Shri Kasturilal Sardarilal luthra, Nashik V. DCIT, Cent. Cir.-1, Nashik

ITA 923/PUN/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1463 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 25-07-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 29-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J P CHANDRAKAR
• Keywords: Unexplained investment; Business income; Loose papers; Document seized; Question of law; Tangible material; Documents seized
• Section: 143(3); 153A; 131; 69; 132; 2; 139

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , !', $ % BEFORE SHRI VIKAS AWASTHY, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.923/PN/2011 ASSESSMENT YEAR : 2003-04 SHRI KASTURILAL SARDARILAL LUTHRA, URMIL, SHRIN MEADOWS, GANGAPUR ROAD, NASHIK. PAN : AAFPK4629P . APPELLANT VS. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, NASHIK. . RESPONDENT / APPELLANT BY : SHRI M. K. KULKARNI / RESPONDENT BY : SHRI J. P. CHANDRAKAR (CIT) / DATE OF HEARING : 25.07.2016 / DATE OF PRONOUNCEMENT: 29.07.2016 & / ORDER PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED APPEAL FILED BY THE ASSESSEE IS AGAIN ST THE ORDER OF CIT(A)-II, NASHIK DATED 24.05.2011 RELATING TO ASSE SSMENT YEAR 2003-04 PASSED UNDER SECTION 153A R.W.S. 143(3) OF THE INCO ME-TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL, THE ASSESSEE RAISED SEVERAL GROU NDS OF APPEAL AND ALSO RAISED ADDITIONAL GROUNDS OF APPEAL UNDER RULE 11 O F THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963. THE ASSESSEE BY THESE GROUNDS, IN ESSENCE, RAISED TWO-FOLD GRIEVANCE AGAINST THE REVENUE. THE FIRST AND PRIMARY GRIEVANCE OF THE ASSESSEE AS PLEADED IS PURE QUESTI ON OF LAW EMANATING FROM EXISTING FACTS ON RECORD. THIS GRIEVANCE CONCERNS THE JURISDICTION OF THE CIT(A) TO INDULGE IN ENHANCEMENT OF ASSESSED INCOME BY INVOKING SECTION 2 ITA NO.923/PN/2011 251(1) OF THE ACT. THE SECOND GRIEVANCE OF THE ASS ESSEE IS ASSESSABILITY OF ADDITIONS MADE TOWARDS UNEXPLAINED INVESTMENT ON ME RITS. NO OTHER GROUNDS WERE PLEADED BEFORE US IN THE COURSE OF THE HEARING . THE ADDITIONAL GROUNDS ON CORRECTNESS OF THE ACTION OF THE CIT(A) TOWARDS ENHANCEMENT OF ASSESSED INCOME BEING PURE QUESTION OF LAW IS ADMITTED IN TE RMS OF RULE 11 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963. THE A SSESSEE HAS FILED VOLUMINOUS PAPER BOOK. HOWEVER, THE LD. AR DID NOT REFER TO ITS CONTENTS IN THE COURSE OF HEARING IN TOTO . THE REVENUE HAS ALSO FILED A PAPER BOOK CONTAINING EXTRACT OF CERTAIN DOCUMENTS SEIZED DURI NG SEARCH AND STATEMENT OF THE ASSESSEE RECORDED UNDER SECTION 132(4) AND SECT ION 131 OF THE ACT. THE DOCUMENTS REFERRED TO IN THE COURSE OF HEARING BY T HE ASSESSEE AS WELL AS THE REVENUE HAS BEEN TAKEN DUE COGNIZANCE AT THE APPROP RIATE PLACE IN THE ORDER WHILE DECIDING THE ISSUES INVOLVED. 3. THE FACTS, IN BRIEF, ARE THAT A SEARCH ACTION UN DER SECTION 132(1) OF THE ACT WAS CONDUCTED BY THE INCOME TAX DEPARTMENT ON 2 8.09.2006 IN LUTHRA GROUP OF CASES AT NASHIK. THE ORIGINAL RETURN OF I NCOME WAS FILED BY THE ASSESSEE UNDER SECTION 139 ON 31.03.2004 DECLARING TOTAL INCOME OF RS.4,03,820/-. CONSEQUENT UPON SEARCH, NOTICE UNDE R SECTION 153A WAS ISSUED TO THE ASSESSEE ON 12.02.2007 AND WAS DULY SERVED O N 24.02.2007 REQUIRING THE ASSESSEE TO FILE THE RETURN BY 15.03.2007. THE ASS ESSEE FILED RETURN UNDER SECTION 153A BELATEDLY ON 14.05.2008 DECLARING TOTA L INCOME OF RS.19,89,910/- CONSISTING OF BUSINESS INCOME, OTHER SOURCES INCOME LIKE A CASH DISCLOSURE OF RS.14,75,000/- AND INTEREST ETC.. THE INCOME OF TH E ASSESSEE WAS ASSESSED UNDER SECTION 153A AT RS.22,65,248/-. IN THE COURS E OF ASSESSMENT PROCEEDINGS, CERTAIN INFORMATION AND CLARIFICATIONS WERE CALLED FROM THE ASSESSEE EMANATING FROM SEIZED MATERIAL AND AN AMOU NT OF RS.8.46 LAKHS WAS INTER-ALIA BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE FOR TH E ASSESSMENT UNDER CONSIDERATION FORMING PART OF ON CASH DISCLOSURE OF RS.14,75,000/- MADE BY THE ASSESSEE. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AND ASSAILED THE ORDER OF THE ASSESSING OFFICER ON VARIOUS ADDITIONS MADE. 3 ITA NO.923/PN/2011 4. THE CIT(A) IN THE FIRST APPELLATE PROCEEDINGS RE -EXAMINED THE SEIZED MATERIAL AND OBSERVED THAT AN IMPORTANT ISSUE HAS E MERGED FROM THE PERUSAL OF THE SEIZED DOCUMENTS MARKED AS ANNEXURE A-34 WHICH RELATES TO PAYMENT OF RS.70,11,000/- IN CASH BY THE ASSESSEE FOR BUYING A PIECE OF LAND AT PHALKE SAMARAK PROPERTY, NASHIK. THE CIT(A) ALSO OBSERVED THAT THE ISSUE HAS BEEN DEALT IN GREAT DETAIL IN THE ASSESSMENT ORDER FOR T HE ASSESSMENT YEAR 2002-03. HE NOTED WITH REFERENCE TO THE AFORESAID SEIZED DOC UMENTS THAT ASSESSEE PAID RS.11,000/- ON 26.03.2002 RELEVANT TO ASSESSMENT YE AR 2002-03 AND THEREAFTER RS.60,00,000/- ON 09.04.2002 AND RS.10,00,000/- IN AUGUST 2002 IN CASH