RAVI SACHETI, Jaipur V. DCIT, Jaipur

ITA 939/JPR/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 47936 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 16-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHRI; SUBHASH CHANDRA
• Assessee Lawyers: O P AGARWAL
• Keywords: Unexplained investment; Unexplained expenditure; Capital asset; Business income; Search and seizure; Principle of natural justice; Cost of acquisition; Fair market value; Block assessment; Onus to prove; Retraction; Documents seized
• Section: 69C; 45(2); 54F; 133A; 69; 54; 263; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.939/ JP/2010 ASSESSMENT YEAR 2007-08 PAN ABXPS 3597 C SHRI RAVI SANCHETI VS. THE DCIT 176, HALDIYON KA RASTA CIRCLE- 2 JOHRI BAZAR, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ITA NO.1118/ JP/2010 ASSESSMENT YEAR 2007-08 PAN ABXPS 3597 C THE DCIT VS SHRI RAVI SANCHETI CIRCLE- 2 176, HALDIYON KA RASTA JAIPUR JOHRI BAZAR,JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI O.P. AGARWAL & SHRI MANISH AGARWAL DEPARTMENT BY :SHRI SUBHASH CHANDRA AND SHRI VINO D JOHRI ORDER PER N.L. KALRA, AM:- THE ASSESSEE AS WELL AS REVENUE HAVE FILED APPEALS AGAINST THE ORDER OF THE LD. CIT(A)-I, JAIPUR DATED 23-06-2010 FOR THE ASSESSMENT YEAR 2007- 08. 2.1 FIRST OF ALL, WE WILL TAKE UP THE APPEAL OF THE ASSESSEE WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL . 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE LD. CIT(A) HAS GROSSLY ERRED IN HOLDING THE INCOME UNDER THE HEAD CAPITAL GAIN AS DECLARED BY THE ASSESSEE A S INCOME FROM BUSINESS WITHOUT PROPERLY APPRECIATING THE NATURE OF TRANSACTIONS AND BY GROSSLY IGNORING THE SUBMISSION MADE, THUS THE ACTION OF THE LD. CIT(A) DESERVES TO BE HELD ILLEGAL AND INCOME DECLARED BY THE ASSESSEE BE DIRECTED TO BE TREATED AS INCOME FROM C APITAL GAINS. 1.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN CONFIR MING THE PROFIT FROM BUSINESS COMPUTED AT RS. 54,40,175/ - BY LD AO ON MERE PRESUMPTIONS AND ASSUMPTIONS BY CASTI NG THE P & L A/C WITHOUT APPRECIATING THE SUBMISSION M ADE, THUS THE ADDITION OF RS. 54,40,175/- MADE DESERVES TO BE DELETED 1.2 THAT THE LD. CIT(A) HAS FURTHER ERRED IN HOLDIN G THAT THE ASSESSEE HAS CARRIED OUT SYSTEMATIC ACTIVI TY OF DEVELOPING, CONSTRUCTING AND MAINTAINING THE BUILDI NG CONSTRUCTION WORK AN MADE INVESTMENT JUST TO MAKE G AINS WITHOUT APPRECIATING THE TRUE NATURE OF ACTIVITY UNDERTAKEN BY ASSESSEE, THUS SUCH OBSERVATIONS DESE RVES TO BE EXCLUDED AND IGNORED. 3 2.2 A SURVEY U/S 133A OF THE ACT WAS CONDUTED ON 10 TH SEPT. 2008 AT THE BUSINESS PREMISES OF THE ASSESSEE. AS PER AO, THE A SSESSEE HAS DERIVED INCOME FROM BUSINESS, CAPITAL GAIN AND OTHER SOURCE S. THE ASSESSEE CONSTRUCTED AND SOLD THE COMMERCIAL COMPLEX NAMED VIMAL CHAMBERS AT 176, HALDIYON KA RASTA, JOHRI BAZAR, JAIPUR THE ARE A IS ABOUT 3400 SQ. FT. AND BUILDING IS CONTAINING THREE FLOORS AND BASEMEN T. THE LAND ON WHICH COMPLEX IS CONSTRUCTED WAS PURCHASED BY THE ASSESSE E FOR A CONSIDERATION OF RS. 8.00 LACS ON 25-06-2001FROM SHRI GULAB CHAND SA NCHETI. THERE WAS AN EXISTING BUILDING CONSISTING OF TWO STOREYS AND THE SAME WAS DEMOLISHED IN MARCH 2005. NEW CONSTRUCTION WAS STARTED IN JUNE, 2 005. WHEN THE COMPLEX WAS UNDER CONSTRUCTION, THE ASSESSEE, SOLD FEW SHOP S AND TOOK ADVANCE FROM PROSPECTIVE BUYERS AND INVESTED IT FURTHER IN CONST RUCTION OF COMPLEX. THE LOCATION OF THE COMPLEX IS IN THE MAIN HEART OF THE CITY MARKET WHICH IS A COMMERCIALLY VIABLE AREA. THE AO ISSUED THE SHOW CA USE NOTICE DATED 27 TH NOV. 2009 VIDE WHICH THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE INCOME FROM SALE OF SHOPS BE NOT TREATED AS INCOME FROM BUSINESS AND THE CLAIM OF DEDUCTION U/S 54 OF THE ACT BE NOT DENIED. THE ASSESSEE FILED THE REPLY VIDE LETTER DATED 3 RD DEC. 2009. IN THE REPLY, IT WAS SUBMITTED THAT THE ASSESSEE HAS NOT CARRIED OUT ANY SYSTEMATIC ACTIVIT Y OF DEVELOPING, CREATING AND MAINTAINING THE BUILDING. THE LAND UNDER QUEST ION WAS INHERITED BY THE 4 ASSESSEE AND THE ASSESSEE IN ORDER TO EARN PROFIT F ROM INVESTMENT ATTEMPTED TO IMPROVE THE ASSETS FOR HAVING THE MAXIMUM VALUE OF THE CAPITAL ASSETS. THE EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTABLE TO THE AO. THE AO HAS REFERRED TO THE MEANING OF THE WORD BUSINESS AS D EFINED IN SECTION 2(1) OF THE ACT. MERE CONTINUITY OR SERIES OF TRANSACTION I S NOT ONLY THE DECISIVE FACTOR IN DETERMINING THE NATURE OF INCOME. THE CON TINUITY IS TO BE SEEN FROM THE OPERATIONS DONE BY THE ASSESSEE. THE AO HAS REF ERRED TO THE FOLLOWING DECISIONS SO THAT THE ACTIVITY DONE BY THE ASSESSEE IS TO BE CONSIDERED AS AN ACTIVITY OF CARRYING ON BUSINESS. 1. DAMODARAN SHENOY VS CIT 26 ITR 650 (BOM) 2. CIT VS CURRIMBHAOY EBRAHIM & SONS , 3 ITR 395 ( PC) 3. CIT VS MOTILAL HIRABHAI SPG. WVG CO. LTD. 113 IT R 173 (GUJ.) 4. VENKATASWAMI NAIDU & CO. VS CIT 35 ITR 594 (SC) 5. JANKI RAM BAHADUR RAM VS CIT, 57 ITR 21 (SC) 6. CIT VS SUTLEJ COTTON MILL SUPPLY AGENCY LTD. 100 IT R 106 (SC) 7. GURDILAL NARAINDAS & CO. VS CIT, 50 ITR 633 (BOM) 2.3 THE AO HAS ALSO REFERRED TO THE FACTS THAT THER E WERE TENANTS IN THE BUILDING AND WHEN THE BUILDING WAS PURCHASED, THE A SSESSEE GOT THE BUILDING 5 VACATED FROM THE TENANTS. THEREAFTER MAP AND DESIGN OF COMMERCIAL COMPLEX CHALKED OUT AND WORK OF CONSTRUCTION WAS GIVEN TO T HE CONTRACTOR. THE ASSESSEE SOLD THE SHOPS TO THE PROSPECTIVE BUYERS WHEN CONSTRUCTION WAS GOING ON. SERIES OF SUCH ACTIVITIES SHOW THAT THE A SSESSEE WAS DOING AN ADVENTURE IN THE NATURE OF TRADE. THE AO HAS REFERR ED TO THE REPLY GIVEN BY THE ASSESSEE IN THE STATEMENT RECORDED AT THE TIME OF SURVEY IN WHICH THE ASSESSEE STATED THAT THE SHOPS HAVE BEEN CONSTRUCTE D IN ORDER TO EARN PROFIT. THE AO HAS REFERRED TO THE FACT THAT THE ASSESSEE H AS DIVERTED THE BORROWED FUNDS FROM ITS OTHER BUSINESS FOR THE CONSTRUCTION OF THE COMPLEX. THIS ALSO SHOWS THAT THE ACTIVITY IN CONSTRUCTING THE SHOP WA S AN ACTIVITY OF CARRYING ON THE BUSINESS. ACCORDINGLY THE AO HELD THAT THE I NVESTMENT HAD BEEN CONVERTED INTO STOCK IN TRADE AS ON MARCH 2005. WHE N SUCH STOCK IS SOLD THEN THE PROFIT ARISING FROM SUCH SALE OF STOCKS WI LL HAVE TO BE APPORTIONED AS BUSINESS INCOME AND CAPITAL GAIN. THE PROFIT ON TH E ASSETS SOLD OUT OF STOCK IN TRADE IS TO BE TAXED TO THE EXTENT OF CAPITAL GA IN BY CONSIDERING THE FAIR MARKET VALUE OF SUCH STOCK AS ON MARCH, 2005 AND TH E INDEXATION COST OF PURCHASES. THE DIFFERENCE BETWEEN IN FAIR MARKET VA LUE FROM MARCH 2005 TO THE DATE OF SALE IS TO BE TAXED AS BUSINESS INCOME. HOWEVER, ONE WILL HAVE TO CONSIDER THE SALE VALUE AS CONSIDERATION RECEIVED. THE AO ACCORDINGLY HAS 6 TREATED PART OF THE PROFIT EARNED BY THE ASSESSEE A S CAPITAL GAIN AND PART OF THE PROFIT HAS BEEN TAXED AS BUSINESS INCOME. 