Sri Rakesh Singh, Bangalore V. ACIT, Bangalore

ITA 846/BANG/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5638 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 19-08-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V SRINIVASAN
• Assessee Lawyers: JACINTA ZIMIK VASHAI
• Keywords: Unexplained cash credit; Unexplained investment; Principle of natural justice; Additional evidence; Reassessment proceedings
• Section: 143(3); 234B; 68; 69; 132

Judgement Text

PAGE 1 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI GEORGE GEORGE K, J.M. AND SHRI A MOHAN ALANKAMONY, A.M ITA NO. ASST. YEAR APPELLANT RESPONDENT 661 & 662/BANG/09 2002-03 & 2005-06 ACIT, C.C.-1(2), BANGALORE. SRI RAKESH SINGH, NO.2, R R CHAMBERS, IV FLOOR, 11 TH MAIN, VASANTHNAGAR, BANGALORE. C.O.NO.45 & 46/B/09 -DO- SRI RAKESH SINGH, NO.2, R R CHAMBERS, IV FLOOR, 11 TH MAIN, VASANTHNAGAR, BANGALORE ACIT, C.C.-1(2), BANGALORE 843 TO 846/BANG/09 2001-02, 2003-04, 2004-05 & 2006-07 SRI RAKESH SINGH, NO.2, R R CHAMBERS, IV FLOOR, 11 TH MAIN, VASANTHNAGAR, BANGALORE. ACIT, C.C.-1(2), BANGALORE APPELLANT BY : SMT. JACINTA ZIMIK VASHAI, ADDL. CIT RESPONDENT BY : SHRI V SRINIVASAN, C.A. ORD ER PER BENCH : THESE APPEALS INSTITUTED BY THE ASSESSEE AS WELL A S THE REVENUE ARE DIRECTED AGAINST THE ORDERS OF THE LD. CIT (A)- VI, BANGALORE IN ITA NOS. 380, 381, 382, 383, 384 AND 385/ ACIT(CC-2)/BLR/CIT(A)- PAGE 2 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 2 VI/2007-08 DATED: 31.3.2009 FOR THE ASSESSMENT YEARS 2001-02, 2002- 03, 2003-04, 2004-05, 2005-06 AND 2006-07 RESPECTIVELY. I. ITA NOS: 843, 844, 845 & 846/09 AYS 2001-02, 03-0 4, 04- 05 & 06-07 1.1. BY THE ASSESSEE : A.Y. 2001-02 (ITA NO.843/09 ) 2. THE ASSESSEE HAD RAISED SIX GROUNDS, IN WHICH, GROUND NO.1 & GROUND NO.6 ARE GENERAL IN NATURE AND NO SPECIFIC ADJUDICATION IS CALLED FOR, HENCE THE SAME ARE DISMISSED. IN GROUND NOS: 2 & 3 , THE ASSESSEE HAD CHALLENGED THE VALIDITY OF THE IMPUGNED ORDER PASSED U/S 153C RWS 143(3) OF THE ACT AND ALSO FOR ASSUMING JURISDICTION U/S 153 OF THE ACT WHICH WERE TOTALLY ABSENT AND, THUS, THE ORDER IN QUESTION DESE RVES TO BE CANCELLED. HOWEVER, DURING THE COURSE OF HEARING BEFORE THIS B ENCH, THE LD. AR CAME UP WITH A SUBMISSION THAT GROUND NOS.2 AND 3 WERE NOT PRESSED AND, ACCORDINGLY, THEY ARE DISMISSED AS NOT PRESSED. GROUND NO.5 I S REGARDING CHARGING OF INTEREST U/S 234A, 234B AND 234C. THE LEVY OF INTEREST U/S 234A, 234B AND 234C ARE MANDATORY AND CONSEQUENTIAL IN NATURE; HENCE, THIS GROUND IS DISMISSED AS NOT MAINTAINABLE. THE LONE GROUND SURVIVED FOR ADJUDICATION IS THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING AN ADDITION OF RS.3.5 LAKHS BEING THE AMOUNT PAYABLE T O SMT.ARATHY SHETTY, AS A CASH CREDIT U/S 68 OF THE ACT. A.Y. 2003-04 (ITA NO.844/09) : 2.1. FOR THIS AY TOO, THE ASSESSEE HAD RAISED SIX GROUNDS, OUT OF WHICH, EXCEPT GROUND NO.4, THE OTHER GROUNDS WERE I DENTICAL TO THAT OF THE GROUNDS RAISED IN THE IMMEDIATELY PREVIOUS AY REFERR ED ABOVE, AND, THUS, THE PAGE 3 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 3 REASONS RECORDED THERETO HOLD GOOD FOR THIS AY TOO. THUS, THE LONE GROUND REQUIRES ADJUDICATION IS THAT GROUND NO.4. THE CIT(A) ERRED IN TREATING RS.2.92 LAKHS OUT OF TOTAL CREDIT OF RS.14.62 LAKHS IN RESP ECT OF M/S SRINIVASA AGENCIES AS UNEXPLAINED CASH CRED IT U/S 68 OF THE ACT. A.Y. 2004-05 (ITA NO.845/09) : 2.2. FOR THIS AY ALSO, THE ASSESSEE HAD RAISED SIX GROUNDS, OUT OF WHICH, EXCEPT GROUND NO.4, THE OTHER GROUNDS WERE I DENTICAL TO THAT OF THE GROUNDS RAISED IN THE IMMEDIATELY PREVIOUS AY REFERR ED ABOVE, AND, THUS, THE REASONS RECORDED THERETO HOLD GOOD FOR THIS AY TOO. THUS, THE LONE GROUND REQUIRES TO BE ADJUDICATED IS THAT GROUND NO.4 . THE CIT(A) OUGHT NOT TO HAVE UPHELD THE ADDITIONAL INCOME OFFERED UNDER AN ERRONEOUS AN D MISTAKEN APPRECIATION OF FACTS WITH REGARD TO INVESTMENT OF RS.3.95 LAKHS MADE IN GEJJAGADALAHALL I PROPERTY. A.Y. 2006-07 (ITA NO.846/09) : 2.3. FOR THIS ASSESSMENT YEAR, THE ASSESSEE HAD RAI SED 5 GROUNDS, OUT OF WHICH, GROUND NOS.1 & 5 ARE GENERAL IN NATUR E AND IT DOESNT SURVIVE FOR CONSIDERATION. IN THE REMAINING GROUNDS, THE S UBSTANCES OF THE ISSUES RAISED ARE REFORMULATED, IN A CONCISE MANNER, AS UN DER: (I) THE CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITIONAL INCOME OF RS.16.98 LAKHS OFFERED BY THE ASSESSEE UNDER A MISTAKEN AND ERRONEOUS APPRECIATIO N PAGE 4 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 4 OF THE ISSUE INVOLVED UNDER THE FACTS OF THE ASSESS EES CASE; (II) THE AUTHORITIES WERE NOT JUSTIFIED IN NOT ADJUSTING THE CASH OF RS.15.5 LAKHS AND THE FIXED DEPOSITS SEIZED FROM THE ASSESSEES RESIDENCE AND BY IGNORING THE LETTER DT.31.10.2006 FILED BY THE ASSESSEES FATHER AND A.R; & (III) THE ASSESSEE DENIES HIMSELF LIABLE TO BE CHARGED TO INTEREST U/S 234A, 234B AND 234C OF THE ACT ITA NOS: 661 & 662/09 AYS 2002-03 AND 2005-06 BY THE REVENUE: 3. FOR THE AY 2002-03 (ITA NO.661/09) , THE REVENUE HAD RAISED SEVEN GROUNDS, IN WHICH, GROUND NOS.1 AND 7 BEING GENERAL AND NO SPECIFIC ISSUES INVOLVED, THEY HAVE BECOME NON-CONSE QUENTIAL. IN THE REMAINING GROUNDS, THE SUBSTANCE OF THE ISSUE RAISE D WAS THAT THE CIT (A) ERRED IN DELETING THE ADDITION MADE TOWARDS INVESTMENT OF RS.9.5 LAKHS U/S 69 OF THE ACT WITHOUT PROPERLY APPRECIATING THE ISSUE. 3.1. FOR THE A.Y 2005-06 (ITA NO.662/09) TOO, THE REVENUE HAD RAISED ELEVEN GROUNDS IN AN ILLUSTRATIVE AND NARRAT IVE MANNER, IN WHICH GROUND NOS. 1 AND 11 BEING GENERAL, THEY DO NOT SURVIVE FOR ADJUDICATION. IN THE REMAINING GROUNDS, THE CRUX OF THE ISSUE WAS THAT THE LD. CIT (A) ERRED IN TELESCOPING AND DELETING THE ADDITION OF RS.6.90 LA KHS (OUT OF RS.20.80 LAKHS) ADDED TOWARDS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. PAGE 5 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 5 C.O NOS: 45 & 46/09 AYS 2002-03 & 05-06 BY THE ASSESSEE: A.Y 2002-03 (C.O.NO.45/09) : 3.2 THE ASSESSEE HAD RAISED SEVEN GROUNDS, IN WHIC H, GROUND NO.1 & 7 BEING GENERAL, THEY DO NOT SURVIVE FOR ADJUDICATION. IN GROUND NOS: 2 & 3 , THE ASSESSEE HAD CHALLENGED THE VALIDITY OF THE IM PUGNED ORDER PASSED U/S 153C RWS 143(3) OF THE ACT AND ALSO FOR ASSUMIN G JURISDICTION U/S 153 OF THE ACT WHICH WERE TOTALLY ABSENT AND, THUS, THE ORD ER IN QUESTION DESERVES TO BE CANCELLED. HOWEVER, DURING THE COURSE OF HEA RING BEFORE THIS BENCH, THE LD. AR CAME UP WITH A SUBMISSION THAT GROUND NO S.2 AND 3 WERE NOT PRESSED AND, ACCORDINGLY, THEY ARE DISMISSED AS NOT PRESSED. GROUND NO.6 IS NOT MAINTAINABLE AS CHARGING OF INTEREST U/S 234 A, 234B AND 234C BEING MANDATORY AND CONSEQUENTIAL IN NATURE, THIS GROUND I S DISMISSED AS NOT MAINTAINABLE. IN THE REMAINING GROUNDS, THE ESSENCES OF THE ISSUES RAISE D ARE REPRODUCED, IN A CONCISE MANNER, AS UNDER: (I) THE LD. CIT (A) WAS NOT JUSTIFIED IN HOLDING THAT R S.2 LAKHS PAYABLE TO DR.ASHOK KUMAR OF NEW DELHI WAS ASSESSAB LE AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT ; & (II) ALSO THE CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS . 3.6 LAKHS OUT OF THE TOTAL CREDIT OF RS.5.4 LAKHS PAYABLE TO M/S.SRINIVASA AGENCIES AS UNEXPLAINED CA SH CREDIT U/S 68 OF THE ACT. A.Y 2005-06 (C.O.NO.46/09) : 3.3. LIKEWISE FOR THIS A.Y ALSO, THE ASSESSEE HAD RAISED SEVEN GROUNDS, OUT OF WHICH, GROUND NO.1 & 7 BEING GENERAL, THEY HAVE BECOME NON-CONSEQUENTIAL. IN GROUND NOS: 2 & 3 , THE ASSESSEE HAD CHALLENGED THE VALIDITY OF THE IMPUGNED ORDER PASSED U/S 153C RWS 1 43(3) OF THE ACT AND PAGE 6 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 6 ALSO FOR ASSUMING JURISDICTION U/S 153 OF THE ACT W HICH WERE TOTALLY ABSENT AND, THUS, THE ORDER IN QUESTION DESERVES TO BE CAN CELLED. HOWEVER, DURING THE COURSE OF HEARING BEFORE THIS BENCH, THE LD. AR CAME UP WITH A SUBMISSION THAT GROUND NOS.2 AND 3 WERE NOT PRESSED AND, ACCORDINGLY, THEY ARE DISMISSED AS NOT PRESSED. GROUND NO.6 IS NOT MAINTAINABLE AS CHARGING OF INTEREST U/S 234A, 234B AND 234C BEING MANDATORY AND CONSEQUENTIAL IN NATURE, THIS GROUND IS DISMISSED AS NOT MAINTAINABL E. IN THE REMAINING GROUNDS, THE SUBSTANCES OF THE ISSUES RAISED ARE RE PRODUCED, IN A CONCISE MANNER, AS UNDER: (I) THE LD. CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITIONAL INCOME OF RS.5.48 LAKHS MISTAKENLY OFFE RED UNDER THE FACTS OF THE CASE; & (II) ALSO THE CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS . 13.8 LAKHS CONSIDERED AS UNEXPLAINED INVESTMENTS U/S 69 OF THE ACT. 4. AS MOST OF THE ISSUES INVOLVED IN THESE APPEALS BEING IDENTICAL AND INTER-LINKED, FOR THE SAKE OF CONVENIENCE AND C LARITY, THEY WERE HEARD, CONSIDERED TOGETHER AND DISPOSED OFF IN THIS COMMON ORDER. 5. BEFORE VENTURE TO LOOK INTO THE GRIEVANCES OF T HE EITHER PARTY, WE FIND THAT THE APPEALS PREFERRED BY THE ASSESSEE FOR THE AYS 2001-02, 2003-04, 2004-05 AND 2006-07 WERE HIT BY LIMITATION. DURING THE COURSE HEARING, THE ASSESSEE HAD FURNISHED AFFIDAVITS SEPA RATELY, HOWEVER, WITH IDENTICAL REASONING THAT - THE APPEALS AGAINST THE SAID APPELLATE ORDERS CAME TO BE INSTITUTED BEFORE THE HONBLE TRIBUNAL ON 19/8/2009 AND, PAGE 7 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 7 THUS, THERE WAS A DELAY OF 55 DAYS IN FILING THE AP PEALS. THE REASON FOR THE DELAY IN FILING THESE APPEALS WE RE EXPLAINED THAT THE APPELLATE ORDERS WERE HANDED OVE R TO THE ASSESSEES FATHER LAKHAN SINGH WHO WAS CONVERSA NT WITH THE FACTS OF THE ISSUE FOR NEEDFUL. AS HE HAD MAINTAINED INDIFFERENT HEALTH CONSEQUENT TO HEART SURGERY, HE COULD NOT BE ABLE TO TAKE FURTHER ACTIO N IN THE MATTER IN TIME. AS THE DELAY, IT WAS PLEADED, DUE TO REASONS BEYOND HIS CONTROL AND THE DELAY CAUSED NEI THER INTENTIONAL NOR DELIBERATE, THE SAME BE CONDONED. 5.1. AFTER DUE CONSIDERATION OF THE SUBMISSION OF THE ASSESSEE, THE DELAY IN PREFERRING THE APPEALS FOR THE ASSESSMENT YE ARS REFERRED ABOVE WAS CONDONED AND THE REGISTRY WAS SUITABLY DIRECTED TO TA KE THOSE APPEALS OF THE ASSESSEE ON RECORD. 6. WE SHALL NOW PROCEED TO ADJUDICATE THE ISSUES R AISED BY THE ASSESSEE IN A CHRONOLOGICAL MANNER AFTER DUE CONSID ERATION OF THE RIVAL SUBMISSIONS MADE DURING THE COURSE OF HEARING, METI CULOUS PERUSAL OF THE RELEVANT CASE RECORDS AS WELL AS THE DOCUMENTARY EVI DENCES PRODUCED BY THE LD. A R IN THE SHAPE OF VOLUMINOUS PAPER BOOKS LIST ED AS P.B I, II AND III. A.Y 2001-02 (ITA NO.843/09) : 7. THE ISSUE, IN BRIEF, WAS THAT THE ASSESSEE, AN INDIVIDUAL, ADMITTED HIS INCOME AT RS.2.85 LAKHS. SUBSEQUENTLY, THERE WAS AN ACTION U/S 132 OF THE ACT ON 30.9.2005 IN THE RESIDENTIAL PREM ISES OF THE ASSESSEES FATHER LAKHAN SINGH AND DURING THE SEARCH, ACCORDIN G TO THE REVENUE, INCRIMINATING DOCUMENTS SUCH AS INVESTMENTS IN IMMO VABLE PROPERTIES MADE BY THE ASSESSEE WERE UNEARTHED. THE ASSESSEE WAS SL APPED WITH A NOTICE U/S PAGE 8 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 8 153C OF THE ACT REQUIRING HIM TO FURNISH A RETURN O F INCOME AND IN COMPLIANCE; THE ASSESSEE HAD FURNISHED HIS RETURN, ADMITTING RS.2.85 LAKHS AS ORIGINALLY RETURNED. 7.1. DURING THE COURSE OF REASSESSMENT PROCEEDINGS , THE AO HAD, AMONG OTHERS, NOTICED THAT THE ASSESSEE HAD SHOWN O NE SMT. ARATHY SHETTY AS A SUNDRY CREDITOR FOR RS.3.5 LAKHS. AS THE ASSESS EE HAD FAILED TO FURNISH EITHER THE ADDRESS OR CONFIRMATION LETTER FROM THE ALLEGED SUNDRY CREDITOR, THE SAME WAS TREATED BY THE AO AS CASH CREDIT U/S 68 OF THE ACT AND ADDED TO THE ASSESSEES INCOME. 7.2. WHEN THE ASSESSEE HAD FAILED TO PRODUCE ANY DO CUMENTARY PROOF AT THE APPELLATE STAGE, THE LD. CIT (A) UPHEL D THE ADDITION. 8. DURING THE COURSE OF HEARING BEFORE THIS BENCH, THE LD. A R HAD VALIANTLY PLEADED THAT THE ASSESSEE DERIVES INCOME O NLY FROM RENTS AND OTHER SOURCES AND, THUS HE WAS NOT CARRYING ON ANY BUSINESS AND, THEREFORE, NO BOOKS OF ACCOUNTS HAVE BEEN MAINTAINED, THAT THE AS SESSEE WAS NOT AWARE OF THE PRESENT WHEREABOUTS OF THE SAID CREDITOR AND, T HEREFORE, UNABLE TO OBTAIN HER CONFIRMATION LETTER ETC., HE HAD ALSO SO UGHT REFUGE IN THE RULING OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. P.K.NOORJAHAN REPORTED IN 237 ITR 570 (SC) WHEREIN THE HONBLE COURT HAD R EASONED THAT THE DISCRETION HAD NOT BEEN PROPERLY EXERCISED BY THE INC OME-TAX OFFICER AND THE AAC IN TAKING INTO ACCOUNT THE CIRCUMSTANCES IN WHICH THE ASSESSEE WAS PLACED AND THE TRIBUNAL HAD FOUND THAT THE SOURCES OF INVESTMENTS COULD NOT BE TREATED AS INCOME OF THE ASSESSEE. PAGE 9 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 9 8.1 . WITH DUE RESPECTS, WE WOULD LIKE TO POINT OUT THAT THE FACTS OF THE ISSUE BEFORE THE HONBLE COURT WAS ENTIRELY ON A DIFFERENT FOOTING AND, THUS, THE RULING OF THE HONBLE APEX COURT CANNOT C OME TO THE RESCUE OF THE PRESENT ASSESSEE. THE ASSESSEE HAD SINCE FAILED TO DISCHARGE HIS ONUS OF FURNISHING A CONFIRMATION LETTER FROM HIS ALLEGED S UNDRY CREDITOR; WE ARE IN AGREEMENT WITH THE FINDING OF THE LD. CIT (A) ON TH IS COUNT. IT IS ORDERED ACCORDINGLY. A.Y 2003-04 (ITA NO.844/09) : 9. THE LONE GROUND SURVIVED FOR CONSIDERATION IS W ITH REGARD TO THE TREATING OF RS.2.92 LAKHS OUT OF TOTAL CREDIT OF RS.14.62 LAKHS IN RESPECT OF M/S SRINIVASA AGENCIES AS UNEXPLAINED C ASH CREDIT U/S 68 OF THE ACT. 9.1. DURING THE COURSE OF HEARING, IT WAS CONTENDE D BY SHRI V. SRINIVASAN, THE LD. A R THAT - THE APPELLANT RECEIVED RS.14,62,500/- FROM .SRIN IVASA AGENCIES, WHICH IS A PROPRIETARY CONCERN OF ONE SRI. LOHIDASAN DURING THE YEAR. WHILE CONFIRMING THE BALANCE DUE F ROM THE APPELLANT AS AT 31/03/2003, .SRINIVASA AGENCIES CON FIRMED THAT RS.5,40,000/- ALONE WAS DUE TO THEM AS PER THEIR CO NFIRMATION LETTER, WHICH WAS FURNISHED BEFORE THE CIT[A] (SO URCE: P.32 - 38 PB AR). IN AS MUCH AS THE APPELLANTS BOOKS REF LECTED A SUM OF RS.14,62,500/- AS PAYABLE, THE A.O MADE THE ADDIT ION OF THE DIFFERENCE BEING RS.9,22,500/- [14,62,500 5,40,00 0] AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT. PAGE 10 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 10 - THAT THE APPELLANT RECEIVED THE ENTIRE AMOUNT FR OM SRINIVASA AGENCIES THROUGH CHEQUES AND THE ENTIRE ENTRIES ARE REFLECTED IN THE BANK ACCOUNTS OF THE APPELLANT [REFERENCE: P .33 & 34 PB] - THAT SRINIVASA AGENCIES [PRESENTLY KNOWN AS AKSHAYA BUILDERS AND DEVELOPERS] HAD CONFIRMED THAT THE APPELLANT AN D HIS BROTHER HAD TO PAY A SUM OF RS.22,55,125/- TO THEM A S ON 31 ST MARCH 2007 AND THAT THE APPELLANT HAD ALSO WORKED O UT THE FOLLOWING RECONCILIATION OF THE AMOUNTS DUE SL. NO PARTICULARS F.Y. AMOUNTS 1 CREDIT IN THE NAMES OF SRINIVASA AGENCIES AS AT 31/03/03 IN THE BOOKS OF THE APPELLANT 2002-03 14,62,500 2 CREDIT IN THE NAMES OF SRINIVASA AGENCIES AS AT 31/03/03 IN THE BOOKS OF THE APPELLANT BROTHER, SRI. RAJESH SINGH REFER STATEMENT OF AFFAIRS OF RAJESH SINGH ENCLOSED HEREWITH AS ANNEXURE 4 2002-03 12,70,000 3 TOTAL DUES OF APPELLANT AND RAJESH SINGH AS AT 31/03/2003 2002-03 27,32,500 4 ADD : AMOUNT RECEIVED ON 15-04-03 AS PER LEDGER ACCOUNT FOR THE YEAR 2003-04 ENCLOSED HEREWITH AS ANNEXURE 