ACCOUNT BUT THE ASSESSEE FAILED TO DO SO. IT WAS ST ATED BY THE ASSESSEE THAT SINCE THE BOOKS ARE NOT UP-TO-DATE, THEREFORE, IT IS NOT POSSIBLE TO PREPARE A INVENTORY AS PER THE BOOKS OF ACCOUNT. IN THIS BACKGROUND THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE THAT W HY A SUM OF RS. 24,32,554/- SHOULD NOT BE ADDED TO THE INCOME OF TH E ASSESSEE. IN RESPONSE, THE ASSESSEE VIDE LETTER DATED 1.2.2013 R EPLIED AS UNDER;- 15 IN RESPONSE TO PARA 9 IT IS SUBMITTED THAT THE T RADING ACCOUNT AS ON THE DATE OF SURVEY IS BEING APPENDED HERETO FOR YOU KIND PERUSAL AND READY REFERENCE. THE TOTAL STOCK AS ON THE DATE OF SURVEY AS PER THE BOOKS OF ACCOUNT AMOUNTS TO RS. 18,47,600/-. THE ST OCK HAS BEEN VALUED BY THE SURVEY TEAM AS 24,32,554/- IN WHICH THE PAIN T ITEMS HAVE BEEN VALUED AT MRP AND THE OTHER ITEMS HAVE BEEN VALUED AT THE SELLING PRICE. MRP ALL THE PAINTS ITEMS IS AT LEAST 18% TO 20% ABO VE THE SELLING PRICE. THESE GOODS ARE SOLD AT DEALER PRICE. THE PERUSAL O F THE SALE BILLS WHICH ARE LYING SEIZED IN YOUR CUSTODY WOULD GO TO REVEAL THAT THE PAINT HAS BEEN SOLD AT MUCH LESSER PRICE THAN THE MRP. THAT S TOCK IS TO BE VALUED AT THE COST PRICE ARE NOT THE MRP. THE DIFFERENCE B ETWEEN THE COST AND THE MRP AMOUNT TO RS. 5,84,954/- AND IF THE SAME TA KEN INTO CONSIDERATION THE STOCK FOUND AT THE SEARCH AND SEI ZURE HAS EXPLAINED IN THE BOOKS SHALL STANDS DULY RECONCILED. IT IS FURTH ER SUBMITTED THAT THE SERIAL NO. 87 IN RESPECT OF THE STOCK FOUND AT THE BASEMENT THE SAME HAS BEEN VALUED AT RS. 14,580/-. WHEREAS THE SAME AMOUN T TO RS. 3,780/- AGGREGATING TO A DIFFERENCE OF RS. 10,800/- IN THE VALUATION. IF ALL THE FACTORS ARE TAKEN INTO CONSIDERATION THERE IS NO DI SCREPANCY IN THE STOCK. THAT BEING THE CASE NO ADDITION UNDER SECTION 69B I S CALLED FOR. 36. AFTER CONSIDERING THIS EXPLANATION, HE OBSERVED THAT INVENTORY WAS PREPARED IN THE PRESENCE OF THE ASSESSEE. FURTHER, ASSESSEE WAS PROVIDED OPPORTUNITY TO RECONCILE THE STOCK. MOREOV ER, THE ASSESSEE WAS NOT MAINTAINING PROPER BOOKS OF ACCOUNT. THEREAFTER HE RECTIFIED THE WRONG VALUATION AT SR.NO. 87 AND ALLOWED THE RELIEF OF RS. 10,800/- AND MADE ADDITION OF RS. 24,21,754/-. 37. ON APPEAL, THE ACTION OF THE ASSESSING OFFICER WAS CONFIRMED BY LD. CIT(A). 