2.4 BEFORE THE LD. CIT(A), IT WAS CONTENDED THAT TH E ASSESSEE ENJOYED ITS PROPERTY IN ITS ORIGINAL STATE FOR OVER FOUR YEARS. THE ASSESSEE WAS ALSO RUNNING ITS BUSINESS FROM THE SAME PREMISES AND WAS ALSO EARNING RENTAL INCOME. IN ORDER TO RECONSTRUCT THE BUILDING, THE A SSESSEE DEMOLISHED THE OLD STRUCTURE SO AS TO HAVE A NEW BUILDING WITH MODERN FACILITIES AND STRUCTURAL ADVANTAGES. A PART OF THE RECONSTRUCTED BUILDING WA S SOLD TO REALIZE THE COST OF CONSTRUCTION AS RECONSTRUCTION WAS DONE OUT OF F UNDS BORROWED FROM BUSINESS ENTERPRISES. THE SURPLUS AMOUNT RECEIVED W AS THE APPRECIATION FOR THE VALUE OF LAND AS NOBODY WILL PAY SUCH A PRICE F OR THE CONSTRUCTION. THE PROFIT MOTIVE WAS ONLY INCIDENTAL. THE ASSESSEE STI LL OWNS AND POSSESSES AROUND 50% OF THE TOTAL AREA OF THE PROPERTY. THE A SSESSEE WAS NEVER ENGAGED IN ANY CONSTRUCTION ACTIVITY AND IT WAS A S OLITARY EFFORT OF CONSTRUCTION CARRIED OUT BY THE ASSESSEE. THE ASSES SEE NEITHER BY CONDUCT NOR BY IMPLICATION HAS CONVERTED THE SUBJECT PROJECT IN TO STOCK IN TRADE. THE ASSESSEE SUBMITTED THAT IN A NORMAL BUSINESS ACTIVI TY, THE ELEMENT OF RISK OR LOSS IS ONE OF THE INGREDIENTS TO DETERMINE THE NAT URE BUT IN THE PRESENT CASE THE ASSESSEE WAS SELLING PART OF THE RECONSTRUCTED BUILDING TO RECOVER THE COST WITHOUT ANY ELEMENT OF RISK INVOLVED. THE TRANSACTI ON CANNOT BE CONSIDERED 7 AS A BUSINESS ACTIVITY. FOR THIS PROPOSITION, RELI ANCE WAS PLACED ON THE FOLLOWING CASE LAWS:- 1. SWADESH WEAVING MILLS VS CEPT, 26 ITR 765 (SC) 2. CIT VS RADHEY SHYAM MORARKA, 271 ITR 111 (BOM.) 2.5 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE AND CONSIDERING THE FINDINGS OF THE AO CONCLUDED THAT T HE AO WAS JUSTIFIED IN TREATING THE ASSETS AS CONVERTED INTO STOCK IN TRAD E FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN U/S 45(2) OF THE ACT AND DETERMINING THE BUSINESS INCOME IN RESPECT OF PROFIT ARISING FROM THE DATE O F CONVERSION OF ASSETS INTO STOCK IN TRADE TILL THE DATE OF SALE. HOWEVER, THE LD. CIT(A) DIRECTED THE AO TO ALLOW DEDUCTION U/S 54 ON LONG TERM CAPITAL GAIN . 2.6 BEFORE US, THE LD. AR HAS FILED THE WRITTEN SUB MISSIONS CONTAINING 77 PAGES AND ALSO FILED THE PAPER BOOK CONTAINING 50 P AGES. THE LD. AR DREW OUR ATTENTION TO THE FACT THAT THE ASSESSEE PURCHAS ED THE PARENTAL PROPERTY. THE ASSESSEE AFTER ACQUISITION KEPT THE SUBJECT PRO PERTY IN ITS ORIGINAL STATE FOR ALMOST FOUR YEARS AND ENJOYED THE POSSESSION BY RUNNING HIS BUSINESS ACTIVITY FROM THIS PREMISES. THE ASSESSEE IS NOT EN GAGED IN ANY CONSTRUCTION ACTIVITY. IN ORDER TO RECONSTRUCT THE BUILDING WIT H MODERN FACILITIES, THE ASSESSEE TOOK NECESSARY STEPS WHICH PRUDENT PERSON IS REQUIRED TO TAKE SUCH STEPS. THE ASSESSEE HAS NEVER INTENDED TO DO THE BU SINESS OF A DEVELOPER. 8 THERE WAS NO PROFIT MOTIVE IN RECONSTRUCTING THE BU ILDING. IN ORDER TO FINANCE THE FUNDS FOR THE PURPOSE OF RECONSTRUCTION OF THE BUILDING, THE ASSESSEE SOLD SOME OF THE SHOPS. THIS MOTIVE WAS NOT TO EARN THE PROFIT BUT WAS TO FINANCE THE PROJECT OF RECONSTRUCTION OF BUILDING. THE TOTA L AREA CONSTRUCTED IS OLY 11753.74 SQ. FT. OUT OF WHICH THE ASSESSEE HAS SOLD ONLY 6242.96 SQ. FT. AREA. THE ASSESSEE NEVER HAD INTENTION TO SELL THE ANCEST RAL PROPERTY AS EVEN TODAY THE ASSESSEE OWNS AND POSSESSES MORE THAN 50% OF TH E TOTAL AREA. 2.7 THE LD. AR DREW OUR ATTENTION THAT IN ORDER TO EARN CAPITAL GAIN FROM SALE OF SHARES, ONE HAS TO PERFORM CERTAIN ACTIVITI ES IN A SYSTEMATIC MANNER. ONE HAS TO OPEN A DMAT ACCOUNT, CREATION OF CLIENT ID WITH A REGISTERED BROKER, PLACEMENT OF ORDER TO BROKER FOR PURCHASE O F SHARES, PAYMENT OF THE PURCHASE CONSIDERATION, TRANSFER OF PURCHASES SHARE S IN DMAT ACCOUNT, PLACEMENT OF ORDER FOR SALE, SUBMISSION OF DELIVERY TO TRANSFER FROM DMAT ACCOUNT AN RECEIVING THE SALE CONSIDERATION. IN SPI TE OF SUCH SYSTEMATIC ACTIVITY, ONE CANNOT HOLD THAT PROFIT FROM SALE OF SHARES IS BUSINESS PROFIT. IN THE BUSINESS, ONE HAS TO BEAR THE RISK OF PROFIT OR LOSS. HOWEVER, IN THE INSTANT CASE, THE ACTIVITY OF THE ASSESSEE WAS NOT HAVING ANY RISK OR LOSS. THE LD. AR HAS RELIED UPON THE FOLLOWING DECISIONS:- 127 ITD 94 ASHA HOUSING ENTERPRISES V. DY. CIT (BAN G) ASSESSMENT YEAR 2005-06 ASSESSEE-FIRM WAS ENGAGED IN BUSINESS OF REAL ESTATE- IT HAD PURCHASED LANDS SITUATED AT S VILLAGE ON 12-11-19 92 SUBSEQUENTLY, IT HAD ENTERED INTO 9 AN AGREEMENT OF SALE ON 22-06-2002 CRORE ASSESSEE FURNISHED ITS RETURN OF INCOME AND OFFERED INCOME ARISING OUT OF ABOVE-MENTIONED TRANS ACTION AS LONG-TERM CAPITAL GAINS ASSESSING OFFICER WAS OF VIEW THAT INCOME ACCRUED F ROM ABOVE TRANSACTION WAS BUSINESS INCOME AND NOT LONG-TERM CAPITAL GAINS COMMISSION ER (APPEALS) UPHELD ORDER OF ASSESSING OFFICER- ON INSTANT APPEAL, IT WAS SEEN T HAT ASSESSEE HAD PURCHASED LANDED PROPERTY AND HELD IT AS INVESTMENT WAY BACK FROM 19 92 AND UNTIL YEAR IT WAS SOLD IT WAS ALSO NOTED THAT A PORTION OF SAME LAND WAS SOLD DUR ING ASSESSMENT YEAR 2001-02 AND AT THAT TIME, REVENUE AHD ACCEPTED THAT INCOME ARISING OUT OF SALE OF PROPERTY FEEL UNDER WAS HEAD LONG-TERM CAPITAL GAINS WHETHER IN VIEW OF AFORESAID, ASSESSING OFFICER WAS NOT RIGHT TO DEEM ASSET IN QUESTION TO BE STOCK IN TRAD E OF ASSESSEE HELD YES, WHETHER, THEREFORE, INCOME ACCRUED FROM SALE OF LAND WAS TO BE ASSESSED AS CAPITAL GAINS. 131 TTJ 229 ITO VS. VIKASH BEHAL [2010] (KOL) [SOURCE: TAX WORLD VOL. XLIV, PART 1, PAGE 7] S. 2(42A), 2(47)(V), 2(47)(VI), 45 & 54EC UNDER THE DEVELOPMENT AGREEMENT WHICH RESULTED IN C ONFERRING OF THE RIGHTS OF OWNERSHIP OF THE DEVELOPERS SHARE OF THE LAND UNTO THE DEVEL OPER ON THE DATE ON WHICH IT WAS ENTERED INTO, THE SAME WOULD CONSTITUTE A TRANSFER IN RELATION TO DEVELOPERS SHARE IN THAT CAPITAL ASSET, AND THAT AGREEMENT HAVING BEEN ENTER ED INTO IN THE YEAR 2000-01, THE CAPITAL GAINS ACCRUED IN THE ASST. YR. 2001-02 AND SALE OF FLAT IN ASST. YR. 2005-06 RECEIVED FROM THE DEVELOPER GAVE RISE TO LONG TERM CAPITAL GAINS, ELIGIBLE FOR EXEMPTION UNDER S. 54EC. 263 ITR 328 MANNA LAL NIRMAL KUMAR SURANA VS. CIT ( RAJ.) CAPITAL GAINS BUSINESS CAPITAL GAINS OR BUSINES S INCOME SALE OF A FEW ITEMS OUT OF MANY ITEMS OF JEWELLERY FINDING THAT SALE ISOLATE D TRANSACTION AND NO TRADING ACTIVITY IN JEWELLERY FINDING THAT JEWELLERY HAD NOT BEEN CON VERTED INTO STOCK-IN-TRADE OF BUSINESS FINDING OF FACT GAINS ASSESSABLE AS CAPITAL GAI NS INCOME TAX ACT, 1961, SS. 28, 45. 304 ITR 194 CIT VS. SOHAN KHAN (2008) (RAJ) WHERE THERE WAS NOTHING TO SHOW THAT THE PROPERTY W AS PURCHASED WITH INTENTION TO SELL THE PROPERTY AT PROFIT, EVEN SALE OF LAND IN PIECE MENTAL WILL NOT TANTAMOUNT TO BUSINESS INCOME. 298 ITR 277 CIT VS. SURESH CHAND GOYAL (2008) (MP) AN ISOLATED TRANSACTION OR ACTIVITY CANNOT BE PART OF BUSINESS AND TO CONSTITUTE BUSINESS THERE MUST BE REGULAR ACTIVITY OF PURCHASING AND SE LLING. WHERE THE LAND WAS SOLD AFTER CONVERTING INTO PLOTS WITH A VIEW TO SECURE BETTER PRICE, THIS ISOLATED ACTIVITY CANNOT COME WITHIN THE PURVIEW OF ADVENTURE IN THE NATURE OF TR ADE AND THE SURPLUS ON SALE OF LAND WAS IN THE NATURE OF CAPITAL GAINS. 281 ITR 354 COMMISSIONER OF INCOME TAX VS. MOHAKAMP UR ICE & COLD STORAGE (ALL) 10 WHERE THE LAND WAS USED AS FIXED ASSETS OF THE COMP ANY AND WAS EXPLOITED FOR ITS BUSINESS AND NOT USED AS STOCK IN TRADE, ITS TRANSF ER TO THE COLONIZER WOULD NOT COME UNDER THE PURVIEW OF BUSINESS INCOME BUT TAXABLE AS CAPIT AL GAIN. 113 TTJ 586 RAI BAHADUR KISHORE CHAND & SONS VS. IT O (ASR.) THERE HAS TO BE REGULAR AND SYSTEMATIC ACTIVITY OF DEVELOPMENT. MERE FACT THAT IT IS PART OF THE OBJECT OF THE COMPANY WILL NOT MAKE IT BUSINESS ACTIVITY IF THE ASSESSEE ITSELF IS SHOWING THE RENT AS INCOME FROM HOUSE PROPERTY. 2.8 ON THE OTHER HAND, THE LD. DR RELIED UPON THE O RDERS OF THE AUTHORITIES BELOW. 2.9 WE HAVE HEARD BOTH THE PARTIES. SINCE THE AO HA S HELD THAT CAPITAL ASSETS HAS BEEN CONVERTED INTO STOCK IN TRADE AS ON MARCH, 2005, THEREFORE, THERE IS NO DISPUTE THAT ASSET WAS A CAPITAL ASSET AT THE TIME OF PURCHASE. IT HAS BEEN ACCEPTED BY THE REVENUE THAT THE INTENTION OF THE ASSESSEE AT THE TIME OF PURCHASE OF THE PROPERTY WAS TO KEEP IT AS AN INVESTMENT. SINCE THE OLD BUILDING WAS DEMOLISHED AND NEW BUILDING WAS CO NSTRUCTED AFTER GETTING THE PLANS APPROVED, THE AO IS OF THE OPINION THAT T HE ASSESSEE HAS STARTED THE BUSINESS ACTIVITY OR ADVENTURE IN THE NATURE OF TRA DE FROM MARCH 2005. THE AO HAS REFERRED TO THE DECISION OF HON'BLE BOMBAY H IGH COURT IN THE CASE OF DAMMODARAN SHENOY (A.P.) VS CIT(1954) 26 ITR 650 . IN THAT CASE THE HON'BLE BOMBAY HIGH COURT HAD AN OCCASION TO CONSI DER AS TO WHETHER A.N GUNA SHENOYAND BROS WAS HAVING A BUSINESS CONNECTIO NS WITH THE ASSESSEE. WITH REFERENCE TO BUSINESS CONNECTIONS, THE HON'BLE BOMBAY HIGH COURT 11 HELD THAT CONTINUITY IS NOT NECESSARILY THE LENGTH OF TIME DURING WHICH BUSINESS CONNECTIONS HAVE BEEN MAINTAINED AND IF A LARGE NUMBER OF ORDERS ARE GIVEN BY THE PRINCIPAL AND EXECUTED BY THE AGEN T FROM TIME TO TIME EVEN WITHIN A SHORT PERIOD THEN THE CONTINUITY OF THE BU SINESS CONNECTIONS IS ESTABLISHED. HENCE, THIS DECISION IS NOT APPLICATIO N TO A CASE WHERE THE REVENUE IS TRYING TO ESTABLISH THAT ACTIVITY DONE B Y THE ASSESSEE IS AN ADVENTURE IN THE NATURE OF TRADE. IN THE CASE BEFOR E THE HON'BLE BOMBAY HIGH COURT, THE PARTY WAS EXECUTING THE ORDERS AND IT WAS HELPING THE OTHER PARTY IN THE BUSINESS ACTIVITY. HERE IN THE INSTANT CASE, THE ASSETS BELONGED TO THE ASSESSEE AND HE WAS TRYING TO MAXIMIZE THE PR OFIT FROM THE SALE OF THE CAPITAL ASSETS. THE AO HAS FURTHER REFERRED TO DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS MOTILAL HIRABHAI SPG. WVG. CO. LTD. (1978) 113 ITR 173. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS MOTILAL HIRABHAI SPG. WVG. CO. LTD. (SUPRA) HAD AN OCCASION TO CONSIDER AS TO WHETHER INTEREST ON ADVANCE IS TO BE TAXED UNDER THE HEAD BUSINESS OR INCOME FROM OTHER SOURCES. THE OBJECTS OF THE COMPA NY AUTHORIZES THE COMPANY TO GIVE ADVANCE NOT ONLY TO CUSTOMERS AND S ELLERS BUT ALSO TO OTHER PERSONS. HENCE, ON THIS GROUND, THE INTEREST INCOME WAS HELD AS INCOME FROM BUSINESS. THIS CASE IS OF NO HELP TO THE REVENUE. T HE AO HAS FURTHER REFERRED TO THE DECISION OF HON'BLE APEX COURT IN THE CASE O F VENKATASWAMI NAIDU & 12 CO. (G) VS CIT (1959) 35 ITR 594.IN THIS CASE, THE FIRM WHICH WAS ACTING AS MANAGING AGENT PURCHASED FOUR CONTIGUOUS PLOTS OF L AND ADJACENT TO THE PLACE WHERE MILL OF THE COMPANY MANAGED BY IT WAS S ITUATED. THE FIRM HAS NOT MADE ANY EFFORT TO CULTIVATE OR TO ERECT ANY SU PERSTRUCTURE ON THE PLOTS. THE PLOTS WERE THEREFORE, PURCHASED IN ORDER TO SEL L THE SAME TO THE MANAGING COMPANY WHENEVER IT THOUGHT IT PROFITABLE SO TO DO. IN VIEW OF THESE FACTS, HON'BLE HIGH COURT HELD THAT TRANSACTI ON WAS AN ADVENTURE IN THE NATURE OF TRADE AND THE SAME WAS CONFIRMED BY THE H ON'BLE APEX COURT. THE AO HAS REFERRED TO THE CASE OF JANKI RAM BAHADUR RA M VS CIT (1965) 57 ITR 21. THIS DECISION IS AGINST THE REVENUE. IN THI S CASE, THE ASSESSEE HAS PURCHASED THE LAND FOR JUTE PRESS AND THE PRESS WAS NOT RUN BY THE ASSESSEE. THIS WAS SOLD AND THE ISSUE WAS AS TO WHETHER THE T RANSACTION IS IN THE NATURE OF TRADE. THE PROPERTY WAS UNDER LITIGATION AND THE RE IS NO INTERFERENCE THAT ACQUISITION WAS AN ADVENTURE IN THE NATURE OF TRADE . THE ASSESSEE INTENDED TO RESELL THE PROPERTY AND HENCE HON'BLE APEX COURT HE LD THAT IT IS NOT AN ADVENTURE IN THE NATURE OF TRADE. THE AO HAS REFERR ED TO THE DECISION OF HON'BLE APEX COURT IN THE CASE OF CIT VS SUTLEJ COT TON MILL SUPPLY AGENCY LTD. (1975) 100 ITR 706. IN THIS CASE, THE TRIBUNA L RECORDED A FINDING THAT DOMINANT INTENTION OF THE ASSESSEE WAS TO MAKE PROF IT BY RESALE OF SHARES AND NOT TO MAKE AN INVESTMENT. KEEPING IN VIEW THESE FI NDINGS, THE HON'BLE 13 APEX COURT HELD THAT PROFIT FROM SALE OF SHARES IS AN ADVENTURE IN THE NATURE OF TRADE. IN THIS CASE, THE HON'BLE APEX COURT STAT ED THAT ONE HAS TO SEE THE DOMINANT INTENTION OF THE ASSESSEE AT THE TIME WHEN THE SHARES WERE PURCHASED. IN THE INSTANT CASE, THE REVENUE HAS ACC EPTED THAT THAT DOMINANT INTENTION OF THE ASSESSEE WAS TO ACQUIRE THE PROPER TY AS AN INVESTMENT BECAUSE THE REVENUE HAS CONSIDERED THE CONVERSION O F CAPITAL ASSETS INTO STOCK IN TRADE IN MARCH 2005 HENCE, THE DECISION OF HON'BLE APEX COURT IN THE CASE OF CIT VS SUTLEJ COTTON MILL SUPPLY AGENCY LTD. (SUPRA) IS OF NO HELP TO THE REVENUE. THE AO HAS RELIED UPON THE DEC ISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GURDILAL NARAINDA S & CO. VS CIT (1963), 50 ITR 633. IN THIS CASE, THE ASSESSEE OBTAINED A P LOT OF LAND ON LEASE FROM THE GOVT. AND ONE OF THE CONDITIONS WAS THAT THE BU ILDING MUST BE PUT UP ON THE PLOT WITHIN FOUR YEARS FROM THE DATE OF POSSESS ION. THE RIGHT TO LEASE WAS SOLD IN NOV 1959 AND THE ASSESSEE EARNED PROFIT OF RS. 90,135/-. THE ISSUE BEFORE THE HON'BLE HIGH COURT WAS AS TO WHETHER THE PROFIT WAS REVENUE RECEIPT OR A PROFIT FROM SALE OF INVESTMENT. THE REVENUE NOTICED FROM THE BALANCE SHEET OF THE ASSESSEE THAT ASSESSEE WAS NOT HAVING ENOUGH FUNDS TO CARRY OUT THE SCHEME OF PUTTING UP HUGE BUILDING ON THE VACANT PLOT. HENCE, THE INTENTION WAS NOT TO HAVE THE LEASE OF PLOT AS INVESTMENT BUT WAS TO EARN PROFIT BY SELLING THE LEASE RIGHT AND NOT CONSTRUCT ING THE PLOT. IN THE INSTANT 14 CASE, THE ASSESSEE HAS AN INTENTION TO HOLD THE PRO PERTY AS INVESTMENT AT THE TIME OF PURCHASE. THE ASSESSEE NEVER WANTED TO EARN THE PROFIT OUT OF SALE OF CERTAIN SHOPS. IN ORDER TO FINANCE THE COST OF CONS TRUCTION OF A MODERN BUILDING, THE ASSESSEE SOLD SOME OF THE SHOPS AND B ALANCE CONSTRUCTED AREA HAS BEEN KEPT BY HIM FOR THE PURPOSE OF HIS BUSINES S. 2.10 NOW WE WILL CONSIDER THE CASE LAWS ON WHICH TH E LD. AR HAS RELIED UPON. IF A PERSON INVESTS MONEY IN LAND, INTENDING TO HOLD IT, ENJOYS ITS INCOME FOR SOMETIME AND THEN SALES IT AT A PROFIT T HEN IT WOULD BE A CLEAR CASE OF CAPITAL ACCRETION AND NOT PROFIT DERIVED FR OM ADVENTURE IN NATURE OF TRADE. THE ASSESSEE IS MAINLY ENGAGED IN THE BUSINE SS OF GEMS AND JEWELLERY AND WAS NOT ENGAGED IN THE BUSINESS OF A DEVELOPER. FOR HAVING A MODERN OFFICE WITHIN THE HEART OF THE CITY, THE ASSESSEE I NTENDED TO DEMOLISH THE OLD STRUCTURE AND TO RECONSTRUCT A BUILDING WITH ADDITI ONAL SPACE. THE OBJECTIVE WAS TO FINANCE THE COST OF CONSTRUCTION SO AS TO EN ABLE HIM TO HAVE OFFICE WITH MODERN FACILITIES IN THE HEART OF CITY. THE IN TENTION OF THE ASSESSEE IS NOT TO EARN THE PROFIT FROM THE PROJECT. AROUND MORE TH AN 50% OF THE CONSTRUCTED AREA HAS BEEN KEPT BY THE ASSESSEE. 2.11 THE HON'BLE JURISDICTIONAL HIGH COURT IN THE C ASE OF CIT SOHAN KHAN, 304 ITR 194 HAD AN OCCASION TO CONSIDER THE CASE WH ERE THE ASSESSEE HAS SOLD THE LAND UNDER SITE PLAN THROUGH SERIES OF TRA NSACTIONS OF SALE OF PART OF 15 THE LAND AND THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IS THAT SUCH SALE IS NOT AN ADVENTURE IN THE NATURE OF TRADE AS THE ASSESSEE WAS NOT THE REAL ESTATE DEALER. SIMILARLY IN THE CASE OF MANNA LAL NIRMAL KUMAR SURANA VS. CIT, 263 ITR 328, THE HON'BLE JURISDICTI ONAL HIGH COURT HELD THAT SALE OF JEWELLERY CANNOT BE CONSIDERED AS ADVE NTURE IN THE NATURE OF TRADE BECAUSE THE ASSESSEE NEITHER PURCHASED NOR SO LD ANY OTHER SIMILAR TYPE OF ITEMS. THE HON'BLE M.P. HIGH COURT IN THE CASE O F CIT VS. SURESH CHAND GOYAL, 298 ITR 277 HAD AN OCCASION TO CONSIDER THE SALE OF DEVELOPED PLOTS AFTER CONVERSION. THE HON'BLE M.P. HIGH COURT HELD THAT THE ASSESSEE DEVELOPED THE PLOTS WITH A VIEW TO SECURE BETTER P RICE. THE ISOLATED ACTIVITY CANNOT BE AN ADVENTURE IN THE NATURE OF TRADE. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. GAJANANA ENTERPRISES HAD AN OCCASION TO CONSIDER THE PROFIT FROM THE SALE OF LAND. IN THIS CASE, THE ASSESSEE PURCHASED THE LAND AND OBTAINED THE PERMISSION OF THE BANGALO RE DEVELOPMENT AUTHORITY TO CONVERT THE INDUSTRIAL LAND TO USE FOR RESIDENTIAL PURPOSES. THE LAND WAS PRE-EMPTIVELY PURCHASED BY THE APPROPRIATE AUTHORITY AND THE HON'BLE KARNATAKA HIGH COURT HELD THAT PROFIT FROM SALE OF SUCH PRE-EMPTIVE PURCHASE IS TO BE CONSIDERED UNDER THE HEAD OF CAPI TAL GAIN. IT IS TRUE THAT HON'BLE APEX COURT IN THE CASE OF IN THE CASE OF RA JA J RAMESHWAR RAO VS. CIT, 42 ITR 179 HAD HELD THAT PROFIT DERIVED FROM S ALE OF PLOTS IS TO BE 16 TREATED AS ADVENTURE IN THE NATURE OF TRADE. IN THA T CASE, THE ASSESSEE OBTAINED THE LAND IN PARCEL WITH A VIEW TO SELL IT LATTER AF TER DEVELOPING IT AND SUCH ACTIVITY WAS IN THE NATURE OF BUSINESS. THE ASSESSE E WAS DEALING IN STOCK IN TRADE BECAUSE THE LAND WAS PURCHASED IN PARCEL. HOW EVER, THE FACTS IN THE INSTANT CASE ARE DIFFERENT. 