RELEVANT TO ASSESSMENT YEAR 2003-04 FOR BUYING AFOR ESAID PIECE OF LAND AT PHALKE SAMARAK PROPERTY, NASHIK. THIS CASH PAYMENT WAS ON MONEY IN ADDITION TO RS.55,00,090/- DECLARED IN THE BOOKS. THE SEIZED DOCUMENTS ALSO REVEALED THAT THE PURCHASE WAS MADE JOINTLY WITH OT HER PERSON NAMELY SHRI RAJKUMAR LUTHRA, WHO PAID RS.16,09,000/- AS AGAINST HIS SHARE OF OWNERSHIP. ON THE BASIS OF SEIZED DOCUMENTS, THE CIT(A) NOTED THAT A PERTINENT ISSUE ARISES IN THE IMPUGNED ASSESSMENT YEAR 2003-04 ABOU T THE SOURCE OF PAYMENT OF RS.70,00,000/- IN CASH TOWARDS PURCHASE OF LAND BY THE ASSESSEE. THE CIT(A) NOTED THAT SUCH FACT OF CASH PAYMENT CAME TO THE NOTICE OF THE DEPARTMENT ONLY AFTER DOCUMENTS UNDER REFERENCE WER E SEIZED DURING SEARCH AT THE PREMISES OF THE ASSESSEE. THE CIT(A) ALSO OBSE RVED THAT ANOTHER DOCUMENT MARKED AS ANNEXURE A-1 WAS SEIZED WHEREIN PAGE 2 AN D 3 THEREOF REFERS TO CERTAIN PAYMENTS MADE IN CASH TO VARIOUS PARTIES. THE CIT(A) WITH REFERENCE TO ANNEXURE A-1 NOTED THAT THE ASSESSEE CLAIMED TO HAVE BEEN GIVEN RS.61.65 LAKHS AS LOANS TO HIS FRIENDS AND RELATIVES IN ASSE SSMENT YEAR 2002-03 (29.10.2001 TO 05.02.2002), THE CASH RECOVERY OF WH ICH IS STATED TO BE UTILIZED TOWARDS PAYMENT OF AFORESAID AMOUNT OF RS.70,11,000 /- TOWARDS AFORESAID PURCHASE OF LAND AND BALANCE PAYMENT OF RS.8.46 LAK HS WAS ADMITTED AS UNDISCLOSED INCOME FOR THE ASSESSMENT YEAR 2003-04 FOR THE REASON THAT THE ASSESSEE WAS NOT IN A POSITION TO PROVIDE ANY DOCUM ENTARY EVIDENCE TO EXPLAIN THE SOURCE OF CASH PAYMENT OF RS.61.65 LAKHS IN ASS ESSMENT YEAR 2002-03 AND RS.8.46 LAKHS IN ASSESSMENT YEAR 2003-04. THE CIT( A), HOWEVER, DID NOT ACCEPT THE THEORY PROPOUNDED BY THE ASSESSEE THAT T HE PAYMENT OF 4 ITA NO.923/PN/2011 RS.70,00,000/- IN CASH RELEVANT TO ASSESSMENT YEAR 2003-04 WAS A PART FINANCED TO THE EXTENT OF RS.61.65 LAKHS OUT OF PURPORTED CA SH RECOVERY OF LOANS GIVEN TO FRIENDS AND RELATIVES IN THE EARLIER YEAR I.E. ASSE SSMENT YEAR 2002-03. THE CIT(A) EXTENSIVELY REFERRED TO VARIOUS SEIZED MATER IAL AS PER PARA 17 TO 18 OF HIS ORDER AND CAME TO THE CONCLUSION THAT RS.61.65 LAKHS HAS BEEN UTILIZED FOR EXECUTION OF OLD ROAD CONSTRUCTION PROJECTS UNDERTA KEN BY HIM ALONG WITH SHRI VIJAY LUTHRA. FOR THIS CONCLUSION, HE REFERRE D TO OTHER PORTIONS OF THE SEIZED MATERIAL AND NOTED WITH REFERENCE TO THE SEI ZED MATERIAL THAT THE ASSESSEE DEPLOYED AFORESAID CASH PAYMENT OF RS.61.65 LAKHS F OR OLD PROJECT EXECUTED WITH OTHER PARTY NAMELY SHRI VIJAY LUTHRA WHO DID N OT MAKE REPAYMENT TO THE ASSESSEE IN LIEU OF THE SAID CASH INVESTMENT. HE, THEREFORE, DISCARDED THE ASSESSEES CONTENTIONS OF FINANCING OF PHALKE SAMAR AK PROPERTY OUT OF RECOVERY OF LOANS AND ADVANCES MADE TO FRIENDS AND RELATIVES IN CASH IN THE EARLIER YEAR. IN THE LIGHT OF THE SEIZED MATERIAL, HE CONCLUDED THAT CASH PAYMENT OF RS.70,00,000/- IN THE IMPUGNED ASSESSMENT YEAR T OWARDS PURCHASE OF LAND HAS NOT BEEN SUBJECTED TO TAXATION AND THUS CALLS F OR ENHANCEMENT OF ASSESSED INCOME TO THE EXTENT OF RS.70,00,000/- FOR ASSESSME NT YEAR 2003-04 ON ACCOUNT OF UNEXPLAINED INVESTMENT FOR PURCHASE OF IMPUGNED LAND. THE ENHANCEMENT SHOW CAUSE NOTICE DATED 24.03.2011 WAS ACCORDINGLY ISSUED TO THE ASSESSEE SEEKING HIS EXPLANATION AS TO WHY IT SHOULD NOT BE CONCLUDED THAT RS.61.65 LAKHS REFLECTED AT PAGE 2 AND 3 OF ANNEXURE A-1 WAS NOT THE LOANS AND ADVANCES AND THEREFORE IT WAS NOT AVAILABLE TO HIM FOR MAKING CASH PAYMENT OF RS.70,00,000/- IN ASSESSMENT YEAR 2003-04. THE PRE MISE FOR SUCH SHOW CAUSE WAS THAT AFORESAID AMOUNT OF RS.61.65 LAKHS WAS ALR EADY INVESTED IN CASH ON ROAD CONSTRUCTIONS PROJECT AND SAME WAS NOT RETURNE D BY SHRI VIJAY LUTHRA AND CONSEQUENTLY NOT AVAILABLE TOWARDS CASH PAYMENT INVOLVED IN PURCHASE OF LAND. 5. THE RELEVANT ENHANCEMENT NOTICE IN THIS REGARD I S EXTRACTED FROM PARA 19 OF THE CIT(A) ORDER AS UNDER :- 1. A PERUSAL OF THE SEIZED MATERIAL (ANN.A-34) IND ICATES THAT A PAYMENT OF RS.82,72,910/- WAS MADE OVER AND ABOVE THE DECLARED COST OF RS.55,00,090/- FOR A 5 ITA NO.923/PN/2011 PIECE LAND SITUATED AT PHALKE SMARAK. ACCORDING TO THE SAID SEIZED DOCUMENTS THE TOTAL COST OF THE LAND WAS RS.1,37,75,000/-. THE LA ND WAS PURCHASED BY YOU ALONG WITH THREE OTHER CO-OWNERS OF THE FAMILY. THE SEIZE D MATERIAL ALSO REVEALED THE DETAILS OF CASH PAID AMOUNTING TO RS.70,11,100/- I. E. RS.11,000/- PAID ON 26/03/2002, RS.60 LACS PAID ON 09/04/2002 AND THE B ALANCE OF RS.10 LACS PAID IN AUGUST 2002. 