38. BEFORE US, LD. COUNSEL FOR THE ASSESSEE REITERA TED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER. HE VEHEMENTLY A RGUED THAT ASSESSEE WAS CARRYING ON THE BUSINESS FOR MANY YEAR S, THEREFORE, THE ASSESSEE MUST BE CARRYING SOME STOCK AND WHOLE STOC K FOUND DURING THE SURVEY COULD NOT BE ADDED. THE ASSESSEE HAS SUBMIT TED THE LIST OF INVENTORY BEFORE CIT(A) FOR RS. 18,47,600/-. MOREO VER, IN MOST OF THE CASES, THE STOCK WAS VALUED AT THE MRP WHEREAS THE ASSESSEE WAS FOLLOWING THE METHOD OF VALUATION OF STOCK AT COST OR MARKET VALUE WHICHEVER IS LOWER. THEREFORE, THIS ADDITION WAS NO T JUSTIFIED AT ALL. 39. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTE D THE ORDER OF CIT(A). 16 40. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND SOME FORCE IN THE SUBMISSIONS OF LD. COUNSEL FOR THE ASSESSEE. TH E ASSESSING OFFICER HAS ADDED THE WHOLE OF THE STOCK FOUND DURING THE S URVEY EXCEPT FOR A MINOR VALUE OF RS. 10,800/-. THIS SEEMS TO BE TOTA LLY INCORRECT. THE ASSESSEE IS REGULARLY CARRYING ON THE BUSINESS OF S ANITARY AND HARDWARE ITEMS AND, THEREFORE, MUST BE CARRYING ON SOME STOC K . BEFORE CIT(A) LIST OF INVENTORY WAS FURNISHED SHOWING STOCK OF RS. 18, 47,600/-. THOUGH INVENTORY LIST WAS NOT FURNISHED BEFORE ASSESSING O FFICER BUT THIS CAN BE SAID TO HAVE BE ACCEPTED BY THE REVENUE BECAUSE INV ESTMENT IN UNDISCLOSED SALE WAS CALCULATED ON THE BASIS OF THE SE DETAILS. FURTHER, WE HAVE ALREADY HELD WHILE ADJUDICATING THE ISSUE R EGARDING UNDISCLOSED STOCK I.E SUM OF RS. 3 LAKHS SHOULD BE ADDED TOWAR DS INVENTORY AND SUNDRY DEBTORS. CONSIDERING THIS FACT AND THE FACT THAT SOME OF THE ITEMS HAVE BEEN VALUED AT RETAIL PRICE WE ARE OF THE OPIN ION THAT ADDITION OF RS. 5 LAKHS TOWARDS COST WOULD MEET THE ENDS OF JUSTICE . ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT TO MAKE AD DITION OF RS. 5 LAKHS TOWARDS UNDISCLOSED STOCK. 41 GROUND NO. 3 - AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING SEARCH / SURVEY OPERATION CASH AMOUNTING TO RS. 21, 46,150/- WAS FOUND AS PER FOLLOWING DETAILS: SL. NO. DETAILS OF PREMISES AMOUNT OF CASH FOUND (I N RS. ) 1 RESIDENCE OF HEMANT LODGE MURRARY FIELD ESTATE, NAVBHAR 20,85,950/- 2 BUSINESS PREMISES OF M/S. NEW SHIMLA HARDWARE & WELDING WORKS 60,200/- TOTAL 21,46,150/- DURING THE COURSE OF ASSESSMENT PROCEEDINGS CASH W AS EXPLAINED AS UNDER: A) CASH AS PER THE BOOKS OF SH. RAJESH POPLI, 17 PROP. M/S. NEW SHIMLA HARDWARE RS. 3,71,084.77 B) CASH AS PER THE BOOKS OF HEMANT POPLI RS. 13,4 5,647.07 C) CASH OF THE DAUGHTER OF THE ASSESSEE JYOTI KHAJUIRA RS. 3,00,000.00 D) CASH OF SH. VIJAY KISHAN SHARMA PENDING PAYMENT FOR WHICH CONFIRMATION SHALL BE FILED IN DUE COURSE RS. 1,50,000.00 RS. 21,66,731.84 THE ASSESSING OFFICER NOTED THAT DURING SURVEY OPER ATION IT WAS CLEARLY STATED THAT SINCE THE BOOKS OF