2.12 AFTER CONSIDERING THE FACTUAL AND LEGAL POSITI ON, WE HOLD THAT THE PROFIT ARISING FROM THE SALE OF SHOPS IS TO BE TAXED UNDER THE HEAD CAPITAL GAIN BECAUSE THE DOMINANT INTENTION OF THE ASSESSEE AT T HE TIME OF PURCHASE OF THE PROPERTY WAS TO HOLD IT AS INVESTMENT. EVEN AFTER C ONSTRUCTION OF THE BUILDING, THE ASSESSEE HAS KEPT 50% OF THE BUILDING COMPLEX FOR HIS OWN PURPOSES AND HIS OWN BUSINESS IS BEING CONDUCTED FROM THAT PREMISES. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS VIMAL CHAND GOLECHA, 201 ITR 442 HAS HELD THAT LAND AND BUILDIN G ARE TWO SEPARATE ASSETS.. IF THE LAND AND BUILDING HAVE BEEN SOLD T OGETHER THEN SALE IS TO BE BIFURCATED AMONGST LAND AND BUILDING. THIS IS NECES SARY AS THE CAPITAL GAIN ON LAND IS LONG TERM WHILE CAPITAL GAIN IN RESPECT OF BUILDING IS SHORT TERM. IN THE INSTANT CASE, THE ASSESSEE HAS TREATED THE INVE STMENT IN CONSTRUCTION OR BUILDING AS COST OF IMPROVEMENT. THE OLD BUILDING H AS BEEN DEMOLISHED. THUS THE BUILDING WHICH WAS EARLIER A CAPITAL ASSET S WITH THE ASSESSEE STANDS DEMOLISHED AND THEREFORE, THERE CANNOT BE ANY IMPRO VEMENT TO THAT BUILDING. 17 IT IS THEREFORE, HELD THAT COST OF THE BUILDING IN RESPECT OF SHOPS SOLD IS TO BE TAKEN AS COST OF ACQUISITION OF BUILDING AND CAPITA L GAIN ON BUILDING WILL BE DETERMINED ON THE BASIS OF SALE OF BUILDING INCLUDE D IN THE SALE OF SHOP. WE THEREFORE, HOLD THAT THE PROFIT FROM THE SALE OF SH OPS DURING THE YEAR WILL BE APPORTIONED BETWEEN THE PROFIT ON THE SALE OF LAND AND BUILDING. THE CAPITAL GAIN ARISING FROM SALE OF LAND WILL BE LONG TERM. T HE PROFIT ON SALE OF BUILDING WILL BE SHORT TERM BECAUSE THE BUILDING WA S STARTED FOR CONSTRUCTION FROM JUNE, 2005 AND THEREFORE, THE PERIOD OF HOLDIN G OF BUILDING WILL BE LESS THAN THREE YEARS FOR SALES MADE DURING THE YEAR. 3.1 NOW WE WILL TAKE UP THE APPEAL FILED BY THE REV ENUE. 3.2 THE FIRST GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S 54F OF THE ACT. 3.3 THE CLAIM OF DEDUCTION U/S 54F WAS REJECTED BY THE AO AND HE HAS NOT RECORDED THE FINDINGS THAT THE ASSESSEE HAS SATISFI ED THE CONDITIONS FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 54F. WE HAVE ALRE ADY HELD THAT CAPITAL GAIN ARISING FROM THE SALE OF LAND INCLUDED IN THE SALE OF SHOPS WILL BE LONG TERM AND FROM THIS THE ASSESSEE WILL BE ENTITLED TO DEDUCTION U/S 54F OF THE ACT IN CASE OTHER CONDITIONS MENTIONED IN SECTION 5 4F ARE SATISFIED. HENCE, THIS ISSUE IS RESTORED BACK ON THE FILE OF THE AO T O THE EXTENT OF AS INDICATED ABOVE. 18 4.1 THE SECOND GROUND OF THE REVENUE IS THAT THE L D. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 78.00 LACS MADE U/S 69 OF THE ACT ON ACCOUNT OF UNEXPLAINED RECEIPTS AND RS. 19.00 LACS MADE U/S 69 C OF THE ACT ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 4.2 THE AO HAS REPRODUCED THE RELEVANT PORTION OF T HE STATEMENT OF THE ASSESSEE RECORDED AT THE TIME OF SURVEY IN WHICH HE ADMITTED THAT HE HAS RECEIVED OWN MONEY OF RS. 78.00 LACS. ON THE BASIS OF THE FACTS GIVEN IN THE STATEMENT, THE AO ADDED A SUM OF RS. 78.00 LACS. TH E AO HAS REFERRED TO VARIOUS JUDGEMENTS TO SUPPORT HIS CONTENTIONS THAT ADDITION CAN BE MADE ON THE BASIS OF ADMISSION MADE BY THE ASSESSEE. 4.3 BEFORE THE LD. CIT(A), IT WAS STATED THAT THERE EXISTED NOT A SINGLE PAPER WHICH MAY LEAD TO A BELIEF THAT THE ASSESSEE HAS RECEIVED ANY ON MONEY. THE AO HAS NOT RECORDED THE STATEMENT OF AN Y PERSON WHO HAS PURCHASED THE PROPERTY. THE RECONSTRUCTED PROPERTY HAS NOT BEEN SOLD BELOW THE DLC RATE. THE ABOVE ADDITION CANNOT BE MADE SIM PLY ON THE BASIS OF THE STATEMENT. RELIANCE WAS PLACED ON THE DECISION OF H ON'BLE KERALA HIGH COURT IN THE CASE OF PAUL MATHEWS & SONS VS CIT, 2 63 ITR 101. THE ASSESSEE ALSO PLACED RELIANCE ON THE VARIOUS DECISI ONS AS MENTIONED AT PAGE 7 OF THE ORDER OF THE LD. CIT(A). THE LD. CIT(A) AFTE R CONSIDERING THE SUBMISSIONS DELETED THE ADDITION OF RS. 78.00 LACS AFTER OBSERVING AS UNDER:- 19 CONTENTION OF THE AR IS CONSIDERED. THE ADDITIONS HAVE BEEN MADE ON THE STRENGTH OF THE ADMISSION MADE BY THE APPELLANT DURING THE COURSE O F SURVEY WHEREIN HE HAS ADMITTED THE RECEIPT OF ON MONEY FROM THE SALE OF SHOPS WHICH WAS UNDER RECORDED IN THE BOOKS OF ACCOUNTS AND FURTHER ADMITTED THE INVESTMENT MADE IN THE CONSTRUCTION OF THE COMPLEX OUT OF SUCH UNEXPLAINED RECEIPTS. HOWEVER, EXCEPT THE ADMISSION BY THE APPELLANT, NOT A SINGLE PAPER WAS FOUND DURING THE COURSE OF SURVEY NOR ANY OTHER EVIDENCE / MATERIAL HAS BEEN BROUGHT ON RECORD BY THE AO BY MAKING FRESH AND INDEPENDENT ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ENTIRE PARTICULARS OF THE CUSTOMER S FOR SALE WERE AVAILABLE WITH THE AO. THE APPELLANT HAS RETRACTED FROM THE ADMISSION MADE DURING THE SURVEY BY NOT INCLUDING THE STATED SURRENDER OF AMOUNT DURING THE SURVEY IN THE RETURN OF INCOME FILED. IT IS THE DUTY OF THE AO TO CARRY OUT THE NECESSARY INVESTIGATION BY ISSUING SUMMONS TO THE PERSONS TO WHOM THE PROPERTY WAS SOLD. THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. BHANWAR LAL MURWATIYA 39 TW 214 HAS HELD THAT THE DEPARTMENT SHOULD BRING ON RECORD SUFFICIENT EVIDEN CE BEFORE MAKING ADDITION U/S 69 OF THE INCOME TAX ACT , 1961 AND THE RETREATED STATEMENT CANNOT BE MADE THE SOLE BASIS FOR MAKING ADDITION AS IT CANNOT BE SAID TO 20 BE CONCLUSION. LIKEWISE IN CASE OF UNEXPLAINED EXPENDITURE OF RS. 19,00,000/- THE AO HAS NOT DISCHARGED THE BURDEN LAY UPON HIM IT BY BRINGING O N RECORD SUFFICIENT MATERIAL TO SUPPORT THE ALLEGATIO N OF UNEXPLAINED INVESTMENT MADE BY THE APPELLANT IN THE CONSTRUCTION OF COMMERCIAL COMPLEX. IF THE AO HAS ENTERTAINED ANY DOUBTS WITH REGARD TO THE COST OF CONSTRUCTION DECLARED BY THE APPELLANT SHE COULD HA VE REFERRED THE MATTER FOR VALUATION BUT WITHOUT DOING SO MAKING ANY ALLEGATION OF UNEXPLAINED INVESTMENT IN THE CONSTRUCTION IS BASELESS. AS THE AO HAS FAILED TO BRING ON RECORD ANY MATERIAL TO PROVE THE ALLEGATIO NS MADE THE ADDITIONS MADE UNDER SECTION 69 OF THE INCOME TAX ACT, 1961 OF RS. 78,00,000/- ON ACCOUNT OF ON MONEY RECEIPTS IS DIRECTED TO BE DELETED. SIMILARLY THE ADDITION OF RS. 19,00,000/- MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE CANNOT BE SUSTAINED. THUS THE AMOUNT OF ` 19,00,000/- IS ALSO DIRECTED TO BE DELETED. THE THIRD GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE APPELLANT. 4.4 BEFORE US, THE LD. DR STATED THAT RETRACTION OF THE STATEMENT IS NOT ACCEPTABLE. THE ASSESSEE ADMITTED THE RECEIPT OF O N MONEY AT THE TIME OF SURVEY AND THEREFORE, THE AO WAS JUSTIFIED IN MAKIN G ADDITION OF RS. 78.00 21 LACS. THERE IS NO EVIDENCE OF ANY HARASSMENT OR DUR ESS BY THE AUTHORIZED OFFICERS OF THE SURVEY PARTY. THE LD. DR RELIED ON FOLLOWING JUDGMENTS. 1. GREENVIEW RESTAURANT VS. ACIT, 263 ITR 169 (GUJ ) 2. CIT VS. JAGDISH CHANDRA GUPTA, 329 ITR 583 (P&H ) 3. DR S.C. GUPTA VS. CIT, 248 ITR 782 (ALL.) 4. SUPREME COURT DECISION AIR 1963 SC 1094 5. BAL KRISHNA CHHAGAN LAL SONI VS. STATE OF WEST B ENGAAL, 1974 AIR 120 (1974 SCR (2) 107) 6. 