5 2003-04 6,00,000 5 TOTAL DUES OF APPELLANT AND RAJESH SINGH AS AT 31/03/2004 2003-04 33,32,500 6 LESS: AMOUNT PAID TO SRINIVASA AGENCIES DURING THE YEAR 2004-05 AS PER LEDGER ENCLOSED HEREWITH AS ANNEXURE6 2004-05 10,77,375/- 7 TOTAL DUES OF APPELLANT AND RAJESH SINGH AS AT 31/03/2005 WHICH CONTINUED AS IT WAS FOR THE PERIODS ENDING 31/03/2006 AND 31/03/2007 2004-05 22,55,125 8 LESS : BALANCE CONFIRMED BY AKSHAYA BUILDERS AND DEVELOPERS AS AT 31/03/2007 2004-05, 2005-07 & 2006-07 22,55,125 9 DIFFERENCE AT 31/03/2007 NIL - AS CAN BE SEEN FROM THE ABOVE, THE AMOUNT OF 22,5 5,125/- CONFIRMED BY THE CREDITOR INCLUDES THE SUM OF RS.14,62,500/- REC EIVED BY THE APPELLANT PAGE 11 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 11 DURING THE YEAR UNDER APPEAL. THE CIT[A] CALLED FOR A REMAND REPORT AND THE A.O. EXAMINED THE SUBMISSIONS MADE AND HE REPO RTED THAT THE APPELLANT HAD CLUBBED THE AMOUNTS DUE TO THE CREDITOR BOTH IN THE CASE OF THE APPELLANT AND HIS BROTHER. HENCE, THE A.O. HELD TH AT THE SAME WAS NOT ACCEPTABLE AND HE PROCEEDED TO RE-WORK THE DIFFEREN CE BY EXCLUDING THE TRANSACTIONS OF THE APPELLANTS BROTHER. IT WAS ST ATED BY THE LEARNED A.O IN THE REMAND REPORT THAT THE AMOUNT DUE TO THE CREDIT OR AS ON 31/03/2003 WAS RS.11,70,000/- ONLY AND THE DIFFERENCE OF RS.2,9 2,500/- IS TO BE ADDED U/S.68 FOR THE ASSESSMENT YEAR 2003-04 AND THE DIFFE RENCE OF RS.3,60,000/- [RS.9,00,000 5,40,000] IS TO BE ADD ED FOR THE ASSESSMENT YEAR 2002-03. IN THIS MANNER, THE A.O. REPORTED TH AT THE DIFFERENCE IN CREDIT BALANCE WAS TO THE TUNE OF RS. 2,92,500/- FO R THE YEAR UNDER APPEAL AND RS. 3,60,000/- FOR THE EARLIER ASSESSMENT YEAR. THE CIT[A] MODIFIED THE ADDITIONS MADE AS STATED BY THE A.O. IN THE REM AND REPORT FOR BOTH THE YEARS. - THAT FROM THE PERUSAL OF THE TABULATION GIVEN AB OVE, IT BECOMES CLEAR THAT THE SUM OF RS. 22,55,125/- DUE BY THE APPELLANT AND HIS BROTHER WHICH HAS BEEN CONFIRMED BY AKSHAYA BUILDERS AND DEVELOPERS (FO RMERLY SRINIVASA AGENCIES), INCLUDES THE SUM OF RS.14,62,500/- RECEI VED BY THE APPELLANT DURING THE YEAR UNDER APPEAL. CONSIDERING THE FACT THAT THE APPELLANT RECEIVED THE AMOUNTS FROM THE CREDITOR THROUGH NORM AL BANKING CHANNELS AND CONSIDERING THE FACT THAT THE ENTIRE AMOUNTS ST AND RECONCILED, THAT THE EXTENT OF ADDITION SUSTAINED BY THE CIT[A]WAS ERRON EOUS, THAT THE CIT[A] OUGHT NOT HAVE RELIED ON THE FINDINGS OF THE A.O. R EJECTING THE RECONCILIATION FURNISHED BY THE APPELLANT. THE CIT[A] OUGHT TO HAV E APPRECIATED THAT THE PAGE 12 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 12 TRANSACTION BETWEEN THE APPELLANT, HIS BROTHER AND THE CREDITOR WERE ALL INTER-CONNECTED AND THE SAME HAD TO BE CONSIDERED T OGETHER TO FIND OUT IF THERE WAS ANY DIFFERENCE. IN AS MUCH AS THERE WAS N O DIFFERENCE IN THE AMOUNTS DUE, WHEN CONSIDERED ON THIS BASIS, THE ADD ITION SUSTAINED IS ERRONEOUS AND SAME REQUIRES TO BE DELETED. 9.2. WE HAVE DULY CONSIDERED THE ASSESSEES LENGTHY SUBMISSION AND ALSO PERUSED THE IMPUGNED ASSESSMENT ORDER WHEREIN THE AO HAD REMARKED THAT 8.1THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTAR Y EVIDENCE IN SUPPORT OF HIS CLAIM. HE HAS NOT FURNISHED THE CON FIRMATION LETTER. AS THE ASSESSEE HAS BEEN CLAIMING THAT HE HAD RECEIVED THE ENTIRE AMOUNT OF RS.14.62 LAKHS THROUGH CHEQUES AND ALSO THE ENTIRE TRANSACTIONS HAVE BEEN REFLECTED IN HIS BANK ACCOUNT WHICH ARE NOW IN HIS POSSESSION, IN THE INTERESTS OF NATURAL JUSTICE, WE ARE OF THE CONSIDE RED VIEW THAT THE ISSUE SHOULD BE LOOKED INTO AFRESH IN VIEW OF THE NEW FAC TS AND, ACCORDINGLY, THE ISSUE IS REMITTED BACK ON THE FILE OF THE AO FOR DE NOVO. THE AO IS DIRECTED TO LOOK INTO THE ISSUE AND TO TAKE APPROPRIATE ACTI ON IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, OF COURSE, AFTER PROVIDING A N OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. IT IS ORDERED ACCORDINGLY. A.Y 2004-05 (ITA NO.845/09) : 10. FOR THIS A.Y ALSO, THE LONE GROUND SURVI VED FOR CONSIDERATION IS WITH REGARD TO THE ADDITION (INVESTMENT) OF RS.3.95 LAKH S MADE IN GEJJAGADALAHALLI PROPERTY. 10.1. IT WAS THE CONTENTION OF THE LD. A R THAT PAGE 13 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 13 - THE APPELLANT OFFERED THE SAME UNDER AN ERRONEOUS IMPRESSION THAT IT HAD TO BE OFFERED TO TAX SINCE THE ENTRY FOR RECORDING T HE PURCHASE OF THE GEJJAGADALAHALLI PROPERTY WAS NOT INCORPORATED IN TH E BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME ORIGINALLY FILED. T HE INVESTMENT IN THE SAID PROPERTY WAS MADE OUT OF UNIMPEACHABLE SOURCE OF FUN DS AVAILABLE WITH THE APPELLANT AND HIS FAMILY MEMBERS, WHICH WERE ALL REF LECTED IN THEIR BALANCE SHEETS FILED BY THE APPELLANT AND HIS FAMILY MEMBERS MUCH BEFORE THE DATE OF SEARCH. THE A O OUGHT NOT TO HAVE ACCEPTED THE D ECLARATION MADE BY THE APPELLANT AND HE OUGHT TO HAVE CONSIDERED THE COMBI NED CASH FLOW STATEMENT FURNISHED BEFORE THE CIT[A]. FOR REASONS STATED TH EREIN IT IS PRAYED THAT THE ADDITION MADE BY THE A.O. IS ERRONEOUS. 10.2. AT THE OUTSET, WE WOULD LIKE TO POINT OUT TH AT A SIMILAR CONTENTION TAKEN BY THE APPELLANTS FATHER LAKHAN SINGH FOR THE AY 2006- 07 - HAS BEEN OUT-RIGHTLY TURNED DOWN BY THE HON BLE TRIBUNAL (ITA NOS:462, 463 &464/BANG/2010 DATED: 3.11.2010), THE FINDING OF WHICH, FOR THE APPRECIATION OF FACTS, ARE EXTRACTED AS UNDER: 45. THE FOURTH GROUND RAISED BY THE ASSESSEE IS TH AT THERE IS NO JUSTIFICATION IN MAKING AS AN ADDITION OF RS.12,74,000/- TOWARDS UNEXPLAINED INVESTMENTS MADE IN THE PURCHASE OF PROPERTY AT MAHADEVAPURA VILLAGE. 46. THE ASSESSEE HAS NOT FURNISHED ANY CONVINCING EXPLANATION REGARDING THE SOURCE FOR PURCHASING OF THE PROPERTY. THEREFORE, THE SAID ADDITION IS JUSTIFIED . 10.3. AS THE ISSUE BEFORE US IS SIMILAR TO THAT OF THE ISSUE WHICH CROPPED UP BEFORE THE HONBLE BENCH IN THE CASE OF THE ASSESSEES FATHER PAGE 14 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 14 CITED SUPRA, WE HAVE NO HESITATION WHATSOEVER, IN C ONFORMITY WITH THE SAID FINDING, IN REJECTING THE ASSESSEES PLEA ON THIS S CORE. A.Y 2006-07 (ITA NO.846/09) : 11. THE ISSUES RAISED FOR THIS ASSESSMENT YEAR ARE DEALT WITH AS UNDER: 11.1. WITH REGARD TO THE ADDITIONAL INCOME OF RS. 16,98,895/- OFFERED BY THE APPELLANT. IT WAS SUBMITTED THAT - THE AFORESAID SUM WAS OFFERED BY THE APPELLANT I N RESPECT OF PROPERTY PURCHASED AT WHITEFIELD MEASURING ABOUT 6 GUNTAS; T HAT THE SEIZED RECEIPT ISSUED BY THE VENDOR OF THE WHITEFIELD PROPERTY, A SU M OF RS. 37,57,050/- WAS SHOWN AS THE CONSIDERATION FOR THE SALE OF THE PROPERTY. AFTER RECKONING THE STAMP DUTY AND REGISTRATION CHARGES, T HE TOTAL INVESTMENT IN THE PROPERTY CAME TO RS. 37,97,790/- AND THE APPELLA NT HAD ONE-HALF SHARE THEREIN CAME TO RS. 18,98,895/-; THAT THE APPELLAN T HAD REFLECTED HIS ONE HALF SHARE IN THE SAID INVESTMENT IN THE STATEMENT OF AFFAIRS FILED FOR THE YEAR UNDER APPEAL. HOWEVER, THE HIS FATHER HAD AGREE D TO OFFER UNDISCLOSED INCOME IN RESPECT OF THIS PROPERTY AT RS. 16,98,895/ -, WHICH WAS ARRIVED AT BY DEDUCTING THE APPELLANTS ONE-HALF SHARE OF THE C ONSIDERATION OF RS. 4 LAKHS SHOWN IN THE SALE DEED FOR REGISTRATION PURPO SES FROM HIS SHARE OF RS. 18,98,895/-. A COPY OF THE LEDGER ACCOUNT OF THE WH ITEFEILD AND UNDISCLOSED INCOME ARE PLACED AT PAGE NO.95 AND N O.96 OF THE PAPER BOOK. PAGE 15 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 15 - THAT THE INCOME AGREED TO BE OFFERED BY THE APPELL ANTS FATHER IN THIS REGARD WAS ERRONEOUS IN AS MUCH AS THE RETURN