ACCOUNT ARE NOT COMP LETE, THEREFORE THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF CASH. THE ASSESSING OFFICER HAS ALSO EXTRACTED RELEVANT QUESTIONS AND ANSWERS W HICH ARE AS UNDER: Q. 13 PLEASE STATE HOW MUCH CASH IS LYING AT THE P REMISES & WHAT IS THE CASH AVAILABLE AS PER YOUR BOOKS. ANS. AS STATED EARLIER I AM NOT ABLE TO STATE THE C URRENT POSITION OF CASH-IN-HAND AS PER BOOKS. HOWEVER, AS PER PHYSICAL VERIFICATION MADE B Y YOU, CASH AMOUNTING TO RS. 60,200/- HAS BEEN FOUND, THE SAME HAS BEEN INVENTOR IZED BY YOU IN A SEPARATE SHEET AND HANDED OVER BACK TO ME. THE SAME HAS BEEN KEPT BY M E IN MY SAFE CUSTODY. I CANNOT OFFER MY COMMENTS TO ANY DIFFERENCE IN CASH AS BOOK S ARE NOT COMPLETE. THE ASSESSING OFFICER FURTHER NOTED THAT AS PER EXT RACT OF THE CASH BOOK OF HP TRADERS & CONTRACTORS, THE PROPRIETARY CONCER N OF HEMANT POPLI CASH ON THE DATE OF SURVEY I.E. 8.10.2010 WAS RS. 1 45647/- INSTEAD OF RS. 1345647/-. SIMILARLY AS PER CASH BOOK OF PROPR IETARY CONCERN OF ASSESSEE M/S SHIMLA HARD WARE AND WELDING WORKS CAS H WAS RS. 71084/- INSTEAD OF RS. 371084/-. IN THIS BACKGROU ND THE ASSESSEE WAS ISSUED A SHOW CAUSE NOTICE THAT WHY THE CASH FOUND DURING SEARCH SHOULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE VIDE LETTER DATED 1.2.2013 GAVE FOLLOWING REPLY: REGARDING CASH IN HAND THE DETAILED SUBMISSIONS H AVE ALREADY BEEN MADE WHICH HAVE ALSO BEEN REPRODUCED BY YOU. JUST BECAUSE CASH IS FOUND WOULD NOT LEAD TO THE INFERENCE WITH SAME IS UNACCOUNTED. JUST BECAUSE SURRENDER HAS BEEN RET RACTED DOES NOT EMPOWER THE REVENUE TO MAKE UNNECESSARY ADDITIONS. THE ABSTRACT OF THE CAS H OF SH. RAJESH POPLI HAS ALREADY BEEN PLACED ON RECORD. NO DISCREPANCY IN THE SAME HAS BE EN POINTED OUT. HIS BROTHER SH. HAMENT POPLI HAS OWNED CASE AS PER HIS BOOKS OF ACCOUNT OF RS. 13,45,647/-. THE SISTER AND BROTHER IN LAW OF THE ASSESSEE HAD OWNED THE CASE OF RS. 3 LAK H AND THEIR STATEMENT WAS ALSO RECORDED 18 DURING THE COURSE OF PROCEEDINGS UNDER SECTION 132 OF THE INCOME TAX ACT, 1961. THE FATHER IN LAW OF THE ASSESSEE SH. VIJAY KISHAN SHARMAS CASH OF RS. 1,50,000/- WAS LYING IN THE HOUSE OF THE ASSESSEE AND CONFIRMATION IN THIS REGARD IS PLA CED ON RECORD FOR YOU KIND PERUSAL AND READY REFERENCE. THAT THE CASH OF THE ASSESSEE IS FURTHER CORROBORATED BY THE FACT THAT IN THE BRIEF CASE OF THE ASSESSEE A SUM OF RS. 3,59,950/- WAS FOUND. THAT BEING THE CASE THE VERSION GIVEN BY THE ASSESS EE IS CORROBORATED. ONCE THE BOOKS OF ACCOUNTS WERE NOT COMPLETE AND THE STATEMENT IN RES PECT OF THE