248 ITR 782 (ALL.) 7. PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA, 91 ITR 18 (SC) 4.5 THE LD. AR HAS SUBMITTED AS UNDER:- AN ADDITION OF RS. 78,00,000/- WAS MADE U/S 69 BY ALLEGING THE SAME AS UNACCOUNTED FOR RECEIPTS FROM THE SALE OF THE PROPERTY. LD. AO ALSO INVOKED THE PROVISIONS OF SECTION 69C TO HOLD RS. 19,00,000/- AS UNACCOUNTED FOR EXP ENDITURE IN THE CONSTRUCTION THEREOF. LD. CIT(A) HAS DELETED THESE ADDITION AGAINST WHICH DEPARTMENT IS IN APPEAL BEFORE THE HONBLE BENCH. BRIEF FACT LEADING TO THIS ISSUE ARE THAT A SURVEY U/S 133A WAS CONDUCTED AT THE BUSINESS PREMISES ON 10.09.2008 AND DURING THE COURSE OF SUR VEY, STATEMENTS OF THE ASSESSEE WERE RECORDED WHEREIN WITHOUT REFERRING TO THE BOOKS OF ACCOUNT AND FURTHER WITHOUT LINKING THE MATERIAL / PAPERS FOUND AND LASTLY TO GET RID O F THE SURVEY PARTY, ASSESSEE UNMINDFULLY SIGNED ON DOTTED LINES AND ACCEPTED THAT HE HAS REC EIVED ` 78.00 LACS IN ADDITION TO THE RECORDED SALE CONSIDERATION. HOWEVER, DURING THE CO URSE OF SURVEY NOT A SINGLE EVIDENCE 22 WAS FOUND WHICH MAY LEAD TO A BELIEF THAT ASSESSEE HAS RECEIVED ANY ON MONEY NOR DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD. AO BY BRIN GING ANY MATERIAL ON RECORD HAD ESTABLISHED THAT ASSESSEE HAS RECEIVED A SUM OF ` 78.00 LACS OVER AND ABOVE THE AGREED CONSIDERATION. IT IS AN ADMITTED PROPOSITION OF LAW THAT STATEMENT RECORDED DURING THE SURVEY COULD BE AN IMPORTANT PIECE OF EVIDENCE BUT COULD NOT BE SOLELY RELIED UPON WITHOUT CORROBORATING THE SAME WITH SOME LOGICAL AND PLAUSIBLE MATERIAL FOR M AKING ADDITION U/S 69 OF THE INCOME TAX ACT, 1961 AND SUCH ONUS CASTED ON THE AO WAS NO T DISCHARGED BY HER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD. AO HAS NEITHER MADE ANY EFFORTS TO MAKE ENQUIRY AND VERIFY EVEN FROM THE BUYERS OF THE SUBJECT PROPERTY NOR IT IS THE CASE WHERE THE PROPERTY WAS SOLD AT THE SALE CONSIDERATI ON LOWER THAN DLC RATE NOR IT IS THE ALLEGATION OF THE AO. FURTHER THE STATEMENTS WHEREIN THE ALLEGED SURRENDE R WAS OBTAINED (PART OF WHICH RELATES TO THE ASSESSMENT YEAR UNDER HAND) FROM THE ASSESSE E WERE TAKEN ON OATH. IN THIS REGARD IT IS SUBMITTED THAT THE STATEMENTS DURING THE COURSE OF SURVEY CANNOT BE RECORDED ON OATH AS IS CLEAR FROM THE PROVISIONS CONTAINED U/S 133A(3) (III) OF THE INCOME TAX ACT, 1961, WHICH EMPOWERS THE INCOME TAX AUTHORITIES TO RECORD THE STATEMENT OF ANY PERSON WHICH MAY BE USEFUL OR RELEVANT TO ANY PROCEEDINGS UNDER THE ACT. FOR THIS PURPOSE WE NEED TO REFER TO THE PROVISIONS CONTAINED IN SECTION 133A(6 ) WHICH MANDATES THAT IF A PERSON REFUSES OR EVADES TO GIVE REPLIES TO THE INCOME TAX AUTHORITY, THEN THEY SHALL HAVE ALL THE POWERS UNDER SUB SECTION (1) OF SECTION 131 FOR ENF ORCING COMPLIANCE WITH THE REQUIREMENT. DURING THE SURVEY PROCEEDINGS THE ASSESSEE OFFERED ALL FACILITIES TO THE SURVEY PARTY AND AT NO OCCASION ANY CONCEALMENT OF FACT, DISRESPECT OR MISBEHAVIOUR WAS NOTICED BY THE SURVEY PARTY. THE INCOME TAX AUTHORITIES CAN EXAMIN E ANY PERSON ON OATH AS PER PROVISIONS CONTAINED U/S 131(1)(B) OF THE INCOME TA X ACT, 1961. THUS IN NORMAL COURSE OF SURVEY PROCEEDINGS STATEMENT RECORDED ON OATH AR E UNWARRANTED AND UNJUSTIFIED AND ARE 23 NONEST. NO COGNIZANCE THEREFORE CAN BE ATTACHED ON SUCH STATEMENTS. THE SAME THEREFORE DESERVES TO BE IGNORED. IN THIS REGARD RELIANCE IS PLACED ON FOLLOWING CASE LAW: PAUL MATHEWS AND SONS VS. CIT (KER.) 263 ITR 101 THE PROVISION ALSO ENABLES THE INCOME-TAX AUTHORITY TO IMPOUND AND RETAIN IN HIS CUSTODY FOR SUCH PERIOD AS HE THINKS FIT ANY BOOKS OF ACCOU NT OR OTHER DOCUMENTS INSPECTED BY HIM, PROVIDED THE AUTHORITY RECORDS HIS REASONS FOR DOING SO AND ALSO SHALL NOT RETAIN THE BOOKS OF ACCOUNT FOR A PERIOD NOT EXCEEDING 15 DAYS . SECTION 133A(3)(III) ENABLES THE AUTHORITY TO RECORD THE STATEMENT OF ANY PERSON WHI CH MAY BE USEFUL FOR, OR RELEVANT TO, ANY PROCEEDING UNDER THE ACT. SECTION 133A, HOWEVER , ENABLES THE INCOME-TAX AUTHORITY ONLY TO RECORD ANY STATEMENT OF ANY PERSON WHICH MA Y BE USEFUL, BUT DOES NOT AUTHORIZE TAKING ANY SWORN STATEMENT. ON THE OTHER HAND, WE FIND THAT SUCH A POWER TO EXA MINE A PERSON ON OATH IS SPECIFICALLY CONFERRED ON THE AUT HORISED OFFICER ONLY UNDER SECTION 132(4) OF THE INCOME-TAX ACT IN THE COURSE OF ANY S EARCH OR SEIZURE. THUS, THE INCOME-TAX ACT, WHENEVER IT THOUGHT FIT AND NECESSARY TO CONFE R SUCH POWER TO EXAMINE A PERSON ON OATH, THE SAME HAS BEEN EXPRESSLY PROVIDED WHEREAS SECTION 133A DOES NOT EMPOWER ANY INCOME-TAX OFFICER TO EXAMINE ANY PERSON ON OATH. T HUS, IN CONTRADISTINCTION TO THE POWER UNDER SECTION 133A, SECTION 132(4) OF THE INC OME-TAX ACT ENABLES THE AUTHORISED OFFICER TO EXAMINE A PERSON ON OATH AND ANY STATEME NT MADE BY SUCH PERSON DURING SUCH EXAMINATION CAN ALSO BE USED IN EVIDENCE UNDER THE INCOME-TAX ACT. ON THE OTHER HAND, WHATEVER STATEMENT IS RECORDED UNDER SECTION 133A O F THE INCOME-TAX ACT IT IS NOT GIVEN ANY EVIDENTIARY VALUE OBVIOUSLY FOR THE REASON THAT THE OFFICER IS NOT AUTHORISED TO ADMINISTER OATH AND TO TAKE ANY SWORN STATEMENT WHI CH ALONE HAS EVIDENTIARY VALUE AS CONTEMPLATED UNDER LAW. THEREFORE, THERE IS MUCH FO RCE IN THE ARGUMENT OF LEARNED COUNSEL FOR THE APPELLANT THAT THE STATEMENT ELICIT ED DURING THE SURVEY OPERATION HAS NO EVIDENTIARY VALUE AND THE INCOME-TAX OFFICER WAS WE LL AWARE OF THIS. FURTHER FROM THE PERUSAL OF THE STATEMENTS IT IS EV IDENT THAT THE STATEMENTS ARE NOTHING MORE THAN WRITTEN PAGES SIGNED BY THE ASSESSEE AND ARE THE OBTAINED STATEMENTS SIGNED BY THE ASSESSEE ON THE DOTTED LINES. IT IS FURTHER SUBMITTED THAT THE ASSESSEE NOT BEING A TECHNICAL EXPERTS ON INCOME TAX HAD SUFFERED PERSECUTION MANIA WHICH IS A MOST NORM AL HUMAN DISPOSITION IN SUCH CIRCUMSTANCES, PARTICULARLY WHEN HE WAS NOT PERMITT ED TO CONSULT HIS TAX ADVISORS AND NOR WAS EVEN PERMITTED TO TAKE OR MAKE THE PHONE CALLS THUS THE ATMOSPHERE WAS DELIBERATELY CONVERTED IN TO A CHARGED ATMOSPHERE WHERE THE NORM ALCY OF THE HUMAN MIND IS BOUND TO DISAPPEAR. THOUGH THE ASSESSEE DOES NOT DENY HIS LI ABILITY TO FACE THE SURVEY PROCEEDINGS YET IT IS THE PIOUS DUTY OF THE HUMAN MINISTRANTS O F THE LAW ENFORCING DEPARTMENT TO CREATE AND KEEP CONGENIAL ATMOSPHERE AND ALSO CREAT E CIRCUMSTANCES WHICH SHOULD INSPIRE CONFIDENCE OF THE LAW TAKERS INTO THE SYSTEM AND NO T TO HOSTILE BY SHOWING EYES AND 24 THROWING QUESTION UPON QUESTION AND OBTAINING DESIR ED ANSWERS AND MAKING THE LAW TAKERS TO SIGN THE STATEMENTS ON DOTTED LINES. ATTENTION OF YOUR GOODSELF IS ALSO INVITED TO THE B UDGET SPEECH GIVEN BY THE HONBLE FINANCE MINISTER ON 28.02.03 WHO WHILE PRESENTING T HE BUDGET BEFORE THE PARLIAMENT HAS PROPOSED TO SIMPLIFY THE PROCEDURE OF SEARCHES AND SURVEYS WHICH READS AS UNDER: PARA 151(I) SIMPLIFYING THE PROCEDURE AND METHODS EMPLOYED DU RING SEARCH AND SEIZURE, AND DURING SURVEY BY THE INCOME TAX DEPART MENT. FIRST, HEREAFTER, STOCKS FOUND DURING THE COURSE OF A SEARCH AND SEIZURE OPERATION WILL NOT BE SEIZED UNDER ANY CIRCUMSTANCES. SECOND, NO CONFESSION SHALL BE OBTAI NED DURING SUCH SEARCH AND SEIZURE OPERATIONS. THIRD, NO SURVEY OPERATION WILL BE AUTH ORIZED BY AN OFFICER BELOW THE RANK OF JOINT COMMISSIONER OF INCOME TAX. FINALLY, BOOKS OF ACCOUNT IMPOUNDED DURING SURVEY WILL NOT BE RETAINED BEYOND TEN DAYS, WITHOUT THE P RIOR APPROVAL OF THE CHIEF COMMISSIONER. THE CBDT VIDE INSTRUCTIONS NO. F.NO. 286/2/2002-IT( INV.) DATED 10.03.03 HAS FURTHER CLARIFIED THE ASSERTION MADE BY THE HONBLE FINANCE MINISTER IN BUDGET SPEECH WHICH READS AS UNDER: INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WH ERE ASSESSEE HAVE CLAIMED THAT THEY HAVE BEEN FORCED TO CONFESS UNDIS CLOSED INCOME DURING THE COURSE OF THE SEARCH AND SEIZURE AND SURVEY OPE RATION. SUCH CONFESSION, IF NOT BASED ON CREDIBLE EVIDENCE, ARE TAKEN/RETRAC TED BY THE CONCERNED ASSESSES WHILE FILLING RETURN INCOME. IN THESE CIRC UMSTANCES, CONFESSION DURING THE SEARCH AND SEIZURE AND SURVEY OPERATION DO NOT SERVE ANY USEFUL PURPOSE. IT IS THEREFORE, ADVISED THAT THERE SHOULD BE FOCUS AND CONCENTRATION ON COLLECTION OF EVIDENCE OF INCOME W HICH LEADS TO INFORMATION ON WHAT HAS NOT BEEN DISCLOSED OR IS NO T LIKELY TO BE DISCLOSED BEFORE THE INCOME TAX DEPARTMENT. SIMILARLY, WHILE RECORDING STATEMENT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, NO ATTEMPT SHOULD BE MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INC OME SINCE THE HONBLE SUPREME COURT IN THE FOLLOWING CA SES HAS HELD THAT BENEFICIAL CIRCULARS / INSTRUCTIONS ISSUED BY THE CBDT ARE BINDING UPON THE INCOME TAX AUTHORITIES THUS THE ADDITIONS BASED ON THE ALLEGED SURRENDER STATED TO HAVE BEEN OBTAINED DURING THE COURSE OF SURVEY ARE IN CONTRAVENTION TO THE CIRCULARS AND IN STRUCTIONS OF THE CBDT AND THEREFORE DESERVES TO BE DELETED. LIST OF CASE LAWS RELIED UPON: 25 (A) BINDING NATURE OF CBDT CIRCULARS: 1. 