2. IN YOUR STATEMENT RECORDED U/S 132(4) OF THE ACT ON 13/10/2006 YOU HAD ADMITTED THAT THE CASH PAYMENTS OF RS.70,11,000/- W ERE MADE FROM UNDISCLOSED SOURCES. THIS WAS ADMITTED AS UNDISCLOSED INCOME. H OWEVER, SUBSEQUENTLY YOU HAD CHANGED YOUR CONTENTION AND SAID THAT THE CASH PAYM ENTS WERE MADE FROM KNOWN SOURCES I.E. OUT OF WITHDRAWALS OF RS.47,25,838/- F ROM M/S LUTHRA CONSTRUCTION, A FIRM IN WHICH YOU ARE ONE OF THE PARTNERS. YOU FURT HER CONTENDED THAT THE REMAINING CASH BALANCE OF RS.14,75,000/- WAS WITH YOUR WIFE L ATE SMT. URMILA K LUTHRA. HOWEVER, IN A SUBSEQUENT COMMUNICATION DTD. 29/12/2 008 TO THE AO, YOU ONCE AGAIN CHANGED YOUR STAND AND AGREED TO SURRENDER RS.61.65 LAC. THIS SUM OF RS.61.65 LAC WAS HOWEVER ADDED BY AO AS YOUR UNDISCLOSED INCOME FOR THE AY 2002-03. THE SAID ADDITION OF RS.61.65 LAC HAS BEEN UPHELD BY BOTH CI T(A)-II, NASHIK AND THE HON'BLE ITAT, PUNE. 3. IN THE APPEAL BEFORE HON'BLE ITAT YOU HAD TAKEN A PLEA THAT ONLY RS.11,000/- WAS PAID ON 26/03/2002 OUT OF THE TOTAL UNDECLARED CONSIDERATION OF RS.70,11,000/- AND REMAINING BALANCE WAS PAID IN 2003-04. HENCE YO U HAD ALSO OBJECTED TO THE ADDITION OF RS. 61.65 LACS MADE BY AO IN AY 2002-03 . 4. DURING THE COURSE OF SEARCH PROCEEDINGS YOU HAD TRIED TO EXPLAIN THE SOURCE OF THE ABOVE PAYMENT AS HAVING BEEN RECEIVED BACK F ROM YOUR PERSONAL FRIENDS TO WHOM RS. 61.65 LAC WAS CLAIMED TO HAVE BEEN ADVANCE D IN AY 2002-03. YOU COULD NOT, HOWEVER SUBSTANTIATE YOUR CONTENTION AND OFFER ED RS.61.65 LAC AS UNDISCLOSED INCOME FOR A.Y. 02-03. 5. IN THE STATEMENT OF FACTS SUBMITTED BY YOU BEFOR E CIT(A)-II, NASHIK ALONGWITH FORM 35 DT. 12/01/2009, IN REGARD TO PAGE 2 & 3 OF ANNEXURE A-1, YOU HAVE STATED AS FOLLOWS: 'PAYMENTS MADE AND NOTED ON PAGE NO. 2 AND 3 WERE T HE PAYMENTS MADE TO SOME PERSONS BUT DID NOT REMEMBER THE NAMES OF THOS E PERSONS OUT OF CASH AVAILABLE WITH THE ASSESSEE AND FAMILY MEMBERS WHICH WERE MAD E IN CASH. HE EXPRESSED HIS INABILITY TO PRODUCE ANY DOCUMENTARY EVIDENCE IN SU PPORT. THE ASSESSEE FURTHER TRIED TO EXPLAIN THAT OUT OF TOTAL CASH AMOUNT OF R S.61.65 LAKHS ABOUT RS.15 LAKHS CASH WAS CONTRIBUTED BY HIS DECEASED WIFE AND HIS S ONS RAJIV AND AMIT WHO WERE MAJOR AND REGULAR ASSESSEES TO INCOME TAX. THE AMOU NT OF RS.61.65 LAC WAS PAID AS AN ADVANCE AND THE LOANS ALREADY PAID TO SOME PERSO NAL FRIENDS WERE RETURNED BY THEM MAKING AVAILABLE THE CASH FOR THE PAYMENT OF R S.70.11 LAKHS ON 26/03/2002 AND 09/04/2002 FOR THE PURCHASE OF LAND AND BALANCE OF RS.8.46 LAC WAS CONTRIBUTED BY HIS FAMILY MEMBERS BEING CO-OWNERS OF THE SAID P ROPERTY. HE ALSO STATED THAT BEING UNABLE TO PRODUCE DOCUMENTARY EVIDENCE AND TH EREFORE IN ORDER TO BUY PIECE OF MIND AND TO AVOID ANY LITIGATION IN THE MATTER A ND FOR THE SAKE OF CLARITY ADMITTED THE UNDISCLOSED INCOME OF RS.61.65 LAKHS FOR F.Y. 2 001-02 AND RS. 8.46 LAKHS FOR F.Y. 2002-03'. 6. FROM THE ABOVE, IT IS THUS CLEAR THAT YOU TOOK T HE FOLLOWING GROUND: (I) PAYMENTS OF RS.61.65 LAC APPEARING AT PAGE 2 &3 OF ANN. A-1 WERE THE ADVANCES PAID TO SOME PERSONS/FRIENDS IN AY 200 2-03. (II) IN ABSENCE OF ANY DOCUMENTARY EVIDENCE IN SUPP ORT OF THE ABOVE CONTENTION, RS.61.65 LAC WAS DISCLOSED AS UNDISCLOS ED INCOME FOR AY 2002-03. 6 ITA NO.923/PN/2011 (III) THIS AMOUNT WAS RECEIVED BACK AND AVAILABLE W ITH YOU TO MAKE CASH PAYMENT OF RS.70.11 LAC ON 26/03/2002 AND 09/04/200 2 TOWARDS PURCHASE OF PHALKE SAMARK PROPERTY. IN A NUT-SHELL PAYMENT OF RS. 70.11 LACS WAS MADE BY USING RS.61.65 LACS, APPEARI NG AT PAGE 2 & 3 OF ANNEXURE A-1. 7. I HAVE PERUSED ANNEXURE A-1. PG. 2, 3, 4, 6, 7 A ND 7 A WHEN READ TOGETHER REVEAL THAT YOU HAD MADE PAYMENT OF RS.61.65 LAC TO WARDS WORKS EXECUTED FOR TAPOVAN AND RAS BIHARI. PAGE 4 REVEALS THAT THERE W AS AN OLD BALANCE OF RS.17.85 LAC. PAGE 3 GIVES DETAILS OF PAYMENT OF RS.79.55 LA CS (RS.61.70 + RS.17.85). OUT OF RS.79.55 LAC RS.13 LAC WAS RECEIVED BACK BY YOU BY CHEQUES (RS.5 LAC + RS.5 LAC + RS.3 LAC). BALANCE RS.66,55,500/- WAS RECEIVABLE ON ACCOUNT OF PAYMENTS MADE FOR WORK DONE FOR TAPOVAN & RAS BIHARI. A PERUSAL OF TH E SEIZED PAPERS FURTHER SUGGESTS THAT INVESTMENT MADE BY YOU FROM 01/11/200 1 TO 31/01/2002 WAS UTILIZED FOR EXECUTION OF OLD WORK. PAGE 2 ESTABLISHES CLEAR LY THAT YOU HAD MADE AN INVESTMENT OF RS.79,55,500/- INCLUDING A HAND LOAN (INTEREST FREE) OF RS.2 LAC AND ANOTHER HAND LOAN OF RS.2.70 LACS FROM VIP (2 + 0.7 0). IT IS ALSO UNDERSTOOD THAT THE WORK WAS DONE BY YOU IN PARTNERSHIP/ ASSOCIATION OF SHRI VIJAY LUTHRA WHO GOT THE PAYMENTS ON ACCOUNT OF BILLS RAISED BUT NEVER GAVE YOU THE MONEY. TO WORK TOGETHER, A JOINT BANK ACCOUNT WAS OPENED IN CENTURION BANK W ITH A DEPOSIT OF RS.10,500/-. WHILE YOU DID W.B.M. WORK, SHRI VIJAY DID B T WORK. . THE PAPERS SUGGEST THAT A WORK FOR RS.4.0 CRORE WAS AWARDED TO YOU AND SHRI V IJAY LUTHRA RS.3 LAC PAID BY YOU ON 22/01/2002 BY DD (PAGE 2, 3 & 13 OF ANN. A-1 ) FROM AURANGABAD WAS DUE TO PENDING PAYMENT OF OLD WORK. YOU HAVE FURTHER STATE D THAT YOU HAD COOPERATED BY WITHDRAWING YOU OWN ACCOUNT AMOUNT FROM LCC (LUTHRA CONSTRUCTION CO.) ON 17/01/2002 FOR REMAINING PAYMENT. THIS CONTRADICS Y OUR CONTENTION THAT CASH PAYMENT TOWARDS PHALKE