SAME HAD ALREADY BEEN GIVEN WHICH ABSTRACT OF BOOKS WERE TAKEN IS NOT KNOWN. IT IS ABSOLUTELY WRONG TO STATE THAT THERE IS NOT PARITY IN THE SUBMISSION EARLIER MADE AND THE ABSTR ACT OF THE CASH BOOK FILED. AS THE CASH HAS BEEN DULY EXPLAINED WITH THE HELP OF DOCUMENTARY EV IDENCE ON QUESTION OF MAKING ANY ADDITION ARISES IN THE INSTANT CASE AT ALL. THAT BEING THE CASE IT IS MOST RESPECTFULLY SUBMITT ED THAT NO ADDITION IN RESPECT OF THE CASH CAN BE MADE TREATING THE SAME IS UNEXPLAINED MOREOVER I T IS SUBMITTED THAT THE CASH ONLY AMOUNTING TO RS. 371,084,77/- BELONGED TO THE ASSESSEE AND HE CAN NOT BE MADE ACCOUNTABLE FOR THE ENTIRE FAMILIES CASH. THE ASSESSING OFFICER CONSIDERED THE ABOVE SUBMISSI ONS AND OBSERVED THAT THE ONUS WAS ON THE ASSESSEE TO EXPLAIN THE CA SH FOUND DURING SEARCH. FURTHER BOOKS OF ACCOUNT WERE NOT COMPLETE AND THEREFORE NO CREDIT COULD BE GIVEN. MERELY PASSING OF ENTRIES I N THE BOOKS OF ACCOUNT ARE NOT SUFFICIENT TO EXPLAIN THE SOURCE OF CASH. NO DOCUMENTARY EVIDENCE HAS BEEN GIVEN IN RESPECT OF CASH OF RS. 3.00 LAKHS BELONGING TO SMT. JYOTI KHAJURIA AND RS. 1.5 LAKH BELONGING T O VIJAY KISHAN SHARMA. 42 IN THE ABOVE BACKGROUND IT WAS FURTHER OBSERVED THAT CASH AMOUNTING TO RS. 1345645/- BELONGING TO HEMANT POPL I WOULD BE CONSIDERED IN HIS BOOKS AND THEREFORE BALANCE CASH OF RS. 800503/- WAS ADDED TO THE INCOME OF THE ASSESSEE. 43 ON APPEAL THE SUBMISSIONS MADE BEFORE THE ASSESS ING OFFICER WERE REITERATED. 44 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S DID NOT FIND FORCE IN THE SAME AND CONFIRMED THE ADDITION OF RS. 80050 3/-. 45 BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REIT ERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND T HE LD. CIT(A). HE REFERRED TO PG 80 OF THE PAPER BOOK WHICH IS A COPY OF THE CASH BOOK AND 19 POINTED OUT THAT CASH AVAILABLE IS RS. 371084/-. H E ALSO REFERRED TO PG 84 WHICH IS A COPY OF CERTIFICATE GIVEN BY SMT. JYO TI KHAJURIA WHO IS SISTER OF THE ASSESSEE WHO WAS VISITING HER PARENTS , HAS CLEARLY STATED THAT SHE HAS BROUGHT CASH OF RS. 3.00 LAKHS FROM DE LHI FOR PURCHASE OF SINGLE ROOM FLAT AT SHIMLA. HE ALSO REFERRED TO PG 85 WHICH IS A COPY OF CERTIFICATE GIVEN BY SHRI VIJAY KISHAN SHARMA WHO I S FATHER-IN-LAW OF SHRI HEMANT POPLI AND SAID TO HAVE CASH OF RS. 3.00 LAKH S WHICH IS WITHDRAWN FROM VIJAY BANK ON 19.8.2010. 