OF IN COME FOR THE YEAR UNDER APPEAL ITSELF WAS DUE ONLY IN JULY 2006 I.E., AFTER T HE SEARCH AND THEREFORE, THE SAME CAN NEVER REPRESENT UNDISCLOSED INCOME; THAT THE APPELLANT HAD FURTHER COMPOUNDED THE ERRONEOUS DECLARATION MADE B Y HIS FATHER BY ERRONEOUSLY FILING HIS RETURN ON INCOME AFTER SEARCH BY INCLUDING RS. 16,98,895/- AS UNDISCLOSED INCOME; THAT THE MERE E RRONEOUS DECLARATION MADE WAS NOT SUFFICIENT TO MAKE THE IMPUGNED ASSESS MENT AS IT IS OPEN FOR THE PARTY MAKING THE ADMISSION TO SHOW THAT THERE WA S AN ERROR IN THE ADMISSION MADE BY HIM; THAT APPELLANT HAD SUFFICIEN T SOURCES OF FUNDS TO EXPLAIN THE ABOVE INVESTMENT MADE AND THEREFORE THE RE WAS NO CASE FOR OFFERING ANY ADDITIONAL INCOME AND THAT TOO TITLED A S UNDISCLOSED INCOME; THAT THE INVESTMENTS OF RS. 16,98,895/- MADE IN THE SAID PROPERTY WAS MADE OUT OF ACCOUNTED FUNDS AVAILABLE WITH THE APPE LLANT AND HIS FAMILY MEMBERS; THAT THE STATEMENT OF AFFAIRS OF THE APPE LLANT AND HIS FAMILY MEMBERS FILED BEFORE THE DATE OF SEARCH REVEALS THA T THE APPELLANT HAD SUFFICIENT SOURCES OF FUNDS TO MAKE THE AFORESAID I NVESTMENT; THAT THE STATEMENT SHOWING THE CASH AVAILABILITY POSITION OF THE APPELLANT AND HIS FAMILY MEMBERS AS A WHOLE IS PLACED AT PAGE NO.48 OF THE PAPER BOOK. IT MAY BE NOTED THAT AGGREGATE CASH BALANCES OF THE APPELL ANT-LAKHAN SINGH, .RAJESH SINGH AND SMT UMA DEVI, AS AT 01/04/2005 AN D 31/03/2006 WAS RS.11,17,242/- AND RS.76,92,267/- RESPECTIVELY. THUS EVEN AFTER CONSIDERING THE APPELLANTS ONE HALF SHARE OF THE INVESTMENT OF RS. 16,98,895/- MADE, IN THE SUBJECT PROPERTY, OUT OF THE ABOVE CASH BALANCE S, THERE WAS SUFFICIENT YEAR-END CASH BALANCES. THEREFORE, THERE WAS ABSOLUT ELY NO JUSTIFICATION FOR PAGE 16 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 16 CONSIDERING THE AFORESAID INVESTMENT AS UNACCOUNTED AND ACCEPTING THE ADDITIONAL INCOME SO OFFERED BY THE APPELLANT, WHICH REQUIRES TO BE EXCLUDED. 11.1.1 HOWEVER, THE LD. A.R, BEFORE CONCLUDING HI S SUBMISSION ON THE ISSUE, WAS MAGNANIMOUS IN FAIRLY CONCEDING THAT A S IMILAR CONTENTION TAKEN UP IN THE CASE OF THE APPELLANTS FATHER LAKHAN SINGH HAS BEEN REJECTED BY THE HONBLE ITAT IN ITS ORDER PASSED IN ITA NO. 462 TO 464/B/2010 DATED 03/11/2010. 11.1.2. AS THE ISSUE BEFORE US IS SIMILAR TO THAT OF THE ISSUE WHICH HAD CROPPED UP BEFORE THE HONBLE BENCH IN THE CASE OF THE ASSESSEES FATHER CITED SUPRA AND ALSO FAIRLY CONCEDED BY THE LD. A.R, WE, IN CONFORMITY WITH THE SAID FINDING, REJECT THE ASSESSEES PLEA ON THI S COUNT. 12. THE OTHER GROUND RELATES TO THE NON-ADJUSTMENT OF CASH OF RS. 15,50,000/- AND THE FIXED DEPOSITS SEIZED FROM THE RESIDENCE OF THE APPELLANT. BEFORE US, THE LD. A R SUBMITTED THAT - THE APPELLANTS FATHER HAD FILED A LETTER REQUESTI NG A O TO ADJUST THE SEIZED CASH AND FIXED DEPOSITS TOWARDS THE TAXE S PAYABLE IN HIS CASE AS WELL AS IN THE CASE OF THE APPELLANT AND HI S BROTHER RAJESH SINGH. HOWEVER, THE A O HAD ASSESSED THE ENTIRE CAS H SEIZED AS UNEXPLAINED INCOME IN THE HANDS OF THE FATHER OF TH E APPELLANT. W HEN THE ASSESSEE PLEADED BEFORE THE CIT (A) FOR SOLACE, THE CIT[A] PAGE 17 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 17 REJECTED THIS CONTENTION PLACING RELIANCE ON THE DE CISION TAKEN BY HIM IN THE CASE OF T.A. ASHOK KUMAR; - ON FURTHER APPEAL IN THE CASE OF SAID ASHOK KUMA R, THE HONBLE ITAT HAD HELD THAT THE A.O. OUGHT TO HAVE ADJUSTED THE CASH SEIZED TOWARDS THE TAXES DUE AS PRAYED FOR BY THE APPELLANT. 12.1. TAKING REFUGE IN THE DECISION OF THE HONBLE ITAT CITED SUPRA, THE LD. A R HAD FERVENTLY PRAYED THAT THE A.O. BE DIR ECTED TO GIVE CREDIT FOR THE CASH SEIZED AS PART OF ADVANCE TAX WHILE CO MPUTING THE INTEREST LIABILITY U/S. 234B OF THE ACT. 12.1.1 WE HAVE DULY CONSIDERED THE ASSESSEES SUBMIS SION AND ALSO THE VERSION OF THE LD. DR WHO WAS PRESENT. 12.1.2. ALMOST AN IDENTICAL ISSUE TO THAT OF THE PR ESENT ONE HAD COME UP BEFORE THE HONBLE JURISDICTIONAL BENCH IN THE CASE OF T.A. ASHOK KUMAR V. DCIT, MYSORE [ IN ITA NO: 346/B/09 DATED: 10.12.2009 ] WHEREIN, THE HONBLE BENCH HAD, AFTER CONSIDERING THE RIVAL SUBM ISSIONS AND ALSO TAKING CUE FROM THE RULINGS OF THE JURISDICTIONAL HIGH CO URT IN THE CASES OF (I) A.B. KAGE & COMPANY [IN ITA NO.28/2003 DT.23.6.2008] AND IN ITRC NOS.4 TO 10.2003 DT: 29.3.2005 OBSERVED THUS: 10. FROM THE ABOVE DISCUSSION, IT IS CLEAR THAT TH E SEIZED CASH WAS TO BE ADJUSTED AGAINST THE TAX PAYABLE AT LEAST ON THE DATE WHEN THE ASSESSEE HAS FILED THE RETURN. WE HAVE ALSO GONE THROUGH THE CO PY PAGE 18 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 18 OF THE INTIMATION AVAILABLE AT PAGE 15 OF THE PAPER BOOK FILED BY THE LEARNED AR. NO INTEREST U/S 234B HAS BEEN CHARGED. AFTER ADJUSTMENT OF PREPAID TAX, THE AMOUNT PAYABLE BY THE ASSESSEE HAS BEEN DETERMINED AT RS.7,38,011/-. INTEREST PAYABLE TO ASSESSEE HAS BEEN DETERMINED AT RS.1,06,983/-. BALANCE DEMAND WAS MADE AT RS.6,31,028/-. HOWEVER, THERE IS A NOTE THAT FOR ADVANCE-TAX CHALL AN FOR RS.24,000/- DATED 8 TH DECEMBER, 2005 AND RS.8 LAKHS DATED 31 ST JANUARY, 2006, THE AO HAS NOT GIVEN CREDIT BECAUSE THE SAME IS NOT TREATED AS COLLECTED IN THE SYSTEM. THUS, THE CREDIT WAS NOT GIVEN BECAUSE THE SYSTEM HAS NOT SHOWN THE COLLECTION. NATURALLY , THE SYSTEM WOULD NOT HAVE BEEN SHOWN THE COLLECTION UNTIL AND UNLESS THE AO REQUIRED THE AMOUNT TO BE REFUNDED IN THE NAME OF THE ASSESSEE FROM THE PD ACCOUNT OF THE CIT. WE THEREFORE FEEL THAT THE AMOUNT WHICH WAS REQUIRED TO BE PAID AS PER RETURN FILED ON 29 TH NOVEMBER, 2006 TO THE EXTENT OF DEMAND SHOULD BE TREATED TO HAVE BEEN PAID FROM THE SEIZED CASH. THUS, THE INTEREST, IF ANY, REQUIRED TO BE COMPUTED U/S 234B UP-TO 29 TH NOVEMBER, 2006. SINCE THE SEIZED CASH COULD NOT HAVE BEEN ADJUSTED AGAINST THE ADVANCE-TAX, THEREFORE, THERE WILL BE N O LEVYING OF INTEREST IN RESPECT OF 234C. 12.1.3. HOWEVER, THE AUTHENTICITY OR OTHERWISE OF T HE ASSESSEES CLAIM THAT - THE ASSESSEES FATHER LAKHAN SINGH HAD FILED A LETT ER REQUESTING THE AO TO ADJUST THE SEIZED CASH AND FIXED DEPOSITS TOW ARDS THE TAXES PAYABLE IN HIS CASE AS WELL AS IN THE CASE OF THE APPELLANT AND HIS BROTHER RAJESH SINGH - COULD NOT BE VERIFIED IN THE ABSENCE OF ANY PROOF FOR HAVING PLACED SUCH A CLAIM. IN VIEW OF THE ABOVE AND IN THE INTE RESTS OF NATURAL JUSTICE AS WELL AS IN CONFORMITY WITH THE FINDING OF THE HONBL E BENCH CITED SUPRA, THIS ISSUE IS REMITTED BACK ON THE FILE OF THE AO WITH A SPECIFIC DIRECTION TO LOOK PAGE 19 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 19 INTO THE GRIEVANCE OF THE ASSESSEE AND TO TAKE APPR OPRIATE ACTION IN ACCORDANCE WITH LAW, IF FOUND TO BE GENUINE. THE A O SHALL, HOWEVER, KEEP IN VIEW THE FINDING OF THE HONBLE BENCH REFERRED ABOV E WHILE DEAL WITH THE ISSUE. IN THE MEANWHILE, THE ASSESSEE, THROUGH HI S LD. AR, IS ADVISED TO FURNISH THE NECESSARY PROOF FOR HAVING MADE SUCH A R EQUEST THROUGH HIS FATHER, AS CLAIMED, WHICH WOULD FACILITATE THE AO T O IMPLEMENT THE DIRECTION OF THIS BENCH IN AN EXPEDITIOUS MANNER. IT IS ORDE RED ACCORDINGLY. 12.1.4. THOUGH CHARGING OF INTEREST U/S 234A, 234B AND 234C BEING MANDATORY AND CONSEQUENTIAL IN NATURE, THIS GROUND I S DISMISSED AS NOT MAINTAINABLE. HOWEVER, IN VIEW OF THE DIRECTIONS O F THIS BENCH IN THE IMMEDIATELY PRECEDING PARAGRAPH, THE AO SHALL LOOK I NTO THE GRIEVANCE OF THE ASSESSEE AND GIVE CONSEQUENTIAL RELIEF TO THE ASSE SSEE IN LIEU OF THE SAID DIRECTIONS, IF FOUND TO BE IN ORDER. IT IS ORDERED ACCORDINGLY. 