SAMARAK PROPERTY WAS MADE OU T OF WITHDRAWALS FROM M/S. LUTHRA CONSTRUCTION. YOU HAVE VERY CLEARLY STATED T HAT INVESTMENT (AS GIVEN AT PAGE 2 & 3 OF ANN A-1) WAS MADE IN CASH (PAGE 13 BACKSID E - 2ND AND 6TH LINE FROM TOP). PAGE 12 REVEALS THAT YOU AGREED TO DO W.B.M. WORK O F TAPOVAN, RASBIHARI AND PATHARDI. THIS LEAVES NO DOUBT WHATSOEVER THAT RS.6 1.65 LACS WAS YOUR INVESTMENT IN CASH FOR UNDERTAKING THE ABOVE REFERRED WORK. SINCE YOU HAD TRIED TO MISLEAD THE DEPARTMENT STATING THAT THIS AMOUNT REPRESENTED ADV ANCE GIVEN TO VARIOUS PERSONS/FRIENDS, YOU COULD NOT PRODUCE THE DOCUMENT ARY EVIDENCE AND LEFT WITH NO OPTION BUT TO OFFER THE SAME RS.61.65 LAC) AS UNDIS CLOSED INCOME FOR AY 2002-03. YOU THEN TIED TO GET THE BENEFIT OF THIS DISCLOSURE BY STATING THAT THIS MONEY WAS RECEIVED BACK FROM FRIENDS AND UTILIZED FOR MAKING UNDISCLOSED CASH PAYMENT OF RS.70.11 LAC FOR PURCHASE OF PHALKE SMARAK PROPERTY IN AY 2003-04 (RS. 60 LAC ON 09/04/2002 AND RS.10 LACS IN AUGUST 2002). THE FACT THAT YOU DID NOT RECEIVE BACK MONEY FROM SHRI VIJAY LUTHRA IS ALSO EVIDENT FROM P AGE NO. 12 OF ANN. A-1 WHEREIN YOU HAVE WRITTEN 'I ASSUMED THAT VIJAY WILL RETURN MY FULL AMOUNT UP TO 31/03/2002 AND FOR TIME-BEING HE WILL RETURN REQUIRED AMOUNT T O MAKE GOOD PROGRESS OF W.B.M. WORKS WHICH WERE TAPOVAN AND RASBIHARI. BUT VERY SO RRY TO SAY HE HAD NOT PAID AMOUNT FOR MAKING REQUIRED PROGRESS DURING FEB & MA RCH 2002 WHICH RESULTED SLOW PROGRESS OF BOTH THE ABOVE WORKS. I WAS NOT HA VING CASH AMOUNT WITH ME AND EVEN MORE ACTIONS OF VIJAY FOR NOT RETURNING CASH A MOUNT OF RS.2.70 LAC, SHOCKED ME.' _ YOU HAVE FURTHER WRITTEN ON THE BACK SIDE OF PAGE 10 'OUT OF MINE INVESTMENT, AFTER RECEIVING BILL PAYMENT OF OLD WORK, MY AMOUNT NOT RETURNED WHICH MADE ME HANDICAPPED'. PARA 6 OF THE SAID PAGE RECORDS- 'IT WAS PLAYED WRONG GAME OF FAMILY MEMBERS OF VIJAY BROTHERS TO OPPOSE K.S.L. E NTRY AS A PARTNER AFTER RECEIVING HUGE AMOUNT AND BILLS'. A PERUSAL OF PAGE 7 FURTHER CORROBORATES MY EARLIER MENTIONED FINDINGS. IT STATES: (I) RS.79.55 WERE GIVEN UP FROM 29/10/2001 TO 05/0 2/2002 FOR OLD WORKS AND SPARED ONE TIPPER'. 7 ITA NO.923/PN/2011 (II) RECEIVED 13.00 AND INVESTED FOR TAPOVAN AND RA SBHIHARI BY K.S.L. FOR INDIVIDUAL WORK, SO FAR NOT RECEIVED FROM VIJAY INS PITE OF BILLS RECEIVED'. 8. IN VIEW OF THE ABOVE DISCUSSION I HOLD AS FOLLOW S: (I) THAT RS.61.65 LACS (MENTIONED AT PAGE 2 & 3 OF ANNEXURE A-1) WAS YOUR CASH INVESTMENT FOR THE WORK DONE BY YOU IN AY 2002 -03. YOUR SUBMISSION THAT THIS REPRESENTED ADVANCE TO FRIENDS IS WITHOUT ANY BASIS AND THEREFORE REJECTED OUTRIGHTLY. (II) IN VIEW OF (I) ABOVE, THERE WAS NO QUESTION OF RECEIVING BACK ANY MONEY FROM FRIENDS AS CLAIMED BY YOU. (III) IN VIEW OF (II) ABOVE, CASH PAYMENT OF RS.70, 00,000/- OUT OF RS.70,11,000/- TOWARDS PHALKE SMARAK PROPERTY IN AY 2003-04 WAS MA DE OUT OF YOUR OTHER UNDISCLOSED INCOME. THE PAYMENT OF CASH OF RS.70,11 ,000/- HAS CLEARLY BEEN REFLECTED IN ANN-A-34 AND THIS FACT HAS ALREADY BEE N ACCEPTED BY YOU EVEN BEFORE HON'BLE ITAT. (IV) IN VIEW OF (III) ABOVE, I PROPOSE TO ENHANCE Y OUR INCOME BY RS.70,00,000/- FOR AY 2003-04 ON ACCOUNT OF' UNEXPLAINED INVESTMEN T MADE BY YOU FOR PURCHASE OF PHALKE SAMARAK PROPERTY. 6. IN RESPONSE THERETO, THE ASSESSEE QUESTIONED THE POWER OF THE CIT(A) WITH REGARD TO THE ENHANCEMENT OF ASSESSED INCOME. 7. THE CIT(A) REBUTTED THE CHALLENGE OF THE ASSESSE E ON IMPEDIMENT OF THE CIT(A) TO ENHANCE THE ASSESSED INCOME. HE RELIED U PON THE DECISIONS OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. K. S. DATTATRAYA [(2009) 197 TAXMAN 151/9 (KAR)] EXPLAINING THE SCOP E OF POWER OF THE CIT(A) AND NOTED THAT HIS ACTION OF PROPOSED ENHANCEMENT I S IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. THE CIT(A) OBSERVED THAT IN THE PRESENT CASE, BOTH ANNEXURE A-1 SHOWING DETAILS OF CASH PAYMENT WITH R EFERENCE TO IMPUGNED SUM OF RS.61.65 LAKHS IN AGGREGATE AND ANNEXURE A-3 4 SHOWING DETAILS OF PAYMENT MADE FOR PURCHASE OF PIECE OF LAND AT PHALK E SAMARAK PROPERTY, NASHIK ARE VITAL TO INVALIDATE THE ASSESSEES CONTE NTIONS. THE CIT(A) OBSERVED THAT THE QUESTION TOWARDS SOURCE OF CASH FOR MAKING UNACCOUNTED CASH PAYMENTS TOWARDS ACQUISITION OF LAND IS NOT A CASE OF FINDING NEW SOURCE OF INCOME BUT TO UNEARTH OR REBUT THE ASSESSEES CONCO CTED CONTENTION OF SOURCE WITH THE HELP OF THE EVIDENCES AVAILABLE IN THE SEI ZED DOCUMENTS. THE CIT(A) NOTED THAT IT IS A SIMPLE CASE OF DEMOLISHING THE A SSESSEES THEORY THAT LOANS AND ADVANCES GIVEN TO FRIENDS & RELATIVES IN ASSESS MENT YEAR 2002-03 WERE RECOVERED IN ASSESSMENT YEAR 2003-04 WERE AVAILABLE FOR IMPUGNED CASH 8 ITA NO.923/PN/2011 PAYMENTS TOWARDS PURCHASE OF LAND OUT OF SAID RECOV ERED LOANS/ADVANCES SO RECOVERED. 