292 ITR 209 TANNA AND MODI VS. CIT (SC) PAGE 218 P ARA 21 WE WOULD ALSO ACCEPT AND PARTICULARLY HAVING REGA RD TO A LARGE NUMBER OF DECISIONS OF THIS COURT OPERATING IN THE FIELD THAT EXECUTIVE CONSTRUCTION IS ORDINARILY ALLOWED TO PREVAIL AND SHALL BE BINDING ON THE AUTHORITIES UNDER THE ACT. A FORTIORI, CLARIFICATORY CIRCULARS ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES MAY ALSO BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF CONSTRUCTION OF THE STATUTE. 2. 259 ITR 51 KERALA STATE INDUSTRIAL DEV. CORPN. LTD . VS. CIT (SC) INTERPRETATION OF TAXING STATUTES FINANCE MINIS TERS SPEECH BEFORE PARLIAMENT WHILE INTRODUCING BILL CAN BE RELIED ON TO THROW LIGHT ON OBJECT AND PURPOSE OF PROVISIONS. 3. 273 ITR 305 CIT VS. DURGESH OIL MILLS (ALL.) CIRCULAR CBDT CIRCULAR BINDING ON INCOME TAX AUTHORITIES. IT IS WELL SETTLED THAT THE CIRCULAR ISSUED BY TH E CENTRAL BOARD OF DIRECT TAXES IS BINDING ON AUTHORITIES. 4. 291 ITR 172 CIT VS. ASHOK KUMAR SONI (RAJ.) ADMISSION IN STATEMENT DURING SEARCH NOT A CONC LUSIVE PROOF OF FACT AND CAN ALWAYS BE EXPLAINED RETRACTED STATEMENT OF ASSESS EE SECOND STATEMENT TO BE READ TOGETHER TO EVALUATE WEIGHT OF ADMISSION FOR A PPRECIATING EVIDENCE. WITHOUT PREJUDICE TO THE LEGAL SANCTITY OF THE STAT EMENTS RECORDED, IT IS SUBMITTED THAT EVEN FROM THE ABOVE SUBMISSION IT IS QUITE EVIDENT THAT WHEN DURING THE ASSESSMENT PROCEEDINGS LD. AO HAS FAILED TO DISCHARGE THE BURD EN LAY UPON HER BY MAKING INDEPENDENT ENQUIRIES AND BY BRINGING ON RECORD ANY SUPPORTING MATERIAL TO ALLEGED THAT A) ASSESSEE HAS RECEIVED UNACCOUNTED FOR ON MONEY O F RS. 78.00 LACS, B) MADE UNRECORDED PAYMENT IN THE CONSTRUCTION TO THE EXTEN T OF RS. 19.00 LACS THAN MERELY ON THE BASIS OF RETRACTED STATEMENTS ADDITION OF SUCH A HU GE AMOUNT COULD NOT BE MADE. SINCE THE BUYERS OF THE PROPERTY ARE EXISTENT HUMAN BEING, TH EIR COMPLETE NAME, ADDRESSES AND PAN WERE AVAILABLE WITH THE LD. AO THUS IT WAS THE DUTY OF THE AO TO SUMMON THEM AND MAKE ENQUIRIES FROM THEM TO FIND OUT THE TRUTH IN T HE MATTER. THE ASSESSEE WAS PUNISHED FOR THE WRONG DOING OR LAPSES OF MADE BY THE AO IN THE ASSESSMENT PROCEEDINGS. LD. CIT(A) AFTER APPRECIATING THESE FACTS HAS DELET ED THE ADDITION BY OBSERVING IN PARA 1 AT PAGE 8 AS UNDER: 26 CONTENTION OF THE AR IS CONSIDERED. THE ADDITIONS HAVE BEEN MADE ON THE STRENGTH OF THE ADMISSION MADE BY THE APPELLANT DUR ING THE COURSE OF SURVEY WHEREIN HE HAS ADMITTED THE RECEIPT OF ON MONEY F ROM THE SALE OF SHOPS WHICH WAS UNDER RECORDED IN THE BOOKS OF ACCOUNTS A ND FURTHER ADMITTED THE INVESTMENT MADE IN THE CONSTRUCTION OF THE COMPLEX OUT OF SUCH UNEXPLAINED RECEIPTS. HOWEVER, EXCEPT THE ADMISSION BY THE APPE LLANT, NOT A SINGLE PAPER WAS FOUND DURING THE COURSE OF SURVEY NOR ANY OTHER EVIDENCE / MATERIAL HAS BEEN BROUGHT ON RECORD BY THE AO BY MAKING FRESH AN D INDEPENDENT ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE EN TIRE PARTICULARS OF THE CUSTOMERS FOR SALE WERE AVAILABLE WITH THE AO. THE APPELLANT HAS RETRACTED FROM THE ADMISSION MADE DURING THE SURVEY BY NOT IN CLUDING THE STATED SURRENDER OF AMOUNT DURING THE SURVEY IN THE RETURN OF INCOME FILED. IT IS THE DUTY OF THE AO TO CARRY OUT THE NECESSARY INVESTIGA TION BY ISSUING SUMMONS TO THE PERSONS TO WHOM THE PROPERTY WAS SOLD. THE HON BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. BHANWAR LAL MURWATIYA 39 TW 214 HAS HELD THAT THE DEPARTMENT SHOULD BRING ON RECORD SUFFICIE NT EVIDENCE BEFORE MAKING ADDITION U/S 69 OF THE INCOME TAX ACT, 1961 AND THE RETREATED STATEMENT CANNOT BE MADE THE SOLE BASIS FOR MAKING ADDITION A S IT CANNOT BE SAID TO BE CONCLUSION. LIKEWISE IN CASE OF UNEXPLAINED EXPENDI TURE OF RS. 19,00,000/- THE AO HAS NOT DISCHARGED THE BURDEN LAY UPON HIM I T BY BRINGING ON RECORD SUFFICIENT MATERIAL TO SUPPORT THE ALLEGATION OF UN EXPLAINED INVESTMENT MADE BY THE APPELLANT IN THE CONSTRUCTION OF COMMERCIAL COMPLEX. IF THE AO HAS ENTERTAINED ANY DOUBTS WITH REGARD TO THE COST OF C ONSTRUCTION DECLARED BY THE APPELLANT SHE COULD HAVE REFERRED THE MATTER FOR VA LUATION BUT WITHOUT DOING SO MAKING ANY ALLEGATION OF UNEXPLAINED INVESTMENT IN THE CONSTRUCTION IS BASELESS. AS THE AO HAS FAILED TO BRING ON RECORD A NY MATERIAL TO PROVE THE ALLEGATIONS MADE THE ADDITIONS MADE UNDER SECTION 6 9 OF THE INCOME TAX ACT, 1961 OF RS. 78,00,000/- ON ACCOUNT OF ON MONEY REC EIPTS IS DIRECTED TO BE DELETED. SIMILARLY THE ADDITION OF RS. 19,00,000/- MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE CANNOT BE SUSTAINED. THUS T HE AMOUNT OF RS. 19,00,000/- IS ALSO DIRECTED TO BE DELETED. THE THI RD GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE APPELLANT. IT IS THUS SUBMITTED THAT THE LD. AO HAS MISERABLY FAILED TO BRING ON RECORD ANY SUPPORTING MATERIAL / EVIDENCE EXCEPT THE SO CALLED ADMISSION BY ASSESSEE WHICH STOOD RETRACTED BY THE ASSESSEE TO SUPPORT THE CONCLUSION THAT ASSESSEE HAS RECEIVED ON MONEY AND ALSO MAKE UNRECORDED INVESTMENT IN THE CONSTRUC TION. IT IS THEREFORE THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION AND THE ORDER OF L D. CIT(A) DESERVES TO BE UPHOLD ON THIS COUNT. LIST OF CASELAWS RELIED UPON: 27 (A) STATEMENT RECORDED DURING SURVEY / SEARCH: 1. 96 ITR 390 (SC) DIT V/S POORANMALL & SONS. CONFESSION CANNOT BE MADE FOUNDATION OF ASSESSMEN T. 2. 22 TW 209 (JP) JAGDISH NARAIN RATAN KUMAR V/S ACIT STATEMENT RECORDED DURING SEARCH ARE GENERALLY IN FLUENCED BY EXTRANEOUS CIRCUMSTANCES & CANNOT BE TERMED AS FREE FROM ALL A MBIGUITY. 3. 100 TTJ 929 RAJESH JAIN VS. DCIT (ITAT, DELHI A B ENCH) SEARCH AND SEIZURE BLOCK ASSESSMENT RETRACTIO N OF STATEMENT ADDITION OF ` 25 LACS MADE SOLELY ON THE BASIS OF CONFESSIONAL S TATEMENT OF ASSESSEE THAT HE EARNED THE SAID AMOUNT IN THE LAST TEN YEARS WAS NO T JUSTIFIED CONFESSIONAL STATEMENT SHOULD BE CORROBORATED WITH SOME MATERIAL TO SHOW THAT ASSESSMENT MADE IS JUST AND FAIR. 4. 99 ITD 183 BANSAL STRIPS (P) LTD. VS. ASSTT. CIT (D ELHI) THERE WAS FORCE IN THE CONTENTION OF THE ASSESSEE THAT THERE WAS NO PROVISION OF LAW UNDER WHICH THE IMPUGNED ADDITION COULD BE MADE TO THE INCOME DECLARED BY THE ASSESSEE. IT IS TRITE LAW THAT IF AN INCOME NOT ADMITTED BY AN ASSESSEE IS TO BE ASSESSED IN THE HANDS OF THE ASSESSEE, THE BURDE N TO ESTABLISH THAT THERE IS SUCH INCOME CHARGEABLE TO TAX IS ON THE ASSESSING O FFICER. WITH A VIEW TO ASSIST THE ASSESSING OFFICER AND TO REDUCE THE RIGOUR OF T HE BURDEN THAT LAY UPON THE ASSESSING OFFICER, PROVISIONS OF SECTIONS 68, 69, 6 9A TO 69D HAVE PROVIDED FOR CERTAIN DEEMING PROVISIONS, WHERE AN ASSUMPTION OF INCOME IS RAISED IN THE ABSENCE OF SATISFACTORY EXPLANATION FROM THE ASSESS EE. AS THESE ARE DEEMING PROVISIONS, THE CONDITIONS PRECEDENT FOR INVOKING S UCH PROVISIONS ARE REQUIRED TO BE STRICTLY CONSTRUED. THE FACTS AND CIRCUMSTANCES GIVING RISE TO THE PRESUMPTION HAVE TO BE ESTABLISHED WITH REASONABLE CERTAINTY. T HE ASSESSING OFFICER CANNOT FIRST MAKE CERTAIN CONJECTURES AND SURMISES AND THE REAFTER APPLY THE DEEMING PROVISIONS BASED ON SUCH CONJECTURES AND SURMISES. IN THE ABSENCE OF ADEQUATE MATERIAL AS TO THE NATURE AND OWNERSHIP OF THE TRAN SACTION, UNDISCLOSED INCOME COULD NOT BE ASSESSED IN THE HANDS OF THE ASSESSEE MERELY BY ARITHMETICALLY TOTALING VARIOUS FIGURES JOTTED DOWN ON THE LOOSE D OCUMENTS. IN OTHER WORDS, FOR THE PURPOSE OF RESORTING TO DEEMING PROVISIONS, DUM B DOCUMENTS OR DOCUMENTS WITH NO CERTAINTY HAVE NO EVIDENTIARY VALUE. AFTER CONSIDERATION OF THE MATTER, THE CONTENTIONS OF THE ASSESSEE HAD TO BE AGREED WI TH. THE IMPUGNED ADDITION HAD BEEN MADE BY THE ASSESSING OFFICER ON GROSSLY I NADEQUATE MATERIAL. THE SAME WAS, THEREFORE, DIRECTED TO BE DELETED. [ PARA 36] 5. 22 TW 529 (JP) SOHAN LAL JAIN V/S ACIT WHETHER CONFESSION CAN BE MADE THE FOUNDATION OF ASSESSMENT ANY CREATES ANY ESTOPPEL HELD NO 28 SURRENDER OF AMOUNT DURING THE COURSE OF SEARCH S HOULD NOT ALWAYS BE MADE THE BASIS OF COMPUTATION OF TOTAL INCOME BUT IN THE INT EREST OF NATURAL JUSTICE THE INCOME WHICH IS EARNED BY THE ASSESSEE AND IS DETER MINABLE SHOULD BE COMPUTED. 6. 26 TW 135 ASHOK KUMAR SONI VS. ACIT (ITAT JD.) WHETHER STATEMENT OF ASSESSEE RECORDED U/S 132(4) CAN BE TREATED AS A BINDING FORCE OF EVIDENCE AS AN ADMISSION ON BEHALF OF ASSE SSEE - HELD NO. IT HAS ALSO BEEN HELD THAT ADMISSION MADE IN THE STATEMENT RECORDED U/S 132(4) CANNOT BE SAID TO HAVE THE SAME VALUE AS AN ADMISSI ON WHEN IT STAND RETRACTED WITH EVIDENCE LATER ON. 7. 25 TAX WORLD 87 CIT V/S RAJENDRA PRASAD GUPTA (RAJ . HIGH COURT) HELD THE ASSESSMENT IS TO BE FRAMED IN THE LIGHT OF MATERIAL THAT HAS COME IN POSSESSION OF THE AO DURING THE COURSE OF SEARCH WH ICH IS THE FOUNDATION OF PROCEEDINGS AND THE AO IS NOT CONFERRED WITH POWER TO MAKE ESTIMATION OF INCOME DEHORS THE MATERIAL IN HIS POSSESSION. (B) PRESUMPTION U/S 132(4) IS REBUTABLE: 1. 287 ITR 209, 221 (SC) P.R. METRANI VS. CIT THE PRESUMPTION UNDER SUB-SECTION (4A) WOULD NOT BE AVAILABLE FOR THE PURPOSE OF FRAMING A REGULAR ASSESSMENT. THERE IS NOTHING E ITHER IN SECTION 132 OR ANY OTHER PROVISION OF THE ACT TO INDICATE THAT THE PRE SUMPTION PROVIDED UNDER SECTION 132 WHICH IS A SELF-CONTAINED CODE FOR SEAR CH AND SEIZURE AND RETENTION OF BOOKS, ETC. CAN BE RAISED FOR THE PURPOSES OF FR AMING OF THE REGULAR ASSESSMENT AS WELL. WHEREVER THE LEGISLATURE INTEND ED THE PRESUMPTION TO CONTINUE, IT HAS PROVIDED SO. REFERENCE MAY MADE TO SECTION 278D OF THE ACT WHICH PROVIDES THAT WHERE DURING THE COURSE OF ANY SEARCH UNDER SECTION 132, ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLES OR THINGS OR ANY BOOKS OF ACCOUNT ETC. ARE TENDERED BY THE PROSECUTION IN EVIDENCE AGAINST THE PERSON CONCERNED, THEN THE PROVISIONS OF SUB-SECTION (4A) OF SECTION 132 SHALL, SO FAR AS MAY BE, APPLY IN RELATION TO SUCH ASSETS OR BOOKS O F ACCOUNT OR OTHER DOCUMENTS. THIS CLEARLY SPELL OUT THE INTENTION OF THE LEGISLA TURE THAT WHEREVER THE LEGISLATURE INDENDED TO CONTINUE THE PRESUMPTION UN DER SUB-SECTION (4A) OF SECTION 132, IT HAS PROVIDED SO. IT HAS NOT BEEN PR OVIDED THAT THE PRESUMPTION AVAILABLE UNDER SECTION 132 (4A) WOULD BE AVAILABLE FOR FRAMING THE REGULAR ASSESSMENT UNDER SECTION 143 AS WELL. 2. 207 ITR 364 (RAJ.) CIT V/S S.M.S. INVESTMENT CORP. (P) LTD. PRESUMPTION U/S 132(4) THAT CONTENTS OF DOCUMENTS SEIZED IN SEARCH IS REBUTTABLE. 3. 41 ITD 97 (JP) (ITAT, JAIPUR BENCH) KISHAN CHAND SO BHRAJMAL VS ACIT 29 PRESUMPTION U/S 132(4) THAT CONTENTS OF DOCUMENTS SEIZED IN SEARCH IS REBUTTABLE. 4. 72 ITD 342 D.A. PATEL VS. DCIT (MUM.) SECTION 158BC OF THE INCOME TAX ACT, 1961 BLOCK ASSESSMENT IN SEARCH CASES COMPUTATION OF UNDISCLOSED INCOME BLOCK PERIOD 01.04.1986 TO 15.07.1996 IN SEARCH CASES COMPUTATION OF UNDISCLOSED INCOME WHETHER SIMPLY BECAUSE A SHEET OF PAPER WAS FOUND DURING SEARCH AT PREMISE S OF ASSESSEE, HE COULD NOT BE SADDLED WITH TAX LIABILITY WHEN THERE WAS NO EVI DENCE CONNECTING APPELLANT TO SEIZED PAPER HELD, YES. 5. HONBLE SUPREME COURT IN THE CASE OF CBI VS. V.C. SHUKLA & OTHERS HAS QUOTED CERTAIN JUDGEMENTS OF THE HIGH COURTS WHICH HAVE BEARING ON THE ISSUE (PAGE 1418 PARA 36 38) AS UNDER: 36. IN YESUVADIYAN VS. SUBBA NAICKER, AIR 1919 MADRAS 132 ONE OF THE LD. JUDGES CONSTITUTING THE BENCH HAD THIS T O SAY: S. 34, EVIDENCE ACT, LAYS DOWN THAT THE ENTRIES IN BOOKS OF ACCOUNT, REGULARLY KEPT IN THE COURSE OF BUSINESS A RE RELEVANT, BUT SUCH A STATEMENT WILL NOT ALONE BE SUFFICIENT TO CH ARGE ANY PERSON WITH LIABILITY. THAT MERELY MEANS THAT THE PLAINTIF F CANNOT OBTAIN A DECREE BY MERELY PROVING THE EXISTENCE OF CERTAIN E NTRIES IN HIS BOOKS OF ACCOUNT EVEN THOUGH THOSE BOOKS ARE SHOWN TO BE KEPT IN THE REGULAR COURSE OF BUSINESS. HE WILL HAVE TO SHO W FURTHER BY SOME INDEPENDENT EVIDENCE THAT THE ENTRIES REPRESEN T REAL AND HONEST TRANSACTIONS AND THAT THE MONEYS WERE PAID I N ACCORDANCE WITH THOSE ENTRIES. THE LEGISLATURE HOWEVER DOES NO T REQUIRE ANY PARTICULAR FORM OR KIND OF EVIDENCE IN ADDITION TO ENTRIES IN BOOKS OF ACCOUNT, AND I TAKE IT THAT ANY RELEVANT FACTS W HICH CAN BE TREATED AS EVIDENCE WITHIN THE MEANING OF THE EVIDENCE ACT WOULD BE SUFFICIENT CORROBORATION OF THE EVIDENCE FURNISHED BY ENTRIES IN BOOKS OF ACCOUNT IF TRUE. WHILE CONCURRING WITH THE ABOVE OBSERVATIONS THE OTHER LD. JUDGE STATED AS UNDER: IF NO OTHER EVIDENCE BESIDES THE ACCOUNTS WERE GIVEN, HOWEVER STRONGLY THOSE ACCOUNTS MAY BE SUPPORTED BY THE PRO BABILITIES, AND HOWEVER STRONG MAY BE THE EVIDENCE AS TO THE HONEST Y OF THOSE WHO KEPT THEM, SUCH CONSIDERATION COULD NOT ALONE WITH REFERENCE TO S. 34, EVIDENCE ACT, BE THE BASIS OF THE DECREE. 37. IN BENI VS. BISAN DAYAL, AIR 1925 NAGPUR 445 IT WAS OBSERVED THAT ENTRIES IN BOOKS OF ACCOUNT ARE NOT BY THEMSEL VES SUFFICIENT TO CHARGE ANY PERSON WITH LIABILITY, THE REASON BEING THAT A MAN CANNOT BE ALLOWED TO MAKE EVIDENCE FOR HIMSELF BY WHAT HE CHOOSES TO WRITE IN HIS OWN BOOKS BEHIND THE BACK OF THE PARTI ES. THERE MUST 30 BE INDEPENDENT EVIDENCE OF THE TRANSACTION TO WHICH THE ENTRIES RELATE AND IN ABSENCE OF SUCH EVIDENCE NO RELIEF CA N BE GIVEN TO THE PARTY WHO RELIES UPON SUCH ENTRIES TO SUPPORT HIS C LAIM AGAINST ANOTHER. IN HIRA LAL VS. RAM RAKHA, AIR 1953 PEPSU 113 THE HIGH COURT, WHILE NEGATIVING A CONTENTION THAT IT HAVING BEEN PROVED THAT THE BOOKS OF ACCOUNT WERE REGULARLY KEPT IN THE ORD INARY COURSE OF BUSINESS AND THAT, THEREFORE, ALL ENTRIES THEREIN S HOULD BE CONSIDERED TO BE RELEVANT AND TO HAVE BEEN PROVED SAID THAT TH E RULE AS LAID DOWN IN SECTION 34 OF THE ACT THAT ENTRIES IN THE B OOKS OF ACCOUNT REGULARLY KEPT IN THE COURSE OF BUSINESS ARE RELEVA NT WHENEVER THEY REFER TO A MATTER IN WHICH THE COURT HAS TO ENQUIRE WAS SUBJECT TO THE SALIENT PROVISO THAT SUCH ENTRIES SHALL NOT ALO NE BE SUFFICIENT EVIDENCE TO CHARGE ANY PERSON WITH LIABILITY. IT IS NOT, THEREFORE, ENOUGH MERELY TO PROVE THAT THE BOOKS HAVE BEEN REG ULARLY KEPT IN THE COURSE OF BUSINESS AND THE ENTRIES THEREIN ARE CORRECT. IT IS FURTHER INCUMBENT UPON THE PERSON RELYING UPON THOS E ENTRIES TO PROVE THAT THEY WERE IN ACCORDANCE WITH FACTS. 38. THE EVIDENTIARY VALUE OF ENTRIES RELEVANT UND ER SECTION 34 WAS ALSO CONSIDERED IN HIRALAL MAHABIR PRASAD, (ILT 1967 1 PUNJ. 435 ) I.D. DUA, J. (AS HE THEN WAS) SPEAKING FOR THE COUR T OBSERVED THAT SUCH ENTRIES THOUGH RELEVANT WERE ONLY CORROBORATIV E EVIDENCE AND IT IS TO BE SHOWN FURTHER BY SOME INDEPENDENT EVIDE NCE THAT THE ENTRIES REPRESENT HONEST AND REAL TRANSACTIONS AND THAT MONIES WERE PAID IN ACCORDANCE WITH THOSE ENTRIES. 6. 35 TW 135 ACIT VS. KALINDEE RAIL NIRMAN ENGG. LTD. (ITAT, JAIPUR BENCH A) FURTHER HELD THAT WHEN A DOCUMENT DOES NOT SPEAK ANYTHING OR NO INTERPRETATION RELATING TO UNDISCLOSED INCOME EMERGES OUT FROM THE SAID DOCUMENTS, THEN SUCH A DOCUMENT HAS TO BE TREATED AS A DUMB DOCUMENT. 7. 39 TW 214 CIT VS. BHANWAR LAL MURWATIYA (RAJASTHAN HIGH COURT, JODHPUR) WHETHER DEPARTMENT HAS TO BRING ON RECORD SUFFICI ENT EVIDENCE BEFORE MAKING AN ADDITION U/S 69 OF THE ACT ? HELD YES. WHETHER A RETRACTED STATEMENT CAN BE MADE THE SOL E BASIS FOR ADDITION ? HELD NO, SINCE IT CANNOT BE SAID TO BE CONCLUSIVE. (C) ADDITION U/S 69B: 1. 