13. LET US NOW TURN OUR ATTENTION TO LOOK INTO THE GRIEVANCES OF THE REVENUE AS WELL AS THE CROSS OBJECTIONS OF THE ASSESSEE. A.Y 2002-03 (ITA NO.661/09) : 14. THE LONE ISSUE OF THE REVENUE IS THAT THE CIT (A) ERRED IN DELETING THE ADDITION MADE TOWARDS INVESTMENT OF RS .9.5 LAKHS U/S 69 OF THE ACT WITHOUT PROPERLY APPRECIATING THE ISSUE. DURIN G THE COURSE OF HEARING, THE SUBMISSION OF THE REVENUE WAS THAT - THE CIT(A) OUGHT TO HAVE CONSIDERED THAT THE ASSESS EE HAD RECEIVED ADVANCES FROM NARAYANDAS BODARAM DURING AUG UST PAGE 20 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 20 1996 TO APRIL 1998 AND THAT THE ASSESSEE HAD NOT PR ODUCED ANY EVIDENCE IN SUPPORT OF SUCH CLAIM; - THAT THE CIT (A) OUGHT TO HAVE CONSIDERED THAT TH E ASSESSEE HAD NOT PRODUCED ANY EVIDENCE THAT THE BANKERS CHEQ UE RECEIVED BY THE SAID NARAYANDAS BODARAM WAS DIRECTLY H ANDED OVER TO SMT.SHANTHA; - THAT THE FIRST APPELLATE AUTHORITY OUGHT TO HAVE C ONSIDERED THAT THE ASSESSEE HAD FILED THE BALANCE SHEET FOR T HE SUBSEQUENT YEARS, BUT NOT SHOWN THE BANKERS CHEQUE R ECEIVED FROM NARAYANDAS BODARAM AND PAYMENT MADE TO SMT.SHANT HA; AND THAT THE CIT (A) OUGHT TO HAVE CONSIDERED THAT THE ASSESSEES FATHER LAKHAN SINGH DURING THE COURSE OF SEARCH PROCEEDINGS HAD ADMITTED THAT THE SAME HAD NOT BEEN REFLECTED IN THE BALANCE SHEET. 14.1. REBUTTING THE REVENUES CLAIM, THE LD. A.R C AME UP WITH THE FOLLOWING SUBMISSION THAT - - THE ASSESSEE AND HIS BROTHER RAKESH SINGH HAD E NTERED INTO AN ORAL UNDERSTANDING WITH SMT. SHANTHA FOR THE PUR CHASE OF HER PROPERTY AT KODIGEHALLI AND SINCE THEY DID NOT HA VE SUFFICIENT FUNDS FOR PURCHASE OF THE PROPERTY, THEY APPROACHED ONE NARAYANDAS BODARAM TO FINANCE THE PURCHASE OF TH E PROPERTY AND, ACCORDINGLY, .NARAYANDAS BODARAM MADE PAYMENTS DIRECTLY TO SMT.SHANTHA IN THE EARLIER YEARS. HOWEVER, THE ASSESSEEEJECTOR HAD NEITHER RECORDED T HE LOAN FROM .NARAYANDAS BODHARAM NOR THE ADVANCE GIVEN TO P URCHASE THE PROPERTY FROM SMT.N.SHANTA IN HIS STATEMENT OF A FFAIRS FOR THE YEAR UNDER APPEAL. THE LEARNED A.O. MADE THE AD DITION OF PAGE 21 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 21 THE INVESTMENT MADE IN THE PURCHASE OF THE PROPERTY CONSIDERING THE SAME AS UNDISCLOSED AS THE APPELLAN T HAD ENTERED INTO AN AGREEMENT WITH SMT.N.SHANTA; . - THAT IT WAS CONTENDED BEFORE THE CIT[A] THAT THE ASSESSEE HAD ENTERED INTO THE ARRANGEMENT WHERE-UNDER, SEVER AL CHEQUES/DD RECEIVED FROM NARAYANDAS BODARAM WERE MAD E OVER DIRECTLY TO SMT. SHANTA FROM TIME TO TIME DURIN G AUGUST 1996, APRIL 1998, ETC. SUBSEQUENTLY, SMT.N.SHANTHA E NTERED INTO TWO SEPARATE AGREEMENTS, WITH THE ASSESSEE AND RAJESH SINGH ON 05/01/2002 WHEREIN SMT. SHANTHA HAD ACKNO WLEDGED THAT SHE RECEIVED RS.9.5 LAKHS. THE RELEVANT PORT ION OF THE AGREEMENT READS AS THAT AN AMOUNT OF RS.9,50,000/- ( RS. NINE LAKH FIFTY THOUSAND ONLY) IS ALREADY PAID BY THE PURCHA SER TO THE SELLER BY BANKERS CHEQUE - THAT CIT[A] DELETED THE ADDITION MADE HOLDING TH AT THE ASSESSEE HAD EXPLAINED THE INVESTMENT MADE AND HAS SUBSTANTIATED THE EXPLANATION TENDERED BY HIM WITH R EGARD TO THE ARRANGEMENT ENTERED INTO WITH BODARAM BY FILING CONFIRMATION LETTERS FROM BODARAM AS WELL AS THE E VIDENCE TO SHOW THE RE-PAYMENT MADE BY THE ASSESSEES FATHER TO NARAYANDAS BODHARAM DURING F.Y. 2003-04 AND 2004-05, WHICH WERE DULY REFLECTED IN THE BALANCE SHEET OF LAKHAN S INGH AS AT 31/03/2004. PAGE 22 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 22 14.1.1. TO DRIVE HOME HIS POINT, THE LD. AR FURNIS HED A VOLUMINOUS PAPER CONTAINING 1 128 PAGES WHICH CONSIST OF, AM ONG OTHERS, COPIES OF THE CONFIRMATION LETTER OF NARAYANDAS AS WELL AS THE OT HER DETAILS [P 14 TO 24]. 14.2. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS . THE LD. CIT (A) DELETED THE ADDITION ON THE FOLLOWING REASON: 6. AS TO THE ADDITION OF RS.9.5 LAKHS, AO AFTER EXAMINING THE CONFIRMATION LETTER FILED BY THE APPEL LANT AT THE TIME OF APPELLATE STAGE SENT TO HIM FOR REMA ND CONCLUDES THAT THE ADDITION NEED TO BE SUSTAINED SI NCE THE CONFIRMATION LETTERS DO NOT CONTAIN THE PAN AND THE CIRCLE/WARD WHERE IT IS (SIC) THEY ARE ASSESSED. HOWEVER, I FIND THAT THESE LETTERS WERE SENT TO AO IN AUGUST, 2008. IT CONTAINS THE COMPLETE ADDRESS OF SRI NARAINDA BODARAM AS NO.239, SANKEY ROAD, SADASHIVNAGAR, BANGALORE 80. THE AO COULD HAVE S ENT SUMMON OR AN INSPECTOR TO THIS ADDRESS FOR ENQUIRY T O LOOK INTO THE VERACITY OF THE BALANCES CONFIRMED BY T HIS PERSON. THAT BEING NOT DONE, I SEE THE ONUS HAS NO T BEEN DISCHARGED PROPERLY SO AS TO JUSTIFY THE ADDITION. H ENCE, ADDITION IS DELETED. 14.2.1. ON A GLIMPSE OF THE REASONING OF THE LD. C IT (A), WE FIND THAT THE CIT (A), WITH THE AVAILABLE MATERIALS BEFORE HI M, WAS WITHIN THE REALM TO ARRIVE AT SUCH A CONCLUSION. ON THE OTHER HAND, TH E AOS REMAND REPORT ON THE ISSUE WAS RATHER WANTING. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE, ACCORDING TO THE AO, HAD NOT PRODUCED ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM THAT TH E BANKERS CHEQUE WAS RECEIVED FROM SRI NARAYANDAS AND SO ON AND SO FORTH. THE ASSESSEE HAS NOW COME UP WITH CONFIRMATION LETTERS AND OTHER DETAILS WHICH WERE NOT, IN FACT, PAGE 23 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 23 PLACED BEFORE THE AO AT THE TIME OF ASSESSMENT OF P ROCEEDINGS. IN A GIVEN CIRCUMSTANCE AND ALSO IN THE INTERESTS OF FAIR PLAY, THE ISSUE IS REMITTED BACK ON THE FILE OF THE AO WITH A SPECIFIC DIRECTIO N TO LOOK INTO THE ISSUE AFRESH AND TO TAKE APPROPRIATE ACTION ON THE ISSUE, OF COURSE, AFTER AFFORDING A REASONABLE OPPORTUNITY TO THE ASSESSEE O F BEING HEARD. IT IS ORDERED ACCORDINGLY. CROSS OBJECTION OF THE ASSESSEE (C.O.NO.45/09) : 15. THE FIRST ISSUE BEING THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN HOLDING THAT RS.2 LAKHS PAYABLE TO DR.ASHOK KUMAR OF NEW DELHI WAS ASSESSABLE AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 15.1. IT WAS SUBMITTED BY THE LD. AR DURING THE COU RSE HEARING THAT THE ADDITION OF RS.2,00,000/- PAYABLE TO DR.ASHOK KU MAR OF NEW DELHI AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT IN THE HA NDS OF THE ASSESSEE WAS TOTALLY UNJUSTIFIABLE AS THE ASSESSEE RECEIVED THE SAID SUM BY WAY OF A DEMAND DRAFT FROM ASHOK KUMAR AND THAT THE AMOUNT WAS REPAID IN THE NEXT YEAR. IT WAS, FURTHER, SUBMITTED THAT AS THE A MOUNT WAS RECEIVED THROUGH BANKING CHANNELS, THE IDENTITY OF THE CREDIT OR CANNOT BE DOUBTED. HOWEVER, HE HAD CONCEDED THAT THE ASSESSEE IS NOT I N A POSITION TO CONTACT THE CREDITOR TO OBTAIN A CONFIRMATION LETTER. 15.2. WE HAVE CAREFULLY CONSIDERED THE PLEADING OF THE LD. A.R. HOWEVER, AS RIGHTLY HIGHLIGHTED BY THE LD. CIT (A), T HE LD. A R HAD NOT BEEN ABLE TO FURNISH A CONFIRMATION LETTER FROM THE ALLE GED CREDITOR OF THE ASSESSEE EITHER AT THE TIME OF ASSESSMENT OR AT THE APPELLATE STAGES. IN THE PAGE 24 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 24 ABSENCE OF ANY DOCUMENTARY EVIDENCE TO JUSTIFY THE PLE ADING OF THE LD. A.R., WE ARE IN TOTAL AGREEMENT WITH THE FINDING OF THE L D. CIT (A) ON THIS COUNT. 16. THE OTHER OBJECTION OF THE ASSESSEE BEING THAT THE CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS . 3.6 LAKHS OUT OF THE TOTAL CREDIT OF RS.5.4 LAKHS PAYABLE TO M/S. SRINIV ASA AGENCIES U/S 68 OF THE ACT. 16.1. IT WAS THE CASE OF THE LD. A R THAT THE AFOR ESAID ADDITION WAS MADE FOR THE YEAR UNDER APPEAL AS PER THE DIRECTION OF THE CIT[A] WHILE DECIDING THE APPEAL FOR THE AY 2003-04. IT WAS, FU RTHER, SUBMITTED THAT THE APPELLANT HAD MADE DETAILED SUBMISSIONS FOR THE AY 2003-04. AS THE FACTS ARE ALSO SIMILAR AND INTER-CONNECTED FOR THE YEAR UNDER APPEAL, THE SUBMISSIONS MADE THEREIN MAY KINDLY BE TREATED AS PAR T AND PARCEL OF THE SUBMISSION. IT WAS FERVENTLY PRAYED THAT FOR REASONS STATED THEREIN, THE ADDITION REQUIRES TO BE DELETED. 