8. SIMILARLY, ON MERITS, THE CIT(A) DREW ADVERSE IN FERENCE AGAINST THE ASSESSEE AND OBSERVED THAT THE ASSESSEE HAS NOT PRO DUCED ANY DISCERNIBLE DOCUMENTARY EVIDENCE WITH REGARD TO THE RECOVERY OF LOANS IN ASSESSMENT YEAR 2003-04 STATED TO HAVE BEEN GIVEN TO FRIENDS AND RE LATIVES IN ASSESSMENT YEAR 2002-03. HE, THEREAFTER, NOTED THAT THERE IS NO EV IDENCE IN THE SEIZED DOCUMENTS WHICH COULD SUBSTANTIATE THE CLAIM OF THE ASSESSEE THAT HE RECEIVED BACK LOANS AND ADVANCES IN ASSESSMENT YEAR 2003-04. ON THE CONTRARY, THE SEIZED DOCUMENTS (A-1) CLEARLY ESTABLISHED THAT IMP UGNED CASH AMOUNTING TO RS.61.65 LAKHS WERE UTILIZED BY THE ASSESSEE TOWARD S ROAD CONSTRUCTIONS PROJECTS IN ASSESSMENT YEAR 2002-03. THE STAND OF ASSESSEE THAT THE CASH PAYMENT OF RS.70.11 LAKHS ON ACCOUNT OF PURCHASE OF PHALKE SAMARAK PROPERTY WAS OUT OF WITHDRAWALS FROM M/S LUTHRA CONSTRUCTION HAS ALSO BEEN REJECTED BY THE ITAT IN ITA NO.16/PN/2010, ORDER DATED 31.01 .2011 RELEVANT TO ASSESSMENT YEAR 2002-03. THE CIT(A) INTER-ALIA NOTED THAT THE ASSESSEE WAS EVASIVE WITH REGARD TO MOST OF THE QUESTIONS PERTAI NING TO PAGES 2 AND 3 OF ANNEXURE A-1 IN HIS STATEMENT RECORDED DURING THE S EARCH PROCEEDINGS. FOR THIS PURPOSE, HE ALSO REFERRED VARIOUS STATEMENTS R ECORDED AS PER PARA 16 OF HIS ORDER AND OBSERVED THAT THE ASSESSEE WAS CHANGING H IS STAND QUITE FREQUENTLY. THE CIT(A) ACCORDINGLY DREW AN INFERENCE THAT THE A SSESSEE HAS COOKED UP THE ENTIRE STORY TO EXPLAIN THE SOURCES OF INVESTMENT I N PHALKE SAMARAK PROPERTY OUT OF CASH INVESTED TOWARDS ROAD CONSTRUCTION PROJ ECTS BY PROPOUNDING THEORY OF RECOVERY CASH FROM FRIENDS AND RELATIVES. THE C IT(A) NOTED THAT THE FIGURES AND OTHER DOCUMENTS MENTIONED IN SEIZED DOCUMENTS P ARTICULARLY IN A-1 AND A-34 ARE NOT MERE THE JOTTINGS ON LOOSE PAPERS BUT A VERY METICULOUSLY WRITTEN STATEMENT OF AFFAIRS. FURTHER, IT IS NOT A CASE OF ONE SINGLE LOOSE PAPER OR ONE ISOLATED JOTTING. THE CIT(A) OBSERVED THAT THERE A RE MULTIPLE CROSS-REFERENCE IN THIS REGARD TO THE ABOVE INVESTMENTS IN THE SEIZ ED ANNEXURES AND THE ADDITION IS NOT MERELY BASED ON STATEMENT UNDER SECTION 134( 1) AND SECTION 131 OF THE ACT. THE CIT(A) CONCLUDED THAT IN THE LIGHT OF INC RIMINATING EVIDENCES IN THE 9 ITA NO.923/PN/2011 FORM OF TRANSACTIONS RECORDED IN THE SEIZED ANNEXUR ES, IT IS EVIDENT THAT ASSESSEE MADE PAYMENTS TOWARDS PHALKE SAMARAK PROPE RTY IN ASSESSMENT YEAR 2003-04 WERE NOT SOURCED OUT OF UNDISCLOSED CASH PA YMENTS RECOVERED FROM FRIENDS & RELATIVES AS CLAIMED BY HIM. THE CIT(A) THUS CONCLUDED THAT THE ENHANCEMENT OF ASSESSED INCOME BY RS.70 LAKHS AS UN EXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT IS JUSTIFIED. THE RELE VANT FINDINGS OF THE CIT(A) ON THE ISSUE IS EXTRACTED HEREUNDER :- 22. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT O RDER FOR AY 2002- 03, APPEAL ORDERS, SEIZED DOCUMENTS AND OTHER MATER IAL ON RECORD. THE APPELLANT HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE IN REGARD TO RECOVERY OF LOANS IN AY 2003-04 (STATED TO HAVE BEEN GIVEN TO F RIENDS AND RELATIVES IN AY 2002-03). FURTHER, THERE WAS NO SUCH EVIDENCE IN TH E SEIZED DOCUMENTS WHICH COULD SUBSTANTIATE THE CLAIM OF THE APPELLANT THAT HE RECEIVED BACK LOANS AND ADVANCES IN AY 2003-04. ON THE CONTRARY THE SEIZED DOCUMENTS (A-1) CLEARLY ESTABLISH THAT CASH INVESTMENTS AMOUNTING TO RS.61. 65 LAC WAS MODE BY THE APPELLANT TOWARDS ROAD CONSTRUCTION PROJECTS IN AY 2002-03. THE APPELLANT'S CONTENTION, THAT THE CASH PAYMENT OF RS.70.11 LAC O N ACCOUNT OF PURCHASE OF PHALKE SAMARAK PROPERTY WAS OUT OF WITHDRAWALS FROM M/S LUTHRA CONSTRUCTION HAS ALREADY BEEN REJECTED BY THE HON'BLE ITAT IN TH EIR ORDER NO. 016/PN/2010 DT.3I/01/2011. VARIOUS CASES QUOTED BY THE APPELLAN T IN HIS VARIOUS SUBMISSIONS ARE NOT APPLICABLE HERE AS THE PERUSAL OF THE SEIZED MATERIAL HAS CLEARLY ESTABLISHED THAT THE APPELLANT SPENT/PAID R S.61.65 LAC IN CASH IN CONNECTION WITH HIS ROAD CONSTRUCTION PROJECTS. IT IS FOR THE APPELLANT TO PROVIDE DETAILS OF SOURCES OF THE SAID EXPENSES. TH E APPELLANT WAS EVASIVE WITH REGARD TO MOST OF THE QUESTIONS PERTAINING TO PAGES 2&3 OF A-1 IN HIS STATEMENT RECORDED DURING THE SEARCH PROCEEDINGS. IN FACT THE APPELLANT HAS BEEN CHANGING HIS STAND QUITE FREQUENTLY. THIS ITSELF SHOWS THAT THE APPELLANT HAS COOKED UP THE ENTIRE STORY TO EXPLAIN HIS UNDISCLOSED EXPENSE S/PAYMENTS FOR ROAD CONSTRUCTION PROJECTS AND INVESTMENTS IN PHALKE SMA RAK PROPERTY. THE FIGURES AND THE OTHER CONTENTS MENTIONED IN THE SEIZED ANNE XURES PARTICULARLY A-1 AND A-34 ARE NOT THE MERE THE JOTTINGS ON LOOSE PAPERS BUT A VERY METICULOUSLY WRITTEN STATEMENT OF AFFAIRS. FURTHER, IT IS NOT A CASE OF ONE SINGLE LOOSE PAPER OR ONE ISOLATED JOTTING. IN FACT, AS EXPLAINED IN T HE PROCEEDING PAPERS THERE ARE MULTIPLE CROSS-REFERENCES IN REGARD TO THE ABOVE IN VESTMENTS IN THE SAID SEIZED ANNEXURES. IT IS