46 ON THE OTHER HAND, THE LD. D.R FOR THE REVENUE STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A) AND SUBMITTED TAT THERE WAS NO OCCASION FOR THE FATHER-IN-LAW TO BRING CASH TO THE HOUSE OF HIS SON-IN-LAW. SIMILARLY SMT. JYOTI KHAJURIA WHO IS THE SISTER OF THE ASSESS EE, HAS NOT EXPLAINED THE SOURCE OF CASH. HE ALSO SUBMITTED THAT SINCE B OOKS OF ACCOUNT WERE NOT COMPLETE AT THE TIME OF SEARCH / SURVEY AND THE REFORE NO CREDIT CAN BE GIVEN FOR CASH IN HAND OF THE BUSINESS. 47 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. FIRST OF ALL AS FAR AS CASH RELATED TO THE BUSINESS IS CONCERNED, A DMITTEDLY THE BOOKS OF ACCOUNT WERE NOT COMPLETE AND THEREFORE CREDIT COUL D NOT BE GIVEN FOR THE AVAILABLE CASH WHICH HAS BEEN SHOWN AFTER SURVEY B ECAUSE THE ENTRIES WERE MADE AFTER SURVEY / SEARCH. HOWEVER, AT THE S AME TIME, CASH AMOUNTING TO RS. 60200/- WAS FOUND AT THE BUSINESS PREMISES OF THE ASSESSEE AND THEREFORE PRESUMPTION SHOULD BE THAT T HIS CASH BELONGS TO THE ASSESSEES BUSINESS AND IN OUR OPINION, A CREDI T OF RS. 60,000/- SHOULD BE GIVEN. AS FAR AS CASH BELONGING TO SMT. JYOTI KHAJURIA IS CONCERNED, IN THE CERTIFICATE FILED AT PG 84 IT HAS BEEN SIMPLY STATED THAT SHE IS A LAWYER AND HER HUSBAND IS WORKING WITH A E XPORT HOUSE BUT NO PAN AND NO COPIES OF THE BANK ACCOUNT FROM WHERE CA SH HAS BEEN WITHDRAWN, HAVE BEEN FURNISHED THEREFORE ENTIRE CAS H CANNOT BE TREATED AS EXPLAINED. AT THE SAME TIME A MARRIED WOMEN COM ING TO HER PARENTS 20 HOUSE MAY BRING CASH AND CONSIDERING THE OVERALL C IRCUMSTANCES WE ARE OF THE OPINION THAT A CREDIT FOR RS. 1 LAKH CAN BE GIVEN FOR CASH BELONGING TO SMT. JYOTI KHAJURIA. AS FAR AS CASH BELONGING T O SHRI VIJAY KISHAN SHARMA IS CONCERNED, NO CREDIT CAN BE GIVEN, FIRSTL Y A FATHER-IN-LAW NORMALLY WOULD NOT KEEP HIS CASH IN THE HOUSE OF SO N-IN-LAW. SECONDLY THERE WAS NO SUCH OCCASION TO KEEP THE CASH WITH TH E SON-IN-LAW. IN ANY CASE THIS CASH WAS WITHDRAWN FROM VIJAY BANK ON 19. 8.2010 AND WHY THAT CASH WAS WITHDRAWN AND KEPT AT SON-IN-LAWS HOUSE, HAS NOT BEEN EXPLAINED. THEREFORE WE DECLINE TO GIVE ANY CREDIT FOR THE CASH TO SHRI VIJAY KISHAN SHARMA. TO SUM UP A CREDIT FOR RS. 1, 60,000/- (I.E. RS. 1 LAKH FOR CASH BELONGING TO SMT. JYOTI KHAJURIA AND RS. 60,000/- BELONGING TO THE BUSINESS SHOULD BE GIVEN AND BALANCE ADDITIO N IS CONFIRMED). THEREFORE WE SET ASIDE THE ORDER OF THE CIT(A) AND ALLOW THIS GROUND PARTLY. 