16.1.1. AT THE OUT-SET, WE WOULD LIKE TO EMPHASIS THAT A SIMILAR ISSUE WHICH CROPPED FOR THE AY 2003-04 HAS BEEN DEALT WIT H ELABORATELY. FOR THE REASONS RECORDED THERETO [PARA 9.2 SUPRA], THIS ISS UE IS ALSO REMITTED BACK ON THE FILE OF THE AO FOR SIMILAR TREATMENT. IT IS ORDERED ACCORDINGLY. A.Y 2005-06 (ITA NO.662/09) : 17. THE SOLITARY GROUND OF THE REVENUE IS THAT THE LD. CIT (A) ERRED IN TELESCOPING AND DELETING THE ADDITION OF R S.6.90 LAKHS (OUT OF RS.20.88 LAKHS) MADE U/S 69 OF THE ACT. PAGE 25 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 25 17.1. DURING THE COURSE OF HEARING, IT WAS SUBMITT ED BY THE REVENUE THAT - THE CIT (A) ERRED IN CONSIDERING THAT IN RESPECT OF PROPERTY AT SY.NO.161/2. GOKHARE VILLAGE (SEIZED MATERIAL MAR KED A/LS/2 PAGE NOS.16 TO 19) THAT THE ASSESSEE WAS A PURCHASER INSTEAD OF SELLER; THAT THE SAID PROPERTY WAS PURCHASED BY THE ASSESSEE AS PER SALE DEED DT.5.3.20 05; - THAT THE CIT (A) OUGHT TO HAVE CONSIDERED THAT THE ASSESSEE AS A PURCHASER HAD PAID RS.7 LAKHS IN CASH AS PER S ALE DEED DT: 24.12.2004 (SEIZED MATERIAL MARKED A/LS/2 PAGE NOS:4 TO 8) TO PURCHASE 3.21 ACRES OF LAND IN SY.NO: 164, KOKARE VILLAGE WHICH WAS NOT ACCOUNTED FOR; - THAT THE CIT (A) OUGHT TO HAVE CONSIDERED THAT THE ASSESSEE AS A VENDOR HAD RECEIVED RS.6.9 LAKHS IN CASH AS PE R AGREEMENT TO SELL DT.27.12.2004 (SEIZED MATERIAL MA RKED A/LS/2 PAGE NOS: 12 TO 15) WHICH WAS ALSO NOT ACC OUNTED FOR; - THAT HE OUGHT TO HAVE CONSIDERED THAT THE ASSESSEE AS A VENDOR HAD RECEIVED ANOTHER SUM OF RS.6.9 LAKHS IN CASH IN RESPECT OF ANOTHER PROPERTY MEASURING 2 ACRES AT SY.NO.161/2, GOKHARE VILLAGE AS PER AGREEMENT TO SEL L DT.7.3.05 WHICH WAS ALSO NOT ACCOUNTED FOR; - THAT THE CIT (A) OUGHT TO HAVE CONSIDERED THAT THE ASSESSEE HAD PAID RS.7 LAKHS IN CASH FOR PURCHASE OF 3.21 AC RES OF LANDS IN SY.NO.164 AND HAD RECEIVED RS.13.8 LAKHS IN CASH AS A VENDOR IN RESPECT OF TWO DIFFERENT PROPERTIES VIZ.,SY.NOS:164 AND 161/2 AT GOKHARE VILLAGE, DEVANA HALLY WHICH WERE REGISTERED DEED; & - THAT HE OUGHT TO HAVE CONSIDERED THAT THE CONSIDER ATION PAID AND RECEIVED BY THE ASSESSEE IN CASH WERE SUPPO RTED BY REGISTERED DEEDS AND THAT THE PAYMENTS AND RECEIPTS WERE NOT ACCOUNTED FOR. PAGE 26 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 26 17.1.1. ON HIS PART, THE LD. A R CAME UP WITH SPIR ITED ARGUMENTS, GIST OF WHICH, ARE SUMMARIZED AS UNDER: - THAT AT THE TIME OF SEARCH IN THE RESIDENTIAL PREMI SES OF THE ASSESSEE, IT WAS NOTICED THAT ONE RAM AVATHAR GUPTA OF MUMBAI WAS ALSO PRESENT AND A SEARCH OF HIS BRIEFCA SE REVEALED THE FOLLOWING 3 DOCUMENTS EXECUTED BY HIM W ITH THE APPELLANT, APART FROM CASH OF RS. 12,50,000/-: [A] SALE DEED DATED 24/12/04 - [ A/LSR/2 PAGES 4 TO 8] [B] SALE AGREEMENT DATED 27/12/04 - [A/LSR/2 PAGE 12 TO 15] [C] SALE AGREEMENT DATED 07/03/05 - [A/LSR/ 2 PAGE 16 TO 19] - WITH REGARD TO THE AFORESAID DOCUMENTS MENTIONED IN [A] AND [B] ABOVE, IT WAS EXPLAINED THAT RAM AVATHAR GU PTA, WAS A CLOSE FRIEND OF THE ASSESSEES FATHER AND THAT, H E HAD PURCHASED CERTAIN LANDS AT SURVEY NO.164 OF GOKARE VILLAGE FROM ONE SMT. LEELAVATHI IN THE YEAR 1995 AND THESE LANDS WERE HELD BY HIM BY VIRTUE OF A GPA EXECUTED IN HIS FAVOUR BY THE SAID LADY. AS MORE THAN 10 YEARS HAD ELAPSED RAM AVATHAR GUPTA WAS HESITANT TO APPROACH THE EARLIER LANDLORDS TO EXECUTE A SALE DEED IN HIS FAVOUR FEAR ING THAT THEY MAY DEMAND MORE MONEY IN VIEW OF THE RISE IN REAL ESTATE PRICES. THEREFORE WITH A DESIRE TO FREE HIMS ELF FROM CLUTCHES OF THE ERSTWHILE LANDLORD AND IN ORDER TO HOLD THE PROPERTY WITHOUT FEARING THEIR ACTIONS, RAMAVATHAR GUPTA REQUESTED THE ASSESSEE WHOM HE HAD KNOWN SINCE HE W AS A CHILD, TO BE THE PURCHASER OF THE AFORESAID PROPE RTY SO THAT RAMAVATAR GUPTA COULD THEN EXECUTE A SALE DEED IN HIS CAPACITY AS GPA HOLDER OF THE AFORESAID SMT. LEELAVA THI. THE ASSESSEE AGREED TO HELP HIM AND CONSEQUENTLY, TH E DOCUMENT MENTIONED IN SL.NO [A] ABOVE CAME TO BE EX ECUTED ON 24/12/2004 IN FAVOUR OF THE ASSESSEE AS PURCHASE R. THEREAFTER, AS AGREED TO BETWEEN THEM, THE ASSESSEE AND RAMAVATAR GUPTA ENTERED INTO A SALE AGREEMENT JUST 3 DAYS THEREAFTER I.E., ON THE 27/12/2004 WHICH DOCUMENT I S PAGE 27 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 27 MENTIONED AT SL. NO [B] ABOVE AND BY VIRTUE OF THIS SALE AGREEMENT .RAMAVATAR GUPTA BECAME THE AGREEMENT HOL DER OF THE AFORESAID LANDS. IN ORDER TO ENSURE THAT TH E DOCUMENTS EXECUTED BY HIM HAVE THE LEGAL AUTHORITY IT WAS STATED THAT A CONSIDERATION OF RS.7,00,000/- WAS PA ID BY THE ASSESSEE TO RAMAVATAR GUPTA UNDER THE SALE DEED DAT ED 24/12/2004. SIMILARLY, IN THE SALE AGREEMENT DATED 27/12/2004, IT WAS STATED THAT THE ASSESSEE HAD REC EIVED RS.6,90,000/- FROM RAM AVATAR GUPTA. HOWEVER, NO CONSIDERATION AS MENTIONED IN THE AGREEMENTS WAS EV ER PAID OR RECEIVED BY THE ASSESSEE AND THUS, NONE OF THESE TRANSACTIONS WERE REPORTED IN THE RETURN OF INCOME FILED BY THE ASSESSEE; - APART FROM THE ABOVE TWO AGREEMENTS, THERE WAS ANOT HER SALE AGREEMENT DATED 07/03/2005 MENTIONED IN SL. NO . [C] ABOVE, SHOWING THE ASSESSEE AS A PURCHASER FOR A CONSIDERATION OF RS. 6,90,000/-; THAT .RAM AVATAR G UPTA HAD ALSO PURCHASED LANDS AT SY NO.161/2, GOKARE VILLAGE, MEASURING 2 ACRES MANY YEARS AGO FROM SRI.KALLAPPA AN D OTHERS. UNDER SIMILAR CIRCUMSTANCES, THE AFORESAID RAM AVATAR GUPTA REQUESTED THE ASSESSEE TO EXECUTE THE AFORESAID DOCUMENT WHICH THE ASSESSEE OBLIGED. HOW EVER, NO CONSIDERATION WAS PAID BY THE ASSESSEE AS MENTION ED IN THIS DOCUMENT; - THAT THE A.O. DID NOT ACCEPT THESE EXPLANATIONS TEN DERED BEFORE HIM IN COURSE OF ASSESSMENT PROCEEDINGS. HE PROCEEDED TO MAKE ADDITIONS OF THE THREE AMOUNTS VI Z., RS.7,00,000/-, RS.6,90,000/- AND RS. 6,90,000/- AGG REGATING TO RS.20,80,000/-THAT THE A.O. RELIED UPON THE STAT EMENT OF THE ASSESSEES FATHER.LAKHAN SINGH IN CONNECTION WI TH THE AFORESAID TRANSACTIONS FOR MAKING THE ADDITION; - THAT BEFORE THE CIT[A], IT WAS SUBMITTED THAT THE A O OUGHT TO HAVE APPRECIATED THAT THE EXPLANATION TENDERED B Y THE ASSESSEE AS BONA-FIDE; THAT THERE WAS ABSOLUTELY NO REASON PAGE 28 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 28 FOR THE ASSESSEE, WHO PURCHASED THE LANDS VIDE SAL E DEED ON 24/12/2004 FROM RAM AVATHAR GUPTA, TO SELL THE SAM E LANDS TO.RAMAVATAR GUPTA HIMSELF AFTER JUST 3 DAYS. THE SEQUENCE OF EVENTS AND THE NATURE OF DOCUMENTS EXEC UTED CLEARLY SHOW THAT THE EXPLANATION OF THE ASSESSEE WA S BONA- FIDE AND ACCEPTABLE; THAT THE ASSESSEE HAD PLACED AT PAGE NO.67 TO 70 OF THE PAPER BOOK, AN AFFIDAVIT OF RAM AVATHAR GUPTA, CONFIRMING THE SUBMISSIONS MADE IN RESPECT O F THE AFORESAID TRANSACTIONS AND THAT THE AFFIDAVIT OF SR I RAM AVATHAR GUPTA WAS ADDITIONAL EVIDENCE FILED BEFORE THE LEARNED CIT[A] IN THE APPELLATE PROCEEDINGS; - THAT THE CIT[A] AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE DELETED THE ADDITION TO THE EXTENT OF RS.6,90,000/- AND SUSTAINED A SUM OF RS.13,90,000/- ; THAT THE CIT[A] OUGHT TO HAVE APPRECIATED THAT THE AFFID AVIT OF .RAM AVATAR GUPTA REMAINS UN-CONTROVERTED AND THAT THE DOCUMENTS WERE SEIZED FROM THE BRIEFCASE OF RAM AVA TAR GUPTA. THE ENTIRE CIRCUMSTANCES CLEARLY SHOW THAT T HE EXPLANATION TENDERED BY THE ASSESSEE WAS BONA-FIDE A ND WITHIN THE REALMS OF PROBABILITY AND THEREFORE, THE SAME OUGHT NOT TO HAVE BEEN REJECTED PURELY ON SUSPICION AND SURMISE AND THAT THE REJECTION OF THE EXPLANATION TENDERED BY THE ASSESSEE WAS CONTRARY TO EVIDENCE ON RECORD; & - RELYING ON THE DECISION OF THE HONBLE SUPREME COUR T IN THE CASE OF MEHTA PARIKH & CO. REPORTED IN 30 ITR 181[ IT WAS HELD BY THE HONBLE SUPREME COURT THAT THE AFFIDAVIT WAS ONE OF MEANS OF GIVING EVIDENCE AND WHEN AN AFFIDAV IT IS FILED AND THE DEPONENT HAS NOT BEEN EXAMINED ON THE BASIS OF THE AVERMENTS MADE IN THE AFFIDAVIT, THE SAME CA NNOT BE REJECTED.] IT WAS SUBMITTED THAT THE CIT[A] WAS NOT JUSTIFIED IN SUSTAINING AN ADDITION OF RS. 13,90,00 0/- OUT OF THE ADDITION OF RS. 20,80,000/- MADE BY THE LEARNED A.O. HENCE, THE ADDITION OF RS.13,90,000/- REQUIRES TO B E DELETED. PAGE 29 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 29 17.2. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS . WE HAVE ALSO METICULOUSLY PERUSED THE FINDING OF THE LD. CIT (A) WHEREIN THE FIRST APPELLATE AUTHORITY, AFTER DULY ANALYZING THE ASSESS EES VERSION, OBSERVED THUS 8. IN THE REMAND REPORT, NO COMMENT HAS BEEN MADE IN RESPECT OF THE ADDITIONAL EVIDENCE GIVEN BY THE AUT HORIZED REPRESENTATIVE IN THE SHAPE OF AFFIDAVIT OF SRI RAM AVTAR GUPTA. THE AFFIDAVIT FILED HAS ALSO BEEN NOT EXAMI NED. HOWEVER, THE REPORT IS CONSIDERED VIS--VIS ADDITIO NAL EVIDENCE SUBMITTED. 9. AFFIDAVIT HAS ALWAYS BEEN CONSIDERED ZA SELF SER VING DOCUMENT AND ALMOST A NULLITY IN THE CONTEXT OF THE DEGREE OF PROOF ATTACHED STATUTORILY TO SEIZE DOCUMENT U/S W13 2 (4A) R.W.S. 292C OF THE I.T. ACT. THESE SEIZED DOCUMENT S THOUGH HAVE BEEN ALLEGEDLY SEIZED FROM THE BRIEF CASE OF S RI RAM AVTAR GUPTA, IT WAS SEIZED FROM THE SEARCH PREMISE S. BESIDES, THE ENTRIES AND THE CONTENTS OF THE DEEDS HAVE NOT BEEN REBUTTED TO BE UNTRUE. MAY IT BE A PAPER TRANSACTIO N, THOUGH NOT ACCEPTING THE SAME, CONSIDERING IT AS AN ARGUME NT POINT, STILL ITS EVIDENTIARY VALUE GETS CORROBORATED AND STRENGTH ENED BY THE ENQUIRY OF AO WHICH REVEALS THAT THE REAL OWNER OF THESE SURVEY NOS.164 AND 161/2 IN RECORD OF RIGHTS OR PATT A IS THE APPELLANT ONLY, ON THE DATE OF SEARCH. HAD THESE TR ANSACTIONS BEEN DONE WITH AN INTENTION TO GET OWNERSHIP OVER L AND BY SRI RAM AVTAR GUPTA, IMMEDIATELY CONTRA ABSOLUTE DEED WO ULD HAVE BEEN EXECUTED BY HIM FREE OF COST BECAUSE IN SUCH TRANSACTIONS, NO MONEY WOULD HAVE EXCHANGED HANDS. EVEN AT THE TIME OF ASSESSMENT OR APPELLATE STAGE, THE OWNE RSHIP STILL LIE WITH THE APPELLANT. THUS, THE EXPLANATION DOES NOT FIT INTO THE SCHEME OF INTENTION/ACTION/PLAN NARRATED IN THE AFFIDAVIT. THUS, I FIND THE ADDITIONS JUSTIFIED. HOWEVER, I S EE THERE ARE TWO PURCHASE DEEDS AND ONE SALE AGREEMENT WHICH NEE D TELESCOPING. THEREFORE, THE ADDITION IS RESTRICTED TO 13.9 LAKHS. PAGE 30 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 30 17.2.1. IN THE MEANWHILE, WE HAVE A GLIMPSE OF THE AFFIDAVIT OF RAMAVTHAR GUPTA [PAGES 142 144 OF PB AR] AND PERU SED WITH RESPECTS THE RULING OF THE HONBLE SUPREME COURT IN THE CASE OF MEHTA PARIKH AND COMPANY V. CIT, BOMBAY 30 ITR 181 (SC) ON WHICH THE A SSESSEE HAD PLACED STRONG RELIANCE. THE HONBLE COURT HAD RULED THUS - IT HAS TO BE NOTED, HOWEVER, THAT BEYOND THESE CALCULATIONS OF FIGURES, NO FURTHER SCRUTINY WAS MAD E BY THE INCOME-TAX OFFICER OR THE APPELLATE ASSISTANT COMMISSIONER OF THE ENTRIES IN THE CASH BOOK OF THE APPELLANTS. THE CASH BOOK OF THE APPELLANTS WAS ACC EPTED AND THE ENTRIES THEREIN WERE NOT CHALLENGED. NO FUR THER DOCUMENTS OR VOUCHERS IN RELATION TO THOSE ENTRIES WERE CALLED FOR, NOR WAS THE PRESENCE OF THE DEPONENTS O F THE THREE AFFIDAVITS CONSIDERED NECESSARY BY EITHER PARTY . THE APPELLANTS TOOK IT THAT THE AFFIDAVITS OF THESE PARTIES WERE ENOUGH AND NEITHER THE APPELLATE ASSIS TANT COMMISSIONER, NOR THE INCOME-TAX OFFICER, WHO WAS PRESENT AT THE HEARING OF THE APPEAL BEFORE THE APPELLATE ASSISTANT COMMISSIONER, CONSIDERED IT NECESSARY TO CALL FOR THEM IN ORDER TO CROSS-EXAMINE THEM WITH REFERENCE TO THE STATEMENTS MADE BY THEM I N THEIR AFFIDAVITS. UNDER THESE CIRCUMSTANCES IT WAS NOT OPEN TO THE REVENUE TO CHALLENGE THE CORRECTNESS OF THE CASH BOOK ENTRIES OR THE STATEMENTS MADE BY THOSE DEPONENTS IN THEIR AFFIDAVITS. 17.3. IN AN OVERALL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE ISSUE AND ALSO TAKING INTO ACCOUNT THE FINDING OF THE LD. CIT (A) WHO HAD TAKEN COGNIZANCE OF THE AFFIDAVIT OF RAMAVTHAR GUPT A [AS RULED BY THE HONBLE SUPREME COURT CITED SUPRA] AND THAT NONE O F THE PARTIES HAVE BROUGHT ANY DOCUMENTARY EVIDENCE TO STRENGTHEN THEIR RESPECTIVE STAND EVEN AT THE TIME OF HEARING BEFORE THIS BENCH, WE A RE OF THE CONSIDERED PAGE 31 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 31 VIEW THAT THE LD. CIT (A) WAS WITHIN HIS REALM TO T AKE A FAIR AND JUDICIOUS VIEW WHICH REQUIRES NO INTERFERENCE AT THIS STAGE. IT IS ORDERED ACCORDINGLY. CROSS OBJECTIONS OF THE ASSESSEE (C.O.NO.46/09) : 18. THE FIRST OBJECTION BEING THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITIONAL INCOME OF RS. 5.48 LAKHS MISTAKENLY OFFERED UNDER THE FACTS OF THE CASE. 18.1. TO STRENGTHEN THE ASSESSEES CLAIM, THE LD. A R SUB MITTED THAT- - FOR THE YEAR UNDER APPEAL, RS. 5.48 LAKHS WAS OFFE RED AS UNDISCLOSED INCOME BY THE ASSESSEE, WHICH HAS BEEN ACCEPTED BY T HE A.O. THE BREAKUP OF THE ABOVE IS AS UNDER: [A] INVESTMENT IN DODDABALLAPUR RS. 3,96,495/ - [B] INVESTMENT IN WHITEFEILD ROAD PROPERTY RS. 1,02 ,229/- ------------------ RS. 4,98,724/- [C] CASH BALANCE RS. 50,000/- ---------------- TOTAL RS. 5,48,724/- ---------------- - THAT THE INVESTMENTS OF RS. 4,98,724/- WERE MAD E OUT OF ACCOUNTED FUNDS AVAILABLE WITH THE ASSESSEE AND HIS FAMILY MEMBERS, THAT THE STATEMENT OF AFFAIRS OF THE ASSESSEE AND HIS FAMILY MEMBERS FILED BEFORE THE DATE OF SEARCH REVEALS THA T THE ASSESSEE HAD SUFFICIENT SOURCES OF FUNDS TO MAKE THE AFORESA ID TWO INVESTMENT AND THAT FAILURE TO REFLECT THE SAID INVESTMENT IS ONLY ON ACCOUNT OF ERROR TO RECORD THE CASH PAYMENT ENTRIES AND IT IS N OT AS IF THE SAID INVESTMENT WAS MADE OUT OF UNACCOUNTED SOURCES OF F UNDS; PAGE 32 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 32 - THAT THE ENTIRE RECORDS OF THE ASSESSEE WERE SEI ZED CONSEQUENT TO THE SEARCH OPERATIONS ON 30/09/2005 AND THEREFORE T HE ASSESSEE COULD NOT REFLECT THE INVESTMENTS IN THE ORIGINAL R ETURN FILED ON 30/12/2005. THE STATEMENT GIVING THE CASH AVAILABIL ITY POSITION OF THE ASSESSEE AND HIS FAMILY MEMBERS HAS BEEN FURNISHED BEFORE THE CIT[A]; THAT THE AGGREGATE CASH BALANCES OF THE AS SESSEE, LAKHAN SINGH, RAJESH SINGH AND SMT UMA DEVI, AS AT 01/04/2 004 AND 31/03/2005 WAS RS.29,76,676/- AND RS.11,17,242/- RE SPECTIVELY AND THAT EVEN AFTER CONSIDERING THE INVESTMENT OF RS. 4,98,724 MADE OUT OF THE ABOVE CASH BALANCES, THE YEAR-END CASH BALANC ES ARE STILL POSITIVE; - THAT THERE WAS ABSOLUTELY NO JUSTIFICATION FOR CO NSIDERING THE AFORESAID INVESTMENT AS UNACCOUNTED. HOWEVER, LAKHA N SINGH AND THE ASSESSEE HAD OFFERED RS.4,98,724/- AS ADDITIONAL IN COME REPRESENTING THE AMOUNT OF INVESTMENTS MADE IN THE AFORESAID TWO PROPERTIES ON THE MISTAKEN BELIEF THAT A PROPERTY WHICH IS NOT REF LECTED IN THE BALANCE-SHEET IS UNACCOUNTED INVESTMENT EVEN IF IT WAS PURCHASED OUT OF ACCOUNTED INCOME ALREADY OFFERED TO TAX; - THAT DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE CIT[A] THE ASSESSEE HAD PRODUCED THE COMBINED CASH FLOW ST ATEMENT AS ADDITIONAL EVIDENCE AS THE SAME COULD NOT BE EXPLAI NED TO THE A.O. IN THE ASSESSMENT PROCEEDINGS. CONSIDERING THE ADDITIO NAL EVIDENCE PRODUCED THERE WAS NO JUSTIFICATION FOR ACCEPTING A SUM OF RS.4,98,724/- OUT OF THE ADDITIONAL INCOME OF RS.5, 48,724/- OFFERED BY THE ASSESSEE UNDER THE MISTAKEN APPRECIATIONS OF FACTS WHICH REQUIRES TO BE DELETED. 18.1. AT THE OUTSET, WE WOULD LIKE TO POINT OUT TH AT AN IDENTICAL ISSUE HAD COME UP IN THE CASE OF THE ASSESSEES FATHER W HICH WAS DULY CONSIDERED BY THE HONBLE TRIBUNAL AND REJECTED THE CLAIM FOR T HE REASONS RECORDED IN ITA NO. 462 TO 464/B/2010 DATED 03/11/2010. AS THE ISSUE BEFORE HAND IS SIMILAR TO THAT OF THE ISSUE WHICH WAS DEALT BY THE HONBLE BENCH CITED SUPRA PAGE 33 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 33 AND IN CONFORMITY WITH THE SAID FINDING, WE UPHOLD T HE STAND OF THE LD. CIT (A) ON THIS COUNT. IT IS ORDERED ACCORDINGLY. 19. THE OTHER OBJECTION WAS THAT THE CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS.13.8 (SIC) RS.13.9 LAK HS CONSIDERED AS UNEXPLAINED INVESTMENTS U/S 69 OF THE ACT. 19.1. TO COUNTER THE CIT (A)S STAND, THE LD. AR SUBMITTE D THAT - AT THE TIME OF SEARCH IN THE RESIDENTIAL PREMISES OF THE CROSS- OBJECTOR THAT ONE RAM AVATHAR GUPTA OF MUMBAI WAS A LSO PRESENT AND A SEARCH OF HIS BRIEFCASE REVEALED THE FOLLOWING 3 DOCUMENTS EXECUTED BY HIM WITH THE APPELLANT, APART FROM CASH OF RS. 12,50,000/- : [A] SALE DEED DATED 24/12/04 - [A/LSR/2 PAGES 4 TO 8] [B] SALE AGREEMENT DATED 27/12/04 - [A/LSR/2 PAGE 12 TO 15] [C] SALE AGREEMENT DATED 07/03/05 - [A/LSR/2 PAGE 16 TO 19] - THAT IT WAS EXPLAINED THAT RAM AVATHAR GUPTA, WAS A CLOSE FRIEND OF THE CROSS-OBJECTORS FATHER AND THAT, HE HAD PURCHA SED CERTAIN LANDS AT SURVEY NO.164 OF GOKARE VILLAGE, DEVANAHALLI TALU K FROM ONE SMT. LEELAVATHI IN THE YEAR 1995 AND THESE LANDS WERE HE LD BY HIM BY VIRTUE OF A GPA EXECUTED IN HIS FAVOUR BY THE AFORESAID LAN DLORD. AS MORE THAN 10 YEARS HAD ELAPSED RAM AVATHAR GUPTA WAS HES ITANT TO APPROACH THE EARLIER LANDLORDS TO EXECUTE A SALE DE ED IN HIS FAVOUR FEARING THAT THEY MAY DEMAND MORE MONEY IN VIEW OF THE RISE IN REAL ESTATE PRICES. THEREFORE WITH A DESIRE TO FREE HIMS ELF FROM CLUTCHES OF THE ERSTWHILE LANDLORD AND IN ORDER TO HOLD THE PROPERTY WITHOUT FEARING THEIR ACTIONS, RAMAVATHAR GUPTA REQUESTED THE CROSS- OBJECTOR HEREIN, WHOM HE HAD KNOWN SINCE HE WAS A C HILD, TO BE THE PURCHASER OF THE AFORESAID PROPERTY SO THAT RAMAVA TAR GUPTA COULD THEN EXECUTED A SALE DEED IN HIS CAPACITY AS GPA HOL DER OF THE AFORESAID SMT. LEELAVATHI. THE CROSS-OBJECTOR AGREE D TO HELP HIM AND PAGE 34 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 34 CONSEQUENTLY, THE DOCUMENT MENTIONED IN SL.NO [A] AB OVE CAME TO BE EXECUTED ON 24/12/2004 IN FAVOUR OF THE CROSS-OBJEC TOR AS PURCHASER. THEREAFTER, AS AGREED TO BETWEEN THEM, THE CROSS- OBJECTOR AND RAMAVATAR GUPTA ENTERED INTO A SALE AG REEMENT ON 27/12/2004 WHICH DOCUMENT IS MENTIONED AT SL.NO [B] ABOVE AND BY VIRTUE OF THIS SALE AGREEMENT RAMAVATAR GUPTA BECAM E THE AGREEMENT HOLDER OF THE AFORESAID LANDS. IN ORDER TO ENSURE THAT THE DOCUMENTS EXECUTED BY HIM HAVE THE LEGAL AUTHORITY IT WAS STATE D THAT A CONSIDERATION OF RS.7,00,000/- WAS PAID BY THE CROSS -OBJECTOR TO SRI.RAMAVATAR GUPTA UNDER THE SALE DEED DATED 24/12 /2004. SIMILARLY, IN THE SALE AGREEMENT DATED 27/12/2004, I T WAS STATED THAT THE CROSS-OBJECTOR HAD RECEIVED RS.6,90,000/- FROM. RAM AVATAR GUPTA. HOWEVER, NO CONSIDERATION AS MENTIONED IN T HE AGREEMENTS WAS EVER PAID OR RECEIVED BY THE CROSS-OBJECTOR AND THUS , NONE OF THESE TRANSACTIONS WERE REPORTED IN THE RETURN OF INCOME FILED BY THE APPELLANT; - APART FROM THE ABOVE TWO AGREEMENT, THERE WAS ANO THER SALE AGREEMENT DT:07/03/2005 SHOWING THE CROSS-OBJECTOR AS A PURCHASER FOR A CONSIDERATION OF RS. 6,90,000/-. IT IS SUBMIT TED THAT .RAM AVATAR GUPTA HAS ALSO PURCHASED LANDS AT SURVEY NO.1 61/2, GOKARE VILLAGE, MEASURING 2 ACRES MANY YEARS AGO FROM SRI.KA LLAPPA AND OTHERS. UNDER SIMILAR CIRCUMSTANCES, THE AFORESAID RAM AVATAR GUPTA REQUESTED THE CROSS-OBJECTOR TO EXECUTE THE AFORESA ID DOCUMENT, WHICH THE CROSS-OBJECTOR OBLIGED. HOWEVER, NO CONS IDERATION WAS PAID BY THE CROSS-OBJECTOR AS MENTIONED IN THIS DOCUMENT. -THE AO DID NOT ACCEPT THESE EXPLANATIONS AND MADE ADDITIONS OF RS.7 LAKHS, RS.6.9 LAKHS AND RS.6,9 LAKHS, AGGREGATING T O RS.20.8 LAKHS BY RELYING UPON THE STATEMENT OF THE CROSS-OBJECTORS F ATHER LAKHAN SINGH IN CONNECTION WITH THE AFORESAID TRANSACTIONS ; - BEFORE CIT[A], IT WAS SUBMITTED THAT EXPLANATIO N TENDERED BY THE CROSS-OBJECTOR WAS BONA FIDE AND THERE WAS NO REASO N FOR THE CROSS- OBJECTOR, WHO OBTAINED PURCHASED THE LANDS VIDE SAL E DEED ON 24/12/2004 FROM RAM AVATHAR GUPTA, TO SELL THE SAM E LANDS TO RAMAVATAR GUPTA HIMSELF AFTER JUST 3 DAYS, THAT THE SEQUENCE OF PAGE 35 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 35 EVENTS AND THE NATURE OF DOCUMENTS EXECUTED CLEARLY SHOWS THAT THE EXPLANATION WAS BONA FIDE; THAT THE AFFIDAVIT OF S RI RAM AVATHAR GUPTA, CONFIRMS THE SUBMISSIONS MADE IN RESPECT OF THE AFORESAID TRANSACTIONS AND THAT THE AFFIDAVIT OF RAM AVATHAR GUPTA WAS ADDITIONAL EVIDENCE FILED BEFORE THE CIT[A];. - THAT THE CIT[A] AFTER CONSIDERING THE SUBMISSION S DELETED THE ADDITION OF RS.6,90,000/- AND SUSTAINED THE BALANC E AMOUNTS THAT THE CIT[A] OUGHT TO HAVE APPRECIATED THAT THE AFFI DAVIT OF .RAM AVATAR GUPTA REMAINS UNCONTROVERTED AND THAT THE DO CUMENTS WERE SEIZED FROM THE BRIEFCASE OF RAM AVATAR GUPTA; THAT THE ENTIRE CIRCUMSTANCES CLEARLY SHOW THAT THE EXPLANATION TEND ERED BY THE CROSS-OBJECTOR WAS BONA-FIDE AND, THEREFORE, THE SA ME OUGHT NOT TO HAVE BEEN REJECTED ON SUSPICION AND SURMISE, AND TH AT THE REJECTION OF THE EXPLANATION WAS CONTRARY TO EVIDENCE ON RECORD; - THAT THE DECISION OF THE HONBLE SUPREME COURT I N THE CASE OF MEHTA PARIKH & CO. REPORTED IN 30 ITR 181 IS ON THE POINT AND THUS THE CIT[A] WAS NOT JUSTIFIED IN SUSTAINING AN ADDI TION OF RS. 13,90,000/- OUT OF RS. 20,80,000/- MADE BY THE A.O. . 19.2. AS ALREADY POINTED OUT BY US IN THE FORE-GOING PARAGRAPHS [ PARA 17.3.], WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT (A) HAD TAKEN ALL THE RELEVANT FACTS INTO ACCOUNT WHILE ALLOWING RELIEF O F RS.6.9 LAKHS, THEREBY RESTRICTING THE ADDITION TO THE EXTENT OF RS.13.9 L AKHS [ RS.20.8 LAKHS MINUS RS.6.9 LAKHS ] FOR THE WELL REASONS SET-OUT IN HIS FINDING WHICH HAS BEEN SUSTAINED BY US REFERRED ABOVE. IN THE LIGHT OF THE ABOVE, WE ARE IN AGREEMENT WITH THE STAND OF THE LD. CIT (A) ON THIS ISSUE TOO. IT IS ORDERED ACCORDINGLY. PAGE 36 OF 36 ITA NOS.661-662, 843-846 /B/09 & CO NOS.45 & 46/BANG/09 36 20. IN THE RESULT : I. ASSESSEES APPEALS : (I) APPEALS FOR THE AYS 2001-02 AND 2004-05 ARE DISMISSED ; (II) CROSS OBJECTIONS FOR THE AY 2002-03 IS PARTLY ALLOWED; (III) APPEAL FOR THE AY 2003-04 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES; (IV) CROSS OBJECTIONS FOR THE AY 2005-06 IS DISMISSED; & (V) APPEAL FOR THE AY 2006-07 IS PARTLY ALLOWED ; II. REVENUES APPEALS : (I) APPEAL FOR THE AY 2002-03 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES; & (II) APPEAL FOR THE AY 2005-06 IS DISMISS ED THE ORDER PRONOUNCED ON THURSDAY, THE 21 ST DAY OF APRIL, 2011 AT BANGALORE. SD/- SD/- (A MOHAN ALANKAMONY) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/18/3. BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.