261 ITR 664 CIT VS. NARESH KHATTAR, HUF (DELHI) UNEXPLAINED INVESTMENT BURDEN OF PROOF REVENU E MUST PROVE INVESTMENTS WHICH WERE UNEXPLAINED STATEMENT BY COUNSEL FOR A SSESSEE IN A CIVIL SUIT 31 NOT ENOUGH TO DISCHARGE BURDEN AMOUNT NOT ASSESSA BLE AS UNEXPLAINED INVESTMENT INCOME TAX ACT, 1961, S. 69B. 4.6 WE HAVE HEARD BOTH THE PARTIES. SECTION 133A DO ES NOT PROVIDE THE AUTHORIZED OFFICER TO RECORD THE STATEMENT ON OATH. THE TRIBUNAL IN THE CASE OF DCIT VS. M/S. SHREE JEWELLERY MART (ITA NO.962/ JP/2009 DATED 25-02- 2011) HAD AN OCCASION TO CONSIDER AS TO WHETHER THE ADDITION CAN BE MADE ON THE BASIS OF THE STATEMENT RECORDED DURING THE COUR SE OF SURVEY. IT WILL BE USEFUL TO REPRODUCE PARA 2.17 TO 2.19 FROM THAT ORD ER AS UNDER:- 2.17 WE HAVE HEARD BOTH THE PARTIES. THE REVENUE HAS RELIED ON THE STATEMENT OF SHRI PRERAK JOHRI FOR MAKING THE ADDIT ION. NOW WE WILL CONSIDER AS TO WHETHER STATEMENT RECORDED DURING THE COURSE OF SURVEY CAN BE USED AS CONCLUSIVE. EVIDENCE FOR MAKING THE ADDITION. SECTI ON 133A(3)(III) ALLOWS THE INCOME TAX AUTHORITIES TO RECORD THE STATEMENT OF A NY PERSON WHICH MAY BE USEFUL FOR OR RELEVANT TO ANY PROCEEDINGS UNDER THE INCOME TAX ACT. IT DOES NOT AUTHORIZE THAT THE I..T. AUTHORITIES CAN RECORD THE STATEMENT ON OATH. HON'BLE KERALA HIGH COURT IN THE CASE OF PAUL MATHEWS & SONS VS CIT 263 /101 HELD THAT STATEMENT ELICITED DURING THE SURVEY OPERATION HAS NO EVIDENT IARY VALUE AND ON THE BASIS OF SUCH STATEMENT, MATTER CANNOT BE DECIDED UNLESS THE RE IS SOME CONCLUSIVE EVIDENCE. 2.18 WHILE DECIDING THE APPEAL IN THE CASE OF ITO V S SMT PRATIBHA GOYAL (ITA NO. 705/JP/2010 DATED 26-03-2010), THE T RIBUNAL HELD THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION BECAU SE THE ADDITION IS MADE SOLELY ON THE BASIS OF THE STATEMENT MADE DURING THE COURS E OF SURVEY. WHILE RECORDING A FINDING BY THIS TRIBUNAL THAT ADDITION CANNOT BE MA DE SOLELY ON THE BASIS OF STATEMENT, THE TRIBUNAL HAS REFERRED TO THE FOLLOWI NG DECISIONS. CIT VS. S KHADER KHAN & SONS. 300 ITR 157 (MAD) ACIT VS. RAVI AGRICULTURAL INDUSTRIES, 117 ITD 33 8 (AGRA.) () 32 TDT MARKETING (P) LTD VS. ACIT, (ITA NO. 1069/DEL/2 007 ORDER DATED 03-10-2008) M/S. UNIVERSAL IMPEX VS. ITO 2008-TIOL-514-ITAT -MU MBAI THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V S DHINGRA METAL WORKS, 328 ITR 384 HELD THAT SECTION 133A OF THE ACT DOES NOT PERMIT THE OFFICER TO EXAMINE THE PERSON ON OATH. SECTION 133A(3)(III) PROVIDES T HAT THE MATERIAL COLLECTED AND STATEMENT RECORDED IS NOT CONCLUSIVE. THE CONFESSIO N MADE DURING THE COURSE OF SURVEY CANNOT BE MADE THE SOLE BASIS FOR MAKING THE ADDITION WITHOUT CONSIDERING THE EXPLANATION OF THE ASSESSEE AS HELD IN THE CASE OF BABU LAL VS ADDL. CIT, TAXWORLD DEC. 2010. THE TRIBUNAL IN THE CASE OF DCI T VS SATYA PRAKASH ARORA, 7 ITR 95 (TRIBUNAL) AT PAGE 109 HAS REFERRED TO THE O RDER OF THE DELHI TRIBUNAL IN THE CASE OF SURYA FOODS & AGRO LTD. VS. ADDL. ACIT IN ITA NO.494/DEL/2009 VIDE ORDER DATED 30-04-2009 REPORTED IN 2009-TIOL-4 03-ITAT-DEL IN WHICH IT HAS BEEN HELD THAT STATEMENT RECORDED IN SURVEY HAS NO EVIDENTIARY VALUE. 2.19 SECTION 132(4) OF THE ACT AUTHORIZES AN OFFICE R TO RECORD THE STATEMENT ON OATH. WHILE SECTION 132(4A) MAKES A PR ESUMPTION THAT THE BOOKS OF ACCOUNT AND THE DOCUMENTS FOUND DURING THE COURSE O F SEARCH ARE TO BE CONSIDERED AS TRUE. SECTION 292C OF THE ACT WAS INSERTED BY TH E FINANCE ACT, 2007 W.R.E.F. 01-10-1975 SO AS TO MAKE THE PRESUMPTION, OF THE BO OKS OF ACCOUNT FOUND DURING THE COURSE OF SEARCH AVAILABLE DURING ANY PROCEEDIN GS UNDER THE I.T. ACT. SUCH PRESUMPTION HAS BEEN MADE APPLICABLE FOR THE SURVEY U/S 133A OF THE ACT W.E.F. 01-06-2002 AS PER FINANCE ACT, 2008. THOUGH THE PRE SUMPTION IN RESPECT OF BOOKS OF ACCOUNT AS FOUND IN SEARCH HAS BEEN MADE A PPLICABLE FOR THE SURVEY YET THERE IS NO CORRESPONDING PROVISION TO MAKE THE AUT HORIZED OFFICER TO RECORD THE STATEMENT ON OATH DURING THE COURSE OF SURVEY. HENC E, THE STATEMENT RECORDED DURING THE COURSE OF SURVEY IS NOT A CONCLUSIVE EVI DENCE THOUGH THE INFORMATION CONTAINED IN SUCH STATEMENT CAN BE UTILIZED AND THE ASSESSEE, WHO HAS GIVEN THE STATEMENT WILL HAVE RIGHT TO SAY THAT THE CONTENTS IN THE STATEMENT ARE NOT CORRECT AND HENCE CANNOT BE RELIED UPON. WE THEREFORE, HOLD THAT THE REVENUE CANNOT 33 MAKE THE ADDITION SOLELY ON THE BASIS OF THE STATEM ENTS RECORDED DURING THE COURSE OF SURVEY. 4.7 HENCE THE INFORMATION CONTAINED IN THE STATEMEN T RECORDED DURING THE COURSE OF SURVEY CAN BE USED BUT IT CANNOT BE A CON CLUSIVE EVIDENCE AGAINST THE ASSESSEE. THE AO HAS NOT COLLECTED ANY MATERIAL FROM THE PURCHASER OF THE SHOPS TO SHOW THAT THE ASSESSEE HAS RECEIVED ON MONEY. THE SALE OF SHOP IS EVIDENCED BY THE SALE DEED. THERE IS NO DOCUMENT ARY EVIDENCE IN RESPECT OF SALE PRICE OF THE SHOPS. THE HON'BLE PUNJAB & H ARYANA HIGH COURT IN THE CASE OF PARAMJIT SINGH VS. ITO, 323 ITR 588 HAD AN OCCASION TO CONSIDER AS TO WHETHER THE ORAL EVIDENCE IS ADMISSIBLE ONCE THE DOCUMENT CONTAINS ALL THE TERMS AND CONDITIONS. HON'BLE HIGH COURT HELD T HAT ACCORDING TO THE PROVISIONS OF THE INDIAN EVIDENCE ACT, 1872 WHEN TE RMS OF A CONTRACT, GRANT OR OTHER DISPOSITION OF PROPERTY HAVE BEEN REDUCED TO THE FORM OF A DOCUMENT THEN NO EVIDENCE IS PERMISSIBLE TO BE GIVEN IN PROO F OF ANY SUCH TERM OR SUCH GRANT OR DISPOSITION OF THE PROPERTY EXCEPT THE DOC UMENT ITSELF AND NO ORAL AGREEMENT CONTRADICTING / VARYING THE TERMS OF A DO CUMENT COULD BE OFFERED. ONCE THE ASSESSEE CONTENDED BEFORE THE AO DURING TH E COURSE OF ASSESSMENT PROCEEDINGS THAT HE HAS NOT RECEIVED ON MONEY THEN THE AO SHOULD HAVE COLLECTED EVIDENCE TO HOLD THAT ASSESSEE HAS RECEIV ED ON MONEY. 34 4.8 WE HAVE GONE THROUGH THE STATEMENT RECORDED AT THE TIME OF SURVEY. THE AO HAS ONLY CONSIDERED THAT THE ASSESSEE HAS AC CEPTED THE RECEIPT OF ON MONEY. THE ASSESSEE STATED THAT THE ON MONEY RECEIV ED WAS USED IN CONSTRUCTION. THE ASSESSEE HAS NOT DISCLOSED THE N AMES OF THE PARTIES FROM WHOM THE ON MONEY RECEIVED. THE PORTIONS WERE BEIN G STARTED FOR SALE IN FINANCIAL YEAR 2006-07 AND UPTO THE DATE OF SURVEY I.E. 10-09-2008, THE ASSESSEE SOLD 14-15 PORTIONS. THE TOTAL ON MONEY WA S AROUND RS. 78.00 LACS. THE ASSESSEE ALSO PURCHASED A PLOT FOR RS. 74,80,20 0/- AND THE BUILDING STANDING ON THAT LAND WAS DEMOLISHED. 4.9 NOW WE HAVE TO CONSIDER THE STATEMENT IN THE LI GHT OF INSTRUCTION OF CBDT MENTIONED AT PAGE 24 OF THIS ORDER. THE AO HAS NOT FOCUSED ON COLLECTION OF EVIDENCE. THE AO HAS NOT MADE ANY ATT EMPT TO ENQUIRE AS TO HOW THE ENTIRE ON MONEY CAN BE CONSIDERED FOR THE A SSESSMENT YEAR UNDER CONSIDERATION. WE HAVE ALREADY NOTICED THAT STATEME NT RECORDED DURING SURVEY IS TO ELICIT INFORMATION AND SUCH STATEMENT IS NOT A CONCLUSIVE EVIDENCE. THE ONUS WAS ON THE REVENUE TO COLLECT MA TERIAL EVIDENCE. IF THE STATEMENT IS RETRACTED THEN ONUS ON THE PROSECUTION TO PROVE THAT STATEMENT IS VOLUNTARY IT IS THE DUTY OF THE REVENUE TO COLLECT TAX ON THE LEGITIMATE AMOUNT. WITHOUT COGENT MATERIAL, IT IS NOT DESIRABL E BY REVENUE TO COLLECT 35 TAX. THE ON MONEY IS AN INCOME OF YEAR IS ALSO TO B E ESTABLISHED. RECEIPT OF ON MONEY IS NOT SUFFICIENT FOR TREATING THE SAME AS INCOME. 4.10 THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SHRI OM PRAKASH K JAIN 2009-TIOL -52-HC-MUM HELD THAT DOCUM ENTARY EVIDENCE MUST PREVAIL OVER ORAL EVIDENCE. STATEMENT DURING S URVEY IS EVEN NOT AN ORAL EVIDENCE BUT AN INFORMATION. WE HAVE ALSO PERUSED T HE CASE LAWS RELIED BY BOTH THE PARTIES AND WE FEEL THAT ADDITION CANNOT B E MADE SIMPLY ON THE BASIS OF STATEMENT RECORDED DURING SURVEY ONLY. HENCE FOR THE PURPOSE OF COMPUTING THE GAIN FROM THE SALE OF THE PROPERTY, I T IS HELD THAT THE CONSIDERATION SHOWN IN THE SALE AGREEMENT IS TO BE CONSIDERED . 5. IN THE RESULT, THE APPEALS OF THE ASSESSEE AS WE LL AS OF REVENUE ARE PARTLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 24-06 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 24/06/2011 *MISHRA COPY FORWARDED TO :- 1. SHRI RAVI SANCHETI, JAIPUR , 2. THE DCIT,CIRCLE- 2,JAIPUR 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE (ITA NO.939/JP/10) A.R, ITAT, JAIPUR 36 37 38