48 GROUND NO. 4 AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING SEARCH JEWELLERY VALUED AT RS. 1085530/- WAS FOUND FROM THE POSSESSION OF THE ASSESSEE AT LOCKER NO. 12, PUNJAB NATIONAL B ANK, NEW SHIMLA. THE DETAIL OF JEWELLERY IS AS UNDER: GOLD ITEMS [ GROSS WEIGHT ] : 735.030 GMS : RS. 9 ,98,600/- DIAMOND ITEMS [GROSS WEIGHT : 4.16 CT INCLUDING 24.62 GM (G.W) OF GOLD] : RS. 65150/- SILVER [GROSS WEIGHT : 1 KG 234 GM] : RS. 21,780 /- RS. 10,85,530/- IN RESPONSE TO THE QUERY REGARDING SOURCE OF JEWELL ERY IT WAS STATED AS UNDER: THAT THE VALUATION OF JEWELLERY AS ELUCIDATE BY Y OU IN PARA 28 IS ALSO ADMITTED IT IS PERTINENT TO MENTION THAT THE FAMILY OF THE ASSESSEE IS A FAMILY OF MEANS AND HAVE BEEN DOING BUSINESS FOR SOME TIME. THE JEWELLERY FOUND UNDER THE RESPECTIVE HEADS AND OWNED BY THE LADIES DATING BACK TO THEIR RESPECTIVE MARRIAGES. IT IS PERTINENT TO MENTION THAT IN THE YEAR OF PURCHASE, OF THE JEWELLERY, THE VALUE OF GOLD WAS ON THE LOWEST SIDE AND WHEN THE JEWELLERY WAS SEIZED THE SAME WAS VALUED AT THE CURRENT MARKET PRICE. 21 THE ASSESSING OFFICER DID NOT FIND ANY FORCE IN THE ABOVE EXPLANATION AND TREATED THE TOTAL JEWELLERY AMOUNTING TO RS. 108553 0/- AS UNEXPLAINED AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE ON PROTECTIVE BASIS. 49 ON APPEAL BEFORE THE LD. CIT(A) IT WAS MAINLY SU BMITTED THAT THE JEWELLERY WAS BELONGING TO THE WIFE OF THE ASSESSEE AND THEREFORE AT BEST IT COULD HAVE BEEN ADDED IN HER HANDS. THE LD. CIT (A) OBSERVED THAT IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE THE EXPLANA TION CANNOT BE ACCEPTED AND THEREFORE SHE CONFIRMED THE ADDITION O N SUBSTANTIVE BASIS IN THE HANDS OF THE ASSESSEE AND DELETED THE ADDITI ON IN THE HANDS OF SMT. SHIVANI POPLI I.E. THE WIFE OF THE ASSESSEE. 50 BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE ASSESSEE WAS MARRIED FOR MANY YEARS AND THE BENEFIT OF INSTRUCTION NO. F.286/63/93-IT(INV)-11 DATED 11.5.1994 ISSUED BY CB DT SHOULD HAVE BEEN ALLOWED. 51 ON THE OTHER HAND, THE LD. D.R FOR THE REVENUE STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A). 52 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND SOME FORCE IN THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE. M OST OF THE BENCHES OF THE TRIBUNAL HAD BEEN HOLDING THAT ATLEAST BENEF IT OF THE INSTRUCTIONS ISSUED BY CBDT IN INSTRUCTION NO. F.286/63/93-IT(IN V)-11 DATED 11.5.1994 SHOULD BE ALLOWED FOR JEWELLERY. AS PER THESE INSTRUCTIONS JEWELLERY TO THE EXTENT OF 500 GMS IN CASE OF A MAR RIED LADY AND 100 GMS IN CASE OF A MARRIED MALE SHOULD BE ACCEPTED, THERE FORE OUT OF JEWELLERY OF 735.20 GMS, JEWELLERY OF 600 GMS SHOULD BE ACCEP TED. SIMILARLY DIAMOND ITEMS HAD BEEN VALUED AT RS. 65150/- AND SI LVER ITEMS HAD BEEN VALUED AT RS. 21780/-. THESE ARE SMALL AMOUNTS AND CONSIDERING THE OVERALL STATUS OF THE FAMILY, IN OUR OPINION, THESE AMOUNTS SHOULD BE ACCEPTED AS EXPLAINED. THEREFORE WE SET ASIDE THE ORDER OF THE CIT(A) 22 AND DIRECT THE ASSESSING OFFICER TO MAKE ADDITION O F JEWELLERY FOR 135.20 GMS. THIS GROUND IS PARTLY ALLOWED. 53 GROUND NO. 5 AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSE SSEE HAD SOLD A FLAT NO. 3, BLOCK NO. 6, TYPE D, HIMUDA, SECTOR-V, PHASE III, NEW SHIMLA FOR RS. 30 LAKHS. THE SHARE OF THE ASSESSE E IN THIS FLAT JOINTLY WITH HIS BROTHER WAS 50%. THIS FLAT WAS PURCHASED ON 1.2.2010 FOR A SUM OF RS. 16,50,000/-. THE ASSESSEE HAD RETURNED CAPI TAL GAIN AS UNDER: SALE CONSIDERATION (50% SHARE) RS. 15,00,000 LESS: COST OF ACQUISITIOJ (50% SHARE) RS. 8,25,000 COST OF IMPROVEMENT RS. 3,50,000 RS. 11,75,000 RS. 3,25,000 DURING ASSESSMENT PROCEEDINGS NO EVIDENCE WAS FILED FOR COST OF IMPROVEMENT, THEREFORE CAPITAL GAIN WAS RECOMPUTED AFTER IGNORING THE COST OF IMPROVEMENT AND A SUM OF RS. 3,50,000/- WA S ADDED TO THE INCOME OF THE ASSESSEE. 54 ON APPEAL IT WAS MAINLY SUBMITTED THAT VARIOUS E XPENSES FOR SALE AND EXPENDITURE WAS DULY INCORPORATED IN THE CASH F LOW STATEMENT. THE LD. CIT(A) DID NOT FIND FORCE IN THE SUBMISSIONS BE CAUSE NO EVIDENCE WAS FILED FOR IMPROVEMENT. 55 BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REIT ERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). 56 ON THE OTHER HAND, THE LD. D.R FOR THE REVENUE SUPPORTED THE ORDER OF THE LD. CIT(A). 57 AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND NO FORCE IN THE SUBMISSIONS BECAUSE NO EVIDENCE HAS BEEN FILED FOR THE SOURCE OF THE 23 CASH FOR SO CALLED IMPROVEMENT. THEREFORE WE SET ASIDE THE ORDER OF THE CIT(A) AND CONFIRM HER ORDER. 58 IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 95/CHD/2014 IS PARTLY ALLOWED. 59 IN THE RESULT, APPEALS OF THE REVENUE AND THE AS SESSEE ARE DISPOSED OFF AS UNDER: SL NO ITA NO NAME OF THE PARTY RESULT 1 77/CHD/2014 DCIT PARTLY ALLOWED 2 78/CHD/2014 DCIT DISMISSED 3 79/CHD/2014 DCIT -DO- 4 80/CHD/2014 DCIT -DO- 5 81/CHD/2014 DCIT -DO- 6 C.O 13/CHD/2014 ASSESSEE DISMISSED 7 C.O 14/CHD/2014 ASSESSEE -DO- 8 C.O 15/CHD/2014 ASSESSEE -DO- 9 C.O 16/CHD/2014 ASSESSEE -DO- 10 C.O 17/CHD/2014 ASSESSEE -DO- 11 84/CHD/2014 DCIT DISMISSED 12 85/CHD/2014 DCIT -DO- 13 94/CHD/2014 ASSESSEE PARTLY ALLOWED 14 95/CHD/2014 ASSESSEE PARTLY ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 11.07.201 4 SD/- SD/- (SUSHMA CHOWLA) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 11.07.2014 RKK/SURESH COPY TO:THE APPELLANT/THE RESPONDENT/THE CIT/THE CI T(A)/THE DR