IMPORTANT TO MENTION HERE THAT THE PROPOSED ADDITIONS ARE NOT MERELY BASED ON THE APPELLANT'S STATEMENT U/S 132(4 ) / U/S 131. THERE ARE ADEQUATE INCRIMINATING EVIDENCES IN THE FORM OF TRA NSACTIONS RECORDED IN THE SEIZED ANNEXURE A-1 AND A-34 WHICH REASONABLY ESTABLISH TH E FACT THAT THE APPELLANT'S UNDISCLOSED CASH PAYMENTS TOWARDS PHALK E SMARAK PROPERTY IN AY 2003-04 WERE NOT OUT OF THE CASH AVAILABLE TO HIM O N ACCOUNT OF RECOVERY OF LOANS AND ADVANCES FROM HIS FRIENDS AND RELATIVES A S CLAIMED BY HIM. INVESTMENT MADE IN RELATION TO ROAD CONSTRUCTION PR OJECT AS SHOWN ON PAGE 2 & 3 OF ANNEXURE A-1 WERE INFACT IN THE NATURE OF PAYM ENT AND THE BILLS FOR THERE PROJECTS WERE PENDING AND NO AMOUNT IN THIS REGARD WAS PAID TO THE APPELLANT BY HIS BUSINESS ASSOCIATE SHRI. VIJAY LUTHRA AS REP EATEDLY MENTIONED BY THE APPELLANT HIMSELF IN ANNEXURE A-1. THE APPELLANT HA S HIMSELF MADE VARIOUS NOTINGS IN THE SEIZED ANNEXURE A-1 STATING THAT HE WAS YET TO RECEIVE PAYMENTS IN REGARD TO THE BILLS RAISED ON ACCOUNT OF THE ROA D PROJECTS. 10 ITA NO.923/PN/2011 23. IN VIEW OF THE FACTS MENTIONED IN PRECEDING PAR AS I AM OF THE CONSIDERED OPINION THAT THE APPELLANT'S CONTENTION THAT THE CASH PAYMENTS OF RS.70.11 LAC IN AY 2003-04 WERE MADE OUT OF THE CAS H AVAILABLE TO HIM ON ACCOUNT OF RECOVERY OF LOANS/ADVANCES AMOUNTING TO RS. 61.65 LAC THAT HE HAD GIVEN TO HIS FRIENDS/RELATIVES IN AY 2002-03 IS DEVOID OF ANY DOCUMENTARY EVIDENCE AND HENCE NOT ACCEPTABLE. APPELLANT'S CONTENTION THAT R S.47.21 LAC CAME FROM LUTHRA CONSTRUCTION AND RS.16.45 LAC FROM LATE SMT URMILA LUTHRA HAS ALREADY BEEN CONSIDERED BY CIT(A) AND HON'BLE ITAT AND REJECTED HOLDING THAT THE ENTIRE EXPLANATION OF THE APPELLANT WAS AN AFTE RTHOUGHT EXERCISE TO EXPLAIN THE SOURCE OF CASH PAYMENTS IN AY 2003-04. UNDER TH E FACTS AND CIRCUMSTANCES OF THE CASE AS MENTIONED ABOVE I HOLD THAT THE APPE LLANT'S CASH PAYMENTS AMOUNTING TO RS.70 LACS IN AY 2003-04 REMAIN UNEXPL AINED. APPELLANT INCOME IS THEREFORE ENHANCED BY RS. 70 LAC AS UNEXPLAINED INV ESTMENT U/S 69 OF THE IT ACT. IN VIEW OF THE FACTS OF THE CASE I ALSO HOLD THAT T HERE WAS NO RELATIONSHIP BETWEEN THE TRANSACTIONS REFLECTED ON PAGE NO. 2 & 3 OF ANNEXURE A-1 AND PAGE 26 & 27 OF ANNEXURE A-34 AS CLAIMED BY THE APPELLAN T. AO RIGHTLY ADDED RS.61.65 LAC ON THE BASIS OF PAGE 2 & 3 OF ANNEXURE A-1 AS U NDISCLOSED INCOME OF THE APPELLANT FOR AY 2002-03. FOR AY 2003-04, I ENHANCE INCOME OF THE APPELLANT BY RS.70 LAC THAT HE PAID IN CASH FOR ACQUIRING LAND A T PHALKE SMARAK AND FOR WHICH HE FAILED TO ESTABLISH ANY SOURCE. SINCE THE APPELL ANT HAS INTERALIA MADE A CASH DISCLOSURE OF RS.14.75 LAC IN HIS RETURN FILED U/S 153A FOR AY 2003-04, A.O. IS DIRECTED TO TAKE IN TO CONSIDERATION THIS CASH DISC LOSURE WHILE GIVING APPEAL EFFECT IN REGARD TO UNEXPLAINED INVESTMENT OF RS. 7 0 LAC TOWARDS PURCHASE OF PHALKE SMARAK PROPERTY. 9. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE THE TRIBUNAL. 10. THE LD. COUNSEL FOR THE ASSESSEE, SHRI M. K. KU LKARNI VEHEMENTLY ASSAILED THE ACTION OF ENHANCEMENT BY THE CIT(A). THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY EXHORTED THAT THE ACTION OF ENH ANCEMENT ONLY SEEKS TO FIND NEW SOURCE OF INCOME NOT ASSESSED BY THE ASSES SING OFFICER WHICH IS NOT PERMISSIBLE UNDER SECTION 251 OF THE ACT. HE, ACCO RDINGLY, PLEADED THAT THE LEGAL GROUND OF THE ASSESSEE THAT ENHANCEMENT IS WI THOUT JURISDICTION AND THUS VITIATED IN LAW AND CONSEQUENTLY DESERVES TO BE QUA SHED REQUIRES TO BE LOOKED INTO FAVAOURABLY. FOR THE PROPOSITION THAT THE CIT (A) HAS NO POWER TO FIND OUT A NEW SOURCE OF INCOME NOT PROCESSED BY THE ASSESSI NG OFFICER, HE CITED THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL I N THE CASE OF M/S NATIONAL AUTO WORLD VS. ITO IN ITA NO.376/PN/2012 AND OTHERS , ORDER DATED 29.11.2013. THE LD. COUNSEL FOR THE ASSESSEE NEXT REFERRED TO THE ORDER OF THE PUNE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CA SE RELATING TO ASSESSMENT YEAR 2002-03 IN ITA NO.816/PN/2010, ORDER DATED 31. 01.2011 AND SUBMITTED 11 ITA NO.923/PN/2011 THAT SURRENDER OF INCOME OF RS.61.65 LAKHS AS UNDIS CLOSED INCOME IN THE ASSESSMENT YEAR 2002-03 HAS BEEN AFFIRMED BY THE IT AT AND THEREFORE IT CAN BE JUDICIALLY PRESUMED THAT THIS AMOUNT IN CASH WAS AVAILABLE AT THE DISPOSAL OF THE ASSESSEE FOR INVESTMENT IN ASSESSMENT YEAR 2003 -04 AND THEREFORE SOURCE OF INVESTMENT IN RELATION TO PURCHASE OF LAND AT NASHI K IN THE SUBSEQUENT ASSESSMENT YEAR STANDS PROPERLY EXPLAINED. THUS, N O ENHANCEMENT OR ADDITION IN THIS REGARD IS SUSTAINABLE ON MERITS EITHER. 11. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR TH E REVENUE SHRI J. P. CHANDRAKAR, ON THE OTHER HAND, VEHEMENTLY SUPPORTED THE ACTION OF THE CIT(A). THE LD. DR POINTED OUT THAT THE PLEA OF THE ASSESSE E ON ENHANCEMENT ACTION OF THE CIT(A) IS MISLEADING. THE LD. DR POINTED OUT T HAT THE ENHANCEMENT OF RS.70,00,000/- BY INVOKING SECTION 69 OF THE ACT EM ANATES OUT OF MATERIAL SEIZED DURING THE COURSE OF SEARCH ACTION UNDER SEC TION 132 OF THE ACT. THE LD. DR ACCORDINGLY SUBMITTED THAT NO NEW SOURCE OF INCOME CAN BE SAID TO BE INVOLVED IN THE PRESENT FACTS. THE SEIZED MATERIAL WERE AVAILABLE WITH THE ASSESSING OFFICER WHICH WERE NOT PURPORTEDLY APPREC IATED BY HIM WHILE ACCEPTING THE INVESTMENT IN LAND AT NASHIK. THE CI T(A) BY VIRTUE OF HIS COTERMINOUS POWER WITH THAT OF ASSESSING OFFICER WA S ENTITLED IN LAW TO LOOK INTO SEIZED MATERIAL AND CORRECTLY APPRECIATE THE S AME AND DETERMINE THE CORRECT ASSESSED INCOME IN THE LIGHT OF DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF K. S. DATTATRAYA (SUPRA) RELIE D UPON BY THE CIT(A). HE NEXT REFERRED TO THE DECISION OF THE CO-ORDINATE BE NCH OF THE ITAT IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2002-03 (SUP RA) AND SUBMITTED THAT THE ITAT HAS APPRECIATED THE FACT IN PERSPECTIVE AND DE CIDED AGAINST THE ASSESSEE. THE LD. DR SUBMITTED THAT ONUS SQUARELY LIES ON THE ASSESSEE TO ESTABLISH THAT THE SOURCE OF CASH PAYMENT OF RS.70.11 LAKHS WAS OU T OF CASH RECOVERY OF LOANS AND ADVANCES PURPORTEDLY GIVEN TO FRIENDS AND RELAT IVES. THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIMARY ONUS WHICH LAY UPON IT WHEREAS CONTRARY IS ESTABLISHED FROM RECORD. THEREFORE, NO INTERFERENC E WITH THE ORDER OF THE CIT(A) IS CALLED FOR. 12 ITA NO.923/PN/2011 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS, ORDERS OF THE AUTHORITIES BELOW, MATERIAL REFERRED TO IN THE COUR SE OF HEARING AND CASE LAWS CITED AT BAR. SINCE THE LD. COUNSEL HAS PRE-DOMINA NTLY EMPHASIZED ON THE VALIDITY OF ENHANCEMENT ACTION OF THE CIT(A) WHICH IS A FUNDAMENTAL ASPECT, WE SHALL DEAL WITH THIS PRIMARY ISSUE FIRST. 12.1 SECTION 251(1)(A) OF THE ACT INTER-ALIA CONFERS THE POWER ON THE COMMISSIONER OF INCOME TAX (APPEALS) TO ENHANCE THE ASSESSMENT WHILE DISPOSING OF AN APPEAL BEFORE IT. IT HAS BEEN JUDI CIALLY APPRECIATED BY THE VARIOUS JUDICIAL PRECEDENTS THAT POWER CONFERRED UP ON THE FIRST APPELLATE AUTHORITY UNDER INCOME TAX ACT ARE MUCH WIDER THAN THE POWER OF AN ORDINARY COURT OF APPEAL. THE FIRST APPELLATE AUTHORITY IS NOT AN ORDINARY COURT OF APPEAL OWING TO THE FACT THAT ONLY ONE PARTY TO THE ORIGINAL DECISION TAKEN IS ENTITLED TO APPEAL. ONCE THE ASSESSMENT ORDER COME S BEFORE THE CIT(A), HIS JURISDICTION IS NOT RESTRICTED TO EXAMINE ONLY THOS E ISSUE THAT HAVE BEEN TAKEN UP BY THE ASSESSEE IN APPEAL BUT RANGES OVER THE WH OLE ASSESSMENT AND IT IS OPEN TO HIM TO CORRECT THE ASSESSMENT ORDER NOT ONL Y WITH REGARD TO THE MATTER TAKEN UP IN APPEAL BUT ALSO WITH REGARD TO THE MATT ERS WHICH WERE CONSIDERED BY THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDI NGS. HE CAN EXAMINE EVERY PROCESS WHICH RESULTS IN ULTIMATE COMPUTATION OF ASSESSED INCOME EVEN IF HIS DECISION LEAD TO ENHANCEMENT OF INCOME. HOWEVE R, IN THE AREA OF POWERS OF ENHANCEMENT, THERE ARE JUDICIAL DECISIONS TO THE EFFECT THAT THE POWER OF ENHANCEMENT IS RESTRICTED TO ONLY THOSE AREAS AND S OURCE OF INCOME WHICH ARE CONSIDERED BY THE ASSESSING OFFICER AT THE ASSESSME NT STAGE AND HENCE SUCH ENHANCEMENT SHOULD NOT LEAD TO A NEW SOURCE OF INCO ME. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S NATIONAL A UTO WORLD (SUPRA) HAS DEALT WITH THE POWER CONFERRED UPON THE CIT(A) UNDER SECT ION 151(1) OF THE ACT AND AFTER ANALYZING HOST OF CASE LAWS ON THE ISSUE, OBS ERVED THAT THE CIT(A) HAS NO POWER TO ENHANCE THE ASSESSMENT BY DISCOVERY OF A N EW SOURCE OF INCOME NOT ASSESSED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THEREFORE, LEGAL PLEA OF THE ASSESSEE THAT THE ACTION OF THE CIT(A) IS NOT IN CONSONANCE WITH THE 13 ITA NO.923/PN/2011 POWERS CONFERS UNDER SECTION 251(1)(A) IN SO FAR AS DISCOVERY OF NEW SOURCE OF INCOME IS CONCERNED HAS CONSIDERABLE FORCE. 12.2 HOWEVER, THE PERTINENT QUESTION IS WHETHER RE- APPRECIATION OF THE SEIZED MATERIAL PLACED BEFORE THE ASSESSING OFFICER IN A S EARCH ASSESSMENT AND RE- DETERMINING THE ENHANCED ASSESSED INCOME TANTAMOUNT S TO DISCOVERY OF NEW SOURCE OF INCOME OR NOT. AS NOTED, THE ASSESSMENT HAS BEEN CARRIED OUT PURSUANT TO SEARCH ACTION WHEREIN SEVERAL INCRIMINA TING DOCUMENTS WERE FOUND AND SEIZED. THE ASSESSMENT FOR ASSESSMENT YEAR 200 2-03 AND 2003-04 WERE INTER-ALIA FRAMED WITH REFERENCE TO THESE SEIZED DOCUMENTS. T HE ASSESSEE HAS ALSO HEAVILY RELIED UPON THE ASSESSMENT ORDER RELEV ANT TO ASSESSMENT YEAR 2002-03 AS WELL AS THE ORDER OF ITAT RELEVANT TO AS SESSMENT YEAR 2002-03 AND ADDITION OF RS.61.65 LAKHS, AMONG OTHERS, THAT WERE MADE IN THE ASSESSMENT PERTAINING TO ASSESSMENT YEAR 2002-03 AND CONFIRMED BY THE ITAT BY DISMISSING THE APPEAL OF THE ASSESSEE. THE ASSESSE E HAS SOUGHT TO ADVANCE A PLEA THAT THIS AMOUNT OF RS.61.65 LAKHS ASSESSED BY THE ASSESSING OFFICER AS UNDISCLOSED INCOME WAS PURPORTEDLY GIVEN AS ADVANCE TO FRIENDS AND RELATIVES WHICH WERE RECOVERED IN CASH DURING THE FINANCIAL Y EAR RELEVANT TO ASSESSMENT YEAR 2003-04 AND CORRESPONDINGLY UTILIZED TO PART F INANCE THE UNDISCLOSED CASH COMPONENT OF THE INVESTMENT MADE IN PHALKE SAMARAK PROPERTY AT NASHIK. THE CIT(A) DEMOLISHED THIS PLEA OF THE ASSESSEE THA T UNACCOUNTED CASH OF RS.61.65 LAKHS FOUND IN SEARCH RELEVANT TO ASSESSME NT YEAR 2002-03 WAS GIVEN AS LOANS AND ADVANCES TO FRIENDS AND RELATIVES. TH E CIT(A) HAS DEMONSTRATED WITH REFERENCE TO OTHER SEIZED MATERIALS THAT THE A FORESAID UNACCOUNTED SUM OF RS.61.65 LAKHS WERE INVESTED TOWARDS ROAD CONSTRUCT ION PROJECT JOINTLY WITH ONE SHRI VIJAY LUTHRA WHO HAS NOT RETURNED THE CASH SO DEPLOYED TO THE ASSESSEE. THUS, THE UNACCOUNTED SUM OF RS.61.65 LA KHS ASSESSED IN ASSESSMENT YEAR 2002-03 WERE DIVERTED TOWARDS ROAD CONSTRUCTIO N PROJECT AND NOT GIVEN AS LOANS & ADVANCES AS CLAIMED. THE AFORESAID SUM WAS THEREFORE NOT AVAILABLE FOR PLOUGHING AS UNACCOUNTED PORTION OF I NVESTMENT IN LAND AT NASHIK. THE CIT(A) THUS DEMONSTRATED THAT THE INVE STMENT OF UNACCOUNTED CASH TOWARDS ACQUISITION OF LAND IS INDEPENDENT OF THE UNACCOUNTED CASH FOUND 14 ITA NO.923/PN/2011 RELEVANT TO ASSESSMENT YEAR 2002-03. THE OBSERVATI ONS OF THE CIT(A) WERE BASED ON TANGIBLE SEIZED MATERIAL ON RECORD OF THE ASSESSING OFFICER. THE SOURCE OF INVESTMENT IN PHALKE SAMARAK PROPERTY WAS ACCEPTED BY THE ASSESSING OFFICER TO BE OUT OF CASH RECOVERY OF RS. 61.65 LAKHS TOWARDS LOANS AND ADVANCES MADE TO FRIENDS AND RELATIVES WHICH PL EA WAS FOUND TO BE WHOLLY INCORRECT BY THE CIT(A) BASED ON TANGIBLE MATERIAL AVAILABLE ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE COULD NOT SUCCESSFULLY IMPUNGE THIS FINDING OF CIT(A) BEFORE US. 12.3 THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF T HE CASE, WE ARE OF THE VIEW THAT THE EXISTING SEIZED MATERIAL CONSIDERED BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT AND ACCEPTING THE INVESTMENT IN LAND WERE SIMPLY RE- APPRECIATED BY THE CIT(A). THE GENESIS OF THE ENHA NCEMENT ACTION LIES IN THE SEIZED MATERIAL RE-APPRECIATED BY THE CIT(A) IN PER SPECTIVE. OSTENSIBLY, IT IS NOT A CASE OF FINDING NEW SOURCE OF INCOME BUT A CA SE OF REBUTTAL OF THE PLEA OF THE ASSESSEE TOWARDS SOURCE OF CASH INVESTMENT IN L AND ACQUIRED AT NASHIK. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT TH E CIT(A) HAS NOT COMMITTED ANY ERROR IN EXERCISING THE POWER WHILE PROPOSING T HE ENHANCEMENT UNDER SECTION 251(1)(A) OF THE ACT. THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S NATIONAL AUTO WORLD (SU PRA) RELIED UPON BY THE ASSESSEE ONLY LAYS DOWN THE PROPOSITION OF LAW THAT NEW SOURCE OF INCOME CANNOT BE DISCOVERED IN THE ENHANCEMENT PROCEEDINGS BY THE CIT(A). THERE CAN BE NO QUARREL TO THIS LEGAL PROPOSITION. HOWEV ER, AS NOTED, INSTANT CASE IS NOT ABOUT DISCOVERY OF NEW SOURCE OF INCOME BUT RE- APPRECIATION OF SEIZED MATERIAL PLACED BEFORE ASSESSING OFFICER TO PROBE T HE SOURCE OF INCOME TOWARDS INVESTMENT CLAIMED BY THE ASSESSEE. THEREF ORE, WE FIND NO REASON TO ENTERTAIN THE PLEA OF LACK OF JURISDICTION TOWARDS ENHANCEMENT RAISED BY THE ASSESSEE. 12.4 WE CONCURRENTLY NOTE THAT THE LD. COUNSEL FOR THE ASSESSEE COULD NOT DEMONSTRATE ON MERITS BY ANY TANGIBLE EVIDENCE ON R ECORD IN REBUTTAL THAT THE PURPORTED LOANS WERE GIVEN TO THE FRIENDS AND RELAT IVES AND WERE ACTUALLY 15 ITA NO.923/PN/2011 RECOVERED IN CASH TO ESTABLISH THE NEXUS OF LOANS R ECOVERED QUA THE INVESTMENTS TOWARD LAND ACQUISITION. WE ACCORDINGLY FIND IT DI FFICULT TO HOLD THE CASE IN FAVOUR OF THE ASSESSEE ON MERITS SINCE THE PRIMARY ONUS HAS NOT BEEN DISCHARGED BY THE ASSESSEE AT ALL. IN VIEW OF THE AFORESAID REASONINGS, THE PLEA OF THE ASSESSEE ON MERITS ALSO DESERVES TO BE DISCA RDED. 12.5 HOWEVER, WE SIMULTANEOUSLY NOTICE THAT THE CIT (A) HAS ENHANCED THE INCOME BY RS.70 LAKHS WHEREAS THE CONTROVERSY REVOL VES AROUND NON- AVAILABILITY OF RS.61.65 LAKHS ONLY. THE SOURCE OF BALANCE UNACCOUNTED INVESTMENT OF RS.8.46 LAKHS HAS ALREADY BEEN DULY O FFERED AND ASSESSED BY THE ASSESSING OFFICER. THUS, THE ENHANCEMENT OF ASSESS ED INCOME REQUIRES TO BE RESTRICTED TO RS.61.65 LAKHS ONLY. THUS, THE ASSES SEE GETS PARTIAL RELIEF ON THIS ISSUE ON MERITS. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED ON THIS 29 TH DAY OF JULY, 2016. SD/- SD/- ( VIKAS AWASTHY ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 29 TH JULY, 2016. & ' () *+( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, NASHIK; 4) THE ADDL. CIT, CENTRAL RANGE, NASHIK; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. &, / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE