Shri Ratanlal C. Bafna, Jalgaon V. JCIT, Range-1, Jalgaon

ITA 951/PUN/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89127 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-01-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 28-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S K RUMALE
• Keywords: Unexplained investment; Capital asset; Gift; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Opportunity of cross examination; Peak credit; Validity of assessment; Documents seized; Reassessment proceedings
• Section: 143(3); 153A; 147; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. ITA.NOS. 951/PN/2010 & 204/PN/2012 (ASSESSMENT YEARS : 2002-03 & 2008-09) SHRI RATANLAL C. BAFNA, PROPRIETOR OF R.C. BAFNA SILVA PALACE, 96 SUBHASH CHOWK, JALGAON 425001 PAN NO.AAMPB3939K .. APPELLANT VS. JCIT, RANGE-1, JALGAON .. RESPONDENT ITA.NO. 1050/PN/2010 (ASSESSMENT YEAR : 2002-03) ACIT, CIRCLE-1, JALGAON .. APPELLANT VS. SHRI RATANLAL C. BAFNA, PROPRIETOR OF R.C. BAFNA SILVA PALACE, 96 SUBHASH CHOWK, JALGAON 425001 PAN NO.AAMPB3939K .. RESPONDENT ITA.NO. 718/PN/2011 (ASSESSMENT YEAR : 2002-03) SHRI SHANKARLAL AMOLAKCHAND CHORDIA, MAHARASHTRA RADIO, FULE MARKET, TOWER CHOWK, DIST : JALGAON 425 001 PAN NO.AAMPC0253H .. APPELLANT VS. ITO, WARD-2(3), JALGAON .. RESPONDENT ASSESSEE BY : SHRI SUNIL GANOO, SHRI RATANLAL C. BAFNA & SHRI S.K. RUMALE REVENUE BY : SHRI RAJESH DAMOR 2 ITA.NO. 101/PN/2012 (ASSESSMENT YEAR : 2002-03) SHRI DALICHAND H. OSWAL (JAIN), PLOT NO.3, GAURI SHANKAR, TELEPHONE NAGAR, JALGAON 425002 PAN NO.AAPO4133C .. APPELLANT VS. ITO, WARD-1(1), JALGAON .. RESPONDENT ASSESSEE BY : SMT. DEEPA KHARE REVENUE BY : SHRI RAJESH DAMOR DATE OF HEARING : 05-01-2015 DATE OF PRONOUNCEMENT : 31-03-2015 ORDER PER R.K. PANDA, AM : ITA NOS. 951/PN/2010 AND 1050/PN/2010 ARE CROSS APP EALS . THE FIRST ONE IS FILED BY THE ASSESSEE AND THE SECOND O NE FILED BY THE REVENUE AND ARE DIRECTED AGAINST THE ORDER DATED 30-04-2010 OF THE CIT(A)-II, NASHIK RELATING TO ASSESSMENT YEAR 2002-03. ITA NO .204/PN/2012 FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 05-12-2011 OF THE CIT(A)-II, NASHIK RELATING TO ASSESSMENT YEAR 2008- 09. ITA NO.718/PN/2011 AND ITA NO.101/PN/2012 FILED BY THE RESPECTIVE ASSESSEES ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 25-03-2011 AND 18-11-2011 OF THE CIT(A) NASHIK RELATING TO ASSESSM ENT YEAR 2002-03. FOR THE SAKE OF CONVENIENCE, THESE APPEALS WERE HEA RD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 3 ITA NO. 951/PN/2010 (BY ASSESSEE-SHRI RATANLAL C. B AFNA) & ITA NO.1050/PN/2010 (BY REVENUE) (A.Y. 2002-03) : 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF TRADING IN GOLD AND S ILVER ORNAMENTS AND MANUFACTURING OF SILVER ORNAMENTS. HE FILED HIS OR IGINAL RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 28-10-2002 DECL ARING TOTAL INCOME OF RS.37,08,583/- AND AGRICULTURAL INCOME OF RS.2,5 3,278/-. 3. THIS CASE WAS REOPENED BY THE ASSESSING OFFICER U/S.147 BY ISSUE OF NOTICE U/S.148 OF THE I.T. ACT ON 17-03-2009. T HE ASSESSEE IN RESPONSE TO THE ABOVE STATUTORY NOTICE FILED A WRITTEN SUBMI SSION STATING TO TREAT THE RETURN OF INCOME FILED BY HIM ON 28-10-2002 AS RETU RN IN RESPONSE TO NOTICE U/S.148. THE REQUEST OF THE ASSESSEE TO SUP PLY THE REASONS FOR ISSUE OF NOTICE U/S.148 WAS ACCEPTED BY THE ASSESSING OFF ICER BY PROVIDING REASONS FOR REOPENING OF THE CASE. 4. A SEARCH AND SEIZURE ACTION U/S.132 OF THE I.T. ACT WAS CONDUCTED AT THE RESIDENTIAL AND OFFICE PREMISES OF CHHORIYA GROUP OF JALGAON ON 22-08-2008. DURING THE COURSE OF SUCH SEARCH CERTA IN DOCUMENTS WERE SEIZED AT THE RESIDENTIAL-CUM-FACTORY PREMISES OF S HRI KANHAIYALAL D. CHHORIYA, G-128, MIDC, JALGAON. IT WAS NOTICED ON PERUSAL OF THE SEIZED DOCUMENTS AS PER ANNEXURE-B ITEM NO.1 TO 40 WHICH A RE ROUGH CASH BOOKS OF CHHORIYA GROUP THAT SHRI RATANLAL C. BAFNA , JALGAON HAD GIVEN ADVANCES TO CHHORIYA GROUP OF JALGAON DURING THE PE RIOD 01-04-2001 TO 31-03-2002. HOWEVER, ON PERUSAL OF THE BALANCE SHE ET FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME FOR THE A. Y. 2002-02 THE ASSESSING OFFICER NOTICED THAT THESE ADVANCES WERE NOT REFLECTED IN THE 4 SAID BALANCE SHEET. HE EXAMINED SUCH ENTRIES DATE- WISE AND OBSERVED THAT RIGHT FROM THE FIRST ENTRY AS ON 04-04-2001 SH OWING A CREDIT AMOUNT OF RS.26,880/- ALL THESE ENTRIES ARE TILL 28-02-200 2. THE PEAK OF ALL THESE ENTRIES COMES TO RS.2,91,36,825/- ON GOING THROUGH THESE ENTRIES IN THE ROUGH CASH BOOK, THE ASSESSING OFFICER NOTED THAT I T HAS BEEN MENTIONED THERE IN CASE OF CERTAIN ENTRIES BY WAY OF CLEAR N ARRATION HAAT- USANE WHICH MEANS TEMPORARY LOANS TAKEN AND TEMPOR ARY LOANS REPAID. THIS IS FURTHER SUPPORTED BY THE FACT THAT THE INTEREST CALCULATION FOR THE SHORT PERIOD HAS ALSO BEEN DONE IN THE DIAR Y ITSELF AND THE SAME IS ADDED TO THAT FIGURE OR MENTIONED JUST BELOW THAT F IGURE OF LOAN. BESIDES THESE TEMPORARY LOANS, AN AMOUNT OF RS.2,80,00,000/ - HAS BEEN GIVEN IN THE MONTH OF APRIL 2001. THE ASSESSING OFFICER FUR THER NOTED THAT THOUGH THIS ENTRY IS NOT MENTIONED AGAINST ANY DATE IN THE ROUGH CASH BOOK, IT IS MENTIONED IN THE MONTHLY SUMMARY DRAWN AT THE END OF THE CASH BOOK AS ON 01-05-2001. FURTHER, AS PER THE SE IZED CASH BOOKS THERE ARE ALSO THE ENTRIES OF PAYMENT OF INTEREST/PROFIT EVERY MONTH FROM APRIL 2001 TO MARCH 2002 AND IT WAS NOTICED THAT THE TOTA L AMOUNT OF RS.82,81,598/- WAS GIVEN BY CHHORIYA GROUP TO SHRI RATANLAL C. BAFNA ON ACCOUNT OF INTEREST. 5. THE ASSESSING OFFICER NOTED THAT SUMMONS U/S.131 OF THE I.T. ACT WAS ISSUED TO SHRI DEVICHAND MOTILAL CHHORIYA WHOSE STATEMENT WAS RECORDED ON OATH ON 01-12-2009. SHRI DEVICHAND MOT ILAL CHHORIYA IS FATHER OF SHRI KANHAIYALAL D. CHHORIYA AND ROUGH CA SH BOOK SEIZED FROM THEIR PREMISES HAS BEEN WRITTEN IN HIS HAND WRITING . QUESTIONS WERE RAISED WITH REGARD TO THE ENTRIES FOUND IN THE ROUG H CASH BOOK SEIZED 5 DURING THE COURSE OF SEARCH ACTION U/S.132. IT WAS REPLIED BY SHRI DEVICHAND MOTILAL CHHORIYA THAT ALL THE NAMES MENTI ONED IN THESE BOOKS WERE IMAGINARY NAMES. HE FURTHER STATED THAT THE M ONEY RECEIVED IN THE VARIOUS NAMES IS INCOME OF THEIR GROUP CONCERN ON W HICH THEY WOULD BE PAYING TAXES FROM F.Y. 2002-03 TO 2007-08 . 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE REQUESTED FOR INSPECTION OF THE SEIZED DOCUMENTS WH ICH WAS ALLOWED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER SPECI FICALLY ASKED THE ASSESSEE AS TO WHY ON THE BASIS OF SEIZED DOCUMENTS ADDITION OF RS.2.91 CRORES SHOULD NOT BE MADE TO HIS INCOME ON ACCOUNT OF UNEXPLAINED LOAN GIVEN DURING F.Y. 2001-02. THE ASSESSEE WAS ALSO GI VEN THE WORKING OF PEAK OF LOAN ENTRIES, ON THE BASIS OF WHICH PEAK AM OUNT WAS WORKED OUT AT RS.2.91 CRORES. THE ASSESSEE WAS ALSO ASKED TO EXPLAIN AS TO WHY THE ADDITION OF RS.82,81,598/- SHOULD NOT BE MADE TO HI S INCOME ON ACCOUNT OF INTEREST RECEIVED DURING THE YEAR UNDER CONSIDER ATION AS PER THE SEIZED DOCUMENTS. 7. THE ASSESSEE IN ITS REPLY DREW THE ATTENTION OF THE ASSESSING OFFICER TO THE STATEMENT GIVEN BY SHRI DEVICHAND MO TILAL CHHORIYA WHEREIN IT HAS BEEN STATED BY HIM THAT ALL THE NAME S AS APPEARING IN THE ROUGH CASH BOOK ARE IMAGINARY AND THE NAME OF SHRI R.C. BAFNA IS ALSO IMAGINARY. THE ASSESSEE SUBMITTED THAT IN ANSWER T O QUESTION NO.6 SHRI DEVICHAND MOTILAL CHHORIYA HAS STATED THAT SINCE F. Y. 2001-02 IS NOT COVERED FOR ASSESSMENT IN HIS CASE, THEY HAD PAID T HE TAXES FOR THE F.Y. 2002-03 TO 2007-08 WORKING OUT THE INCOME OF THEIR CONCERNS. IT WAS FURTHER SUBMITTED THAT SHRI DEVICHAND MOTILAL CHHOR IYA HAS NOWHERE 6 ADMITTED THAT SHRI R.C. BAFNA HAS EVER GIVEN ANY LO AN TO HIM. IT WAS ACCORDINGLY SUBMITTED THAT NO ADDITION IS CALLED FO R. THE ASSESSEE FURTHER SUBMITTED THAT SHRI DEVICHAND MOTILAL CHHORIYA IN H IS STATEMENT RECORDED HAS ADMITTED HIMSELF THAT THE SAID TRANSAC TIONS ARE BELONGING TO HIS FIRMS. THEREFORE, THE AMOUNTS CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE. THE ASSESSEE ALSO OBJECTED TO THE WORKIN G OF THE PEAK ON THE BASIS OF WHICH RS.2,91,36,825/- WAS TREATED BY THE ASSESSING OFFICER AS UNEXPLAINED LOAN. IT WAS ARGUED THAT THE CREDIT EN TRY OF RS.2,80,00,000/- WAS NOT FOUND IN THE WHOLE MONTH OF APRIL 2001 BUT IT WAS SEEN ONLY IN THE SUMMARY SHEET OF MAY 2001 IN THE NAME OF SHRIM ANSHETH. THE ASSESSEE SUBMITTED THAT NO CLEAR CUT NAME WAS WRITT EN THERE. THE ASSESSEE FURTHER REITERATED THAT THE FIGURE OF RS.2 ,80,00,000/- DOES NOT APPEAR IN THE DAY-WISE DAILY CASH BOOK IN THE WHOLE YEAR. THEREFORE, IT MAY BE OUTSTANDING BEFORE MARCH 2001 ONLY. IT WAS ACCORDINGLY ARGUED THAT THIS CANNOT BE A LOAN IN THE MONTH OF APRIL 20 01. THE ASSESSEE FURTHER ARGUED THAT THE FIGURE OF RS.2,80,00,000/- WAS ALSO NOT WRITTEN IN FULL VALUE. IT WAS ARGUED THAT THE REASONINGS OF 2 80 MEANS RS.2,80,00,000/- IS NOT CORRECT. IT WAS ACCORDINGL Y ARGUED TO CORRECT THE PEAK AMOUNT SO AS TO AVOID FURTHER COMPLICATION TO THE MATTER. 8. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. AS REGARDS THE OBJECTION THAT SHRI DEVICHAND MOTILAL CHHORIYA IN HIS STATEMENT HAS ADM ITTED THAT THE NAMES AS APPEARING IN THE ROUGH CASH BOOK ARE IMAGINARYON E INCLUDING THAT OF THE ASSESSEE, THE ASSESSING OFFICER NOTED THAT SHRI DEVICHAND MOTILAL CHHORIYA IS A LAND DEVELOPER AND RUNNING A DAL MILL . THE ASSESSEE SHRI 7 R.C. BAFNA HAS PURCHASED VARIOUS PLOTS ADMEASURING 16077.91 SQ.MTRS. FROM CHHORIYA GROUP AND IS HAVING BUSINESS RELATION SHIP WITH CHHORIYA GROUP. FURTHER, SMT. TARADEVI R. BAFNA, WIFE OF THE ASSESSEE, IS ASSOCIATED WITH CHHORIYA GROUP AS A MEMBER OF AN AO P BY NAME D.D. JAIN-AOP, CHANDWAD WHICH HAS DEVELOPED A LAYOUT I N LAND AND SOLD PLOTS. FURTHER SHRI R.C. BAFNA IS ALSO ASSOCIATED WITH THIS GROUP AS A MEMBER OF AN AOP UNDER THE NAME OF S.D. JAIN-AOP, BHAMBHORI. FURTHER, THE ASSESSEE IS TRADING IN GOLD AND SILVE R ARTICLES AND THERE ARE ENTRIES IN THE SEIZED CASH BOOK SHOWING GOLD AND SI LVER ARTICLES PURCHASED BY MR. CHHORIYA FROM THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER HELD THAT WHEN THESE ENTRIES OF PURCHASE OF GOLD AN D SILVER FROM SHRI R.C. BAFNA ARE CORRECT, THEREFORE, THE LOAN AND INTEREST ENTRIES IN WHICH ALSO THE NAME OF SHRI R.C. BAFNA IS APPEARING CANNOT BE TREA TED AS THE ENTRIES IN IMAGINARY NAME. 9. SO FAR AS THE ARGUMENT OF THE ASSESSEE THAT SHRI DEVICHAND MOTILAL CHHORIYA IN HIS STATEMENT RECORDED HAS HIMSELF ADMI TTED THAT THE SAID TRANSACTIONS ARE BELONGING TO HIS ALL FIRMS AND THE REFORE THE AMOUNT CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE IS CON CERNED, THE ASSESSING OFFICER HELD THAT THE ASSESSMENT IS FINALISED NOT O NLY ON THE BASIS OF STATEMENT OF SHRI DEVICHAND MOTILAL CHHORIYA BUT AL SO ON THE BASIS OF THE VARIOUS DOCUMENTS SEIZED DURING THE COURSE OF SEARC H AND SEIZURE ACTION U/S.132. HE OBSERVED THAT ALTHOUGH DURING THE COUR SE OF SEARCH ACTION U/S.132 OF THE I.T. ACT, THE STATEMENTS OF SHRI KAN HAIYALAL D. CHHORIYA AND SHRI DEVICHAND MOTILAL CHHORIYA WERE RECORDED A ND THEY HAD ADMITTED THE FACT OF RECORDING OF TRANSACTIONS IN R ESPECT OF THE BUSINESS 8 AFFAIRS OF THE FAMILY MEMBERS, HOWEVER, INFERENCE C AN BE DRAWN EASILY FROM THE SEIZED DIARY THAT THESE ARE TRANSACTIONS O F CHHORIYA GROUP WITH THE ASSESSEE AND THEREFORE THE STATEMENT OF SHRI DE VICHAND MOTILAL CHHORIYA RECORDED ON 01-12-2009 IS FALSE AND MISLEA DING. 10. THE ASSESSING OFFICER ALSO REJECTED THE SUBMISS ION OF THE ASSESSEE THAT THE WORKING OF PEAK ON THE BASIS OF WHICH RS.2 ,91,36,825/- HAS BEEN TREATED AS UNEXPLAINED LOAN IS INCORRECT, SINCE THE CREDIT ENTRY OF RS.2,80,00,000/- WAS NOT FOUND IN THE WHOLE MONTH O F APRIL 2001 AND NO CLEAR CUT NAME WAS WRITTEN THERE AND THAT THE AMOUN T MIGHT BE OUTSTANDING BEFORE MARCH 2001. THE ASSESSING OFFIC ER HELD THAT THOUGH THE AMOUNT OF RS. 2,80,00,000/- IS NOT MENTIONED IN THE DAY-WISE CASH BOOK, HOWEVER, IT APPEARS IN THE MONTHLY SUMMARY SH EET AS ON 01-05- 2001 IN THE NAME OF SHRIMANSHETH. HE OBSERVED THAT WHENEVER THE NAME OF SHRIMANSHETH APPEARS IN THE SUMMARY SHEETS, ON T HE SAME DAY IN THE CASH BOOK, THE ENTRIES ARE CLEARLY WRITTEN IN THE N AME OF SHRI RATANLAL CHUNILAL BAFNA OR SHRI R.C. BAFNA. THE VARIOUS ENT RIES FOUND IN THE SEIZED DIARY CLEARLY ESTABLISHES THE FACT THAT WHER EVER THE NAME OF SHRIMANSHETH APPEARS IT IS TO BE READ AS SHRI R.C. BAFNA IN THE SUMMARY SHEET. SHRI SHRIMANSHETH IS FOR THE SAKE OF CONVE NIENCE OF CHHORIYA TO DENOTE AS A SHORT TITLE NAME INSTEAD OF LONG TITLE NAME AS SHRI R.C. BAFNA. 11. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT OF RS.2,80,00,000/- MAY BE OUTSTANDING ON MARCH 2001 A ND DOES NOT PERTAIN TO F.Y. 2001-02, THE AO NOTED THAT THE INTEREST OF RS. 2 LAKHS AND PROFIT COMPONENT OF RS.5 LAKHS IS SHOWN IN THE DAY BOOK FO R THE PERIOD ENDING APRIL 2001 ON THE SEIZED PAGE NO.3 OF ANNEXURE-B/5. THERE IS NO 9 IDENTICAL ENTRY SHOWING THAT THE INTEREST PAYMENT F OR THE PERIOD ENDING MARCH 2001. THIS, ACCORDING TO THE ASSESSING OFFIC ER, INDICATES THAT THE LOAN QUANTUM OF RS.2,80,00,000/- APPEARING IN THE M ONTH OF MAY 2001 ON PAGE NO.139 OF ANNEXURE-B/5 WAS TAKEN FOR THE FI RST TIME SOMEWHERE AFTER MARCH 2001 AND BEFORE MAY 2001. AS REGARDS T HE ARGUMENT OF THE ASSESSEE THAT THE FIGURE OF RS.2,80,00,000/- WAS AL SO NOT WRITTEN IN FULL VALUE AND IT WAS WRITTEN AS 280 WHICH WAS WRONGLY I NFERRED AS RS.2,80,00,000/-, THE ASSESSING OFFICER HELD THAT A T THE TIME OF SEARCH ACTION IT WAS ADMITTED BY SHRI CHHORIYA THAT THE AM OUNTS ARE TO BE READ IN LAKHS THAT IS 280 MEANS RS. 280 LAKHS, I.E. RS.2,80 ,00,000/-. THE VARIOUS OTHER ENTRIES FOUND IN THE SEIZED CHART ALSO CORROB ORATE THE SAME THING. HE ACCORDINGLY REJECTED THE CONTENTION OF THE ASSES SEE AND HELD THAT THE ASSESSEE HAD GIVEN ADVANCES TO CHHORIYA GROUP WHICH THE ASSESSEE FAILED TO DISCLOSE IN HIS RETURN OF INCOME. SINCE THE ASS ESSEE HAD GIVEN LOANS, INTEREST ON THE SAME WILL ALSO HAS TO BE TAXED IN A SSESSEES HANDS. FROM THE VARIOUS ENTRIES FOUND IN THE SEIZED DOCUMENTS, THE ASSESSING OFFICER NOTED THAT THERE IS A SPECIFIC TREND OF GIVING CERT AIN AMOUNT EVERY MONTH RIGHT FROM APRIL 2001 TO MARCH 2002 BY CHHORIYA GRO UP TO SHRI R.C. BAFNA. THIS AMOUNT IS RS.7 TO RS.7.5 LAKHS PER MON TH. HE NOTED THAT THOUGH FOR CERTAIN AMOUNTS THE NARRATION IS CLEARL Y MENTIONED AS INTEREST AGAINST THE ENTIRE AMOUNT OF RS.7 TO RS.7.5 LAKHS, FOR CERTAIN MONTHS NARRATION IS GIVEN AS INTEREST AND PROFIT OR OTHE R NARRATION. THIS NARRATION, ACCORDING TO THE ASSESSING OFFICER, DOES NOT CHANGE THE TAXABILITY OF THE AMOUNT AS INTEREST OR PROFIT BOTH NEED TO BE TAXED. FURTHER, THE NAME OF THE ASSESSEE SHRI R.C. BAFNA I S ALWAYS THERE WITH EVERY ENTRY EVEN IF NARRATION IS INTEREST, PROFIT, CASH, AJITH BHAU OR 10 GADHIAYAJI. THIS ACCORDING TO THE ASSESSING OFFICE R SHOWS THAT THE INTEREST IS BEING PAID TO THE ASSESSEE ONLY. AS TH ESE ARE NOT ENTRIES OF REPAYMENT OF LOAN, THEREFORE, THESE ENTRIES HAVE TO BE OF INTEREST ONLY WHICH IS CLEAR FROM THE FACT THAT FOR CERTAIN MONTH S THE ENTIRE AMOUNT OF RS.7 TO RS.7.5 LAKHS IS CLEARLY WRITTEN AS INTEREST . IN VIEW OF THE ABOVE, THE ASSESSING OFFICER HELD THAT AN AMOUNT OF RS.82, 81,598/- WAS PAID TO THE ASSESSEE ON ACCOUNT OF INTEREST DURING THE YEAR UNDER CONSIDERATION. REJECTING THE VARIOUS SUBMISSIONS MADE BY THE ASSES SEE FROM TIME TO TIME AND DISTINGUISHING THE VARIOUS DECISIONS RELIE D BY THE ASSESSEE BEFORE HIM THE ASSESSING OFFICER MADE ADDITION OF R S.2,91,36,825/- BEING THE PEAK AMOUNT TO THE TOTAL INCOME OF THE AS SESSEE AS UNEXPLAINED ADVANCES. SIMILARLY, HE MADE ADDITION OF RS.82,81, 598/- BEING INTEREST AS UNACCOUNTED INCOME OF THE ASSESSEE. 12. THE ASSESSING OFFICER FURTHER NOTED THAT THE AS SESSEE IS A MANUFACTURER OF JEWELLERY APART FROM A TRADER. THE ASSESSEE HAD MADE PAYMENT OF LABOUR CHARGES TO THE ARTISANS (KARIGARS ). ON BEING ASKED BY THE ASSESSING OFFICER TO EXPLAIN AS TO WHY THE PROP ORTIONATE LABOUR CHARGES ARE NOT INCLUDED WHILE VALUING THE CLOSING STOCK OF JEWELLERY, THE ASSESSEE STATED THAT HE HAS BEEN FOLLOWING A CONSIS TENT PRACTICE OVER THE YEARS AND NO OBJECTION HAS BEEN RAISED. IT WAS SUB MITTED THAT LABOUR CHARGES ARE SHOWN AS SEPARATELY RECEIVED IN THE SAL E BILLS. IN CASE LABOUR CHARGES ARE INCLUDED IN THE CLOSING STOCK, THEN THE Y SHOULD ALSO BE TAKEN INTO ACCOUNT FOR OPENING STOCK. 13. HOWEVER, THE ASSESSING OFFICER WAS NOT IMPRESSE D WITH THE ARGUMENTS ADVANCED BY THE ASSESSEE. HE NOTED THAT ALTHOUGH THE ASSESSEE 11 HAS BEEN FOLLOWING ONE SYSTEM OF ACCOUNTING CONSIST ENTLY OVER THE YEARS, HOWEVER, FOR ARRIVING AT THE CORRECT VALUE OF THE C LOSING STOCK OF JEWELLERY, PROPORTIONATE LABOUR CHARGE HAS TO BE IN CLUDED. ACCORDING TO THE AO FOR ARRIVING AT THE CORRECT VALUE, THE LABOU R CHARGES ON THE OPENING STOCK HAS ALSO TO BE INCLUDED. THEREFORE, THE ASSESSING OFFICER MADE ADDITION OF PROPORTIONATE LABOUR CHARGES TO TH E NET INCREASE IN THE SILVER OF 385.13 KGS. AFTER GIVING CREDIT TO THE S TOCK OF BULLION AND OLD ORNAMENTS SOLD BY CUSTOMERS. SINCE THE LABOUR CHAR GES ARE 82 TO 225/10 GMS THE ASSESSING OFFICER TOOK THE AVERAGE RATE OF 2000/KGS AND MADE ADDITION OF RS.77,026/- TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF VALUATION OF CLOSING STOCK. THE ASSESSING OFFICER ALSO MADE ADDITION OF RS.10,000/- ON ESTIMATE BASIS OUT OF THE OFFICE EXP ENSES AND POSTAGES IN ABSENCE OF SUPPORTING VOUCHERS. 14. BEFORE CIT(A) THE ASSESSEE CHALLENGED THE VALID ITY OF THE REOPENING OF THE ASSESSMENT ON THE GROUND THAT THE CASE OF ASSESSEE IS ENTIRELY BASED UPON THE IMAGINARY ALLEGED PAPERS FO UND IN THE SEARCH AND SEIZURE ACTION AT THE PREMISES OF CHHORIYA FOR WHIC H SEPARATE PROCEDURE IS LAID DOWN FOR SUCH ASSESSMENT UNDER THE PROVISIO NS OF SECTION 153C WHICH OVERRIDES THE PROVISIONS OF SECTION 147 R.W.S . 148. IT WAS SUBMITTED THAT WHEN THERE IS NO CONSISTENCY IN THE APPROACH OF THE DEPARTMENT IN AS MUCH AS THE AMOUNT IS SOUGHT TO BE TAXED IN THE HANDS OF THE ASSESSEE FOR A.Y. 2002-03 SIMPLY BECAUSE IT IS NOT COVERED IN THE PERIOD LAID DOWN FOR ACTION U/S.153C FOR ASSESSMENT , THEREFORE, THE ASSESSMENT FRAMED U/S.143(3) R.W.S. 147 IS BAD IN L AW AND VOID AB-INITIO. IT WAS ARGUED THAT THE STATEMENT OF SHRI CHHORIYA G IVEN ON OATH DURING 12 THE COURSE OF ASSESSMENT PROCEEDINGS SHOULD HAVE BE EN CONSIDERED AND SHOULD NOT HAVE BEEN TREATED AS FALSE AND MISLEADIN G. THE ASSESSEE ALSO CHALLENGED THE ADDITION OF RS.2,91,36,825/- ON ACCO UNT OF UNACCOUNTED PEAK ADVANCES ON THE GROUND THAT THE NAME OF THE AS SESSEE IN THE BOOKS OF CHHORIYA WAS STATED AS IMAGINARY NAME AND WHEN C HHORIYA HIMSELF HAS ADMITTED THAT SUCH INCOME BELONGS TO HIM, THERE FORE, THE ADDITION IN THE HANDS OF THE ASSESSEE WAS NOT JUSTIFIED. WITHO UT PREJUDICE TO THE ABOVE, THE ASSESSEE FURTHER ARGUED THAT THE CREDIT FIGURE OF RS.2,80,00,000/- IS NOT REFLECTED IN THE SAID ALLEG ED ROUGH CASH BOOK, THEREFORE, THE ADDITION OF THE SAME IS NOT JUSTIFIE D SINCE THE SAME IS LEGALLY UNSUSTAINABLE, ARBITRARY AND DEVOID OF ANY MERIT. THE ASSESSEE ALSO CHALLENGED THE ADDITION OF INTEREST OF RS.82,8 1,598/-, ADDITION OF LABOUR CHARGES OF RS.77,026/- AND ESTIMATED DISALLO WANCE FOUND ON ACCOUNT OF EXPENSES OF RS.10,000/-. 15. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFIC ER. AFTER CONSIDERING THE SAME AND REPLY OF THE ASSESSEE TO SUCH REMAND R EPORT, THE LD.CIT(A) UPHELD THE REASSESSMENT PROCEEDINGS INITIATED BY TH E ASSESSING OFFICER U/S.147 OF THE I.T. ACT. WHILE DOING SO, HE HELD T HAT THE REASONS RECORDED BY THE ASSESSING OFFICER SHOWS THAT THE ASSESSING O FFICER EXAMINED THE DOCUMENTS SEIZED U/S.132 OF THE I.T. ACT IN THE CAS E OF SHRI KANHAIYALAL D. CHHORIYA OF JALGAON. THE SEIZED DOCUMENTS SHOWE D TRANSACTIONS OF ADVANCES RECEIVED FROM SHRI R.C. BAFNA DURING THE P ERIOD STARTING FROM 01-04-2001 TO 31-03-2002 WHICH HAS BEEN QUANTIFIED BY THE ASSESSING OFFICER AT RS.9,83,50,000/- FOR A.Y. 2001-02. SINC E THE BALANCE SHEET OF THE ASSESSEE FILED WITH THE DEPARTMENT DID NOT REFL ECT SUCH FIGURE, 13 THEREFORE, THE ASSESSING OFFICER HAD REASON TO BELI EVE THAT INCOME OF THE ASSESSEE ESCAPED ASSESSMENT WITHIN THE MEANING OF E XPLANATION 2(B) OF SECTION 147 OF THE I.T. ACT. THE ADDL.CIT, AFTER RE CEIVING THE PROPOSAL FROM THE ASSESSING OFFICER HAD APPROVED THE PROPOSA L FOR ISSUE OF NOTICE U/S.148 OF THE I.T. ACT VIDE HIS LETTER OF 12-03-20 09. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY INVOKED THE PROVISION S OF SECTION 147 OF THE I.T. ACT, 1961. 16. AS REGARDS THE ARGUMENT OF THE ASSESSEE THAT PR OCEDURE UNDER THE PROVISIONS OF SECTION 153C OF THE I.T. ACT SHOULD H AVE BEEN FOLLOWED BY THE ASSESSING OFFICER, THE LD.CIT(A) HELD THAT THE INCRIMINATING MATERIAL FOUND DURING THE SEARCH AND SEIZURE ACTION IN THE C ASE OF CHHORIYA GROUP WAS FORWARDED TO THE ASSESSING OFFICER HAVING JURIS DICTION OVER THE CASE OF THE ASSESSEE AND THE AO HAD DECIDED TO INVOKE TH E PROVISIONS OF SECTION 147 OF THE I.T. ACT AS THERE WAS ESCAPEMENT OF INCOME CHARGEABLE TO TAX FOR THE A.Y. 2002-03. HE HELD THAT THERE IS NO BAR UNDER THE I.T. ACT TO TAKE ACTION U/S.147 OF THE I.T. ACT IN SUCH CIRCUMSTANCES. HE FURTHER NOTED THAT THE SOCALLED OBJECTION FILED BY THE ASSESSEE FOR THE REASSESSMENT PROCEEDINGS CLEARLY INDICATES THAT THE Y ARE NOT CONTAINING ANY SPECIFIC OBJECTIONS AS PROVIDED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF G.K.N. DRIVE SHAFTS (I) LTD., REPORTED IN 259 ITR 19. SO FAR AS THE ARGUMENT OF THE ASSESSEE THAT THE ASS ESSING OFFICER SHOULD NOT HAVE RESORTED TO THE REASSESSMENT PROCEEDINGS P ARTICULARLY WHEN SHRI CHHORIYA ACCEPTED THE TRANSACTIONS AS HIS OWN AND S TATING THAT THE NAMES CONTAINED IN THE SEIZED DOCUMENTS WERE IMAGINARY AN D FURTHER THAT THE ASSESSING OFFICER COULD NOT FIND ANY INCRIMINATING DOCUMENTS DURING 14 SURVEY CONDUCTED U/S.133A OF THE I.T. ACT IN HIS PR EMISES ON 19-09-2008 AND THEREFORE THE REASSESSMENT WAS NOT CORRECT, THE LD.CIT(A) HELD THAT SINCE THE MATERIAL SEIZED IN THE CASE OF CHHORIYA G ROUP REVEALED CERTAIN FINANCIAL TRANSACTIONS WHICH WERE NOT DISCLOSED BY THE ASSESSEE TO THE DEPARTMENT, THEREFORE, THE ACTION TAKEN BY THE ASSE SSING OFFICER U/S.147 OF THE I.T. ACT IS JUSTIFIED. 17. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT THE ASSESSING OFFICER SHOULD NOT HAVE IGNORED THE STATEMENT OF SH RI CHHORIYA WHICH WAS RECORDED ON OATH ON 01-12-2009 AS FALSE AND MIS LEADING, THE LD.CIT(A) REJECTED THE SAME ON THE GROUND THAT THE ASSESSING OFFICER HAS ARRIVED AT THE CONCLUSION BASED ON THE ENQUIRIE S AND OTHER MATERIAL AVAILABLE ON RECORD AND IT CANNOT BE STATED THAT TH EY WERE MERE PRESUMPTIONS. 18. SO FAR AS THE ARGUMENT OF THE ASSESSEE THAT THE ADDITION OF RS.2,91,36,825/- ON ACCOUNT OF UNACCOUNTED ADVANCES ARRIVED AT BY THE PEAK METHOD BY INCLUDING THE AMOUNT OF RS.2,80,00,0 00/-, THE LD.CIT(A) ON THE BASIS OF THE VARIOUS ARGUMENTS ADVANCED BY T HE ASSESSEE DETERMINED THE PEAK AT RS.9,30,000/- AS AGAINST RS. 2,91,36,825/- BY OBSERVING AS UNDER : 6.2 THE GROUND NOS. 5, 6, 7 AND 8 ARE INTER-CONNECT ED REGARDING THE ADDITIONS MADE BY THE A.O. BASED ON THE CONTENTS OF TH E DOCUMENTS SEIZED IN THE CASE OF CHHORIYA GROUP. THEREFORE, THESE GROUN DS ARE DISCUSSED AND DECIDED TOGETHER IN THE FOLLOWING PARAGRAPHS. TH E APPELLANT OBJECTED TO THE USE OF THE SAID SEIZED DOCUMENTS FOR MAKING ADD ITIONS IN THE RE- ASSESSMENT ON THE FOLLOWING REASONS: I) THAT HE DENIED TO HAVE GIVEN ANY ADVANCES NOTED ON THE SEIZED DOCUMENT. II) SHRI KANHAIYALAL CHHORIYA HIMSELF ADMITTED IN T HE SWORN STATEMENT RECORDED DURING THE COURSE OF THE ACTION U/S.132 THAT THE TRANSACTIONS WERE RELATED TO THE FAMILY MEMBERS OF THEIR GROUP. 15 III) EVEN DURING THE COURSE OF THE ASSESSMENT PROCEEDIN GS SHRI DEVICHAND MOTILAL CHHORIYA STATED THAT THE NAMES CONTAINED IN T HE SAID SEIZED DOCUMENTS WERE IMAGINARY IN HIS STATEMENT DATED 01/12/ 2009 RECORDED U/S.131 OF THE ACT. IV) NO ADDITION CAN BE MADE BASED ON THE SEIZED DOC UMENTS PARTICULARLY WHEN THE PERSON SEARCHED SHRI CHHORIYA ADMITTED THAT THE SAME BELONGED TO HIM AND AGREED FOR THE ADDITIONS. V) MERE ENTRIES IN THE ACCOUNT OF THIRD PARTY REGAR DING THE PAYMENTS WERE NOT SUFFICIENT TO MAKE ADDITIONS. VI) THE DOCUMENTS SEIZED DURING THE COURSE OF THE SEAR CH DO NOT CONTAIN ANY SIGNATURE OF THE APPELLANT OR THE BORROWER. VII) THERE WAS NO CORROBORATIVE EVIDENCE TO CONCLUDE THAT THE ENTRIES RECORDED IN THE SEIZED DOCUMENTS WERE REPRESENTING THE REAL TRANSACTIONS RELATING TO THE APPELLANT. 6.3 IT IS TRUE THAT SHRI CHHORIYA HIMSELF ADMITTED TH E TRANSACTIONS CONTAINED IN THE SEIZED DOCUMENTS WERE RELATED TO HIM AND MAINTAINED SIMILAR STAND DURING THE ASSESSMENT PROCEEDING WHEN HE WA S QUESTIONED U/S.131 OF THE ACT. A PERUSAL OF THE SEIZED DOCUMENTS A ND THE TRANSACTIONS CONTAINED THEREIN WOULD REVEAL THAT SHRI CHHORIYA CLEARLY WROTE THE FINANCIAL TRANSACTIONS WITH VARIOUS PERS.ONS, INCLUDING THOSE OF THE APPELLANT. THE OTHER ARGUMENT OF THE APPELLANT THAT THE SEIZED DOCUMENTS DO NOT CONTAIN ANY OF HIS SIGNATURE OR THE BORROWER IS ALSO NOT ACCEPTABLE AS THE UNACCOUNTED TRANSACTIONS ARE ALWAYS C ARRIED-OUT BASED ON MUTUAL TRUST AND FAITH. THE SEIZED DOCUMENTS CONTAI NED THE NAMES OF THE APPELLANT AS 'RATANLAL C.BAFNA', 'R.C.BAFNA', 'R ATANLALJI BAFNA', 'SHRI RATANLAL BAFNA', ETC. IN RESPECT OF VARIOUS FINANCIAL TRANSACTIONS. IT IS AN UNDENIABLE FACT THAT SHRI RATANLAL C.BAFNA, WHO IS T HE APPELLANT IN THE INSTANT CASE, IS HAVING BUSINESS TRANSACTIONS WITH CHHORIYA GROUP, THEREFORE, IT CAN BE SIMPLY INFERRED THAT THE TRANSAC TIONS AGAINST THE ABOVE SAID NAMES RELATED TO THE BUSINESS OR FINANCIAL TR ANSACTIONS OF THE APPELLANT WITH THE CHHORIYA GROUP. AS PER THE SEIZED DOCUMENT PAGE NO.64 OF ANNEXURE B-19, SHRI CHHORIYA HAS GIVEN THE COMPLETE DETAILS OF ADVANCES AND INTEREST RECEIVED IN RESPECT OF SHRI RATA NLAL C.BAFNA. THE ENTRIES RECEIVED ON ACCOUNT OF SALE PLOTS MEASURING SPEC IFIC AREAS MENTIONED IN THE SEIZED DOCUMENTS TALLIED WITH THE DE TAILS OF ACTUAL PURCHASE OF PLOTS BY APPELLANT FROM THE CHHORIYA GROU P. SIMILARLY, THERE ARE TRANSACTIONS RELATING TO SALE OF JEWELLERY IN THE SAID SEIZED DOCUMENTS AGAINST THE NAME OF THE APPELLANT IN ONE OR THE OTHE R FORMS MENTIONED ABOVE. THESE ASPECTS HAVE BEEN ELABORATELY DISCUSSED BY T HE A.O. IN THE ASSESSMENT ORDER AT PARA 7 AND CONCLUDED THAT THE TRANS ACTIONS WERE RELATED TO THE APPELLANT AND ACCORDINGLY CONSIDERED FOR MAKING ADDITIONS IN THE ASSESSMENT. THEREFORE, I FULLY AGREE WITH THE A. O. IN HER CONCLUSION REGARDING THE ASSESSABILITY OF THESE TRANSACTIONS. THE ADM ISSION OF THE FINANCIAL TRANSACTIONS BY SHRI CHHORIYA IN HIS GROUP M AY NOT ABSOLVE THE APPELLANT FROM EXPLAINING THE TRUE TRANSACTIONS RELAT ING TO THE SEIZED DOCUMENTS. SHRI CHHORIYA WOULD NOT HAVE WRITTEN THE NAME OF THE APPELLANT WITHOUT REALLY HAVING THE TRANSACTIONS IN A 'CASH BOOK' AND SUMMARY SHEETS' MAINTAINED BY HIM. THEREFORE, IT I S ALL THE MORE IMPORTANT THAT SUCH FINANCIAL TRANSACTIONS, PARTICULAR LY ADVANCES MADE AND INCOME RECEIVED BY THE APPELLANT ARE TO BE BROU GHT TO TAX. IN VIEW OF THESE CIRCUMSTANCES, THE QUESTION IS WHETHER THE APPAREN T CAN BE CONSIDERED AS REAL. APPARENT MUST BE CONSIDERED REAL UN TIL IT IS SHOWN 16 THAT THERE ARE REASONS TO BELIEVE THAT APPARENT IS NO T THE REAL AND THAT THE TAXING AUTHORITIES ARE ENTITLED TO LOOK INTO THE SURR OUNDING CIRCUMSTANCES TO FIND OUT THE REALITY AND THE MATTER HAS TO BE CON SIDERED BY APPLYING THE TEST OF HUMAN PROBABILITIES [RELIANCE PLACED ON 214 I TR 801 (SC)]. THE FINANCIAL TRANSACTIONS WERE NOT MEANT TO BE DISCLOSED T O THE DEPARTMENT AND WERE SECRET HENCE DIRECT EVIDENCE ABOUT SUCH TRAN SACTIONS WOULD BE RARELY AVAILABLE. THE A.O. HAS CONSIDERED ALL THE CIR CUMSTANCES AND OTHER FACTORS IN THE INSTANT CASE AND HAS DRAWN AN INFERENCE REGARDING THE UNACCOUNTED INCOME OF THE APPELLANT. THEREFORE, I H AVE NO HESITATION IN HOLDING THAT THE TRANSACTIONS CONTAINED IN THE SEIZED DOCUMENTS ARE RELATED TO THE APPELLANT AS FAR AS MENTIONED AGAINST ' VARIOUS NAMES' OF THE APPELLANT. 6.4 THE APPELLANT MADE AN ALTERNATIVE ARGUMENT THAT THE METHOD OF COMPUTING THE PEAK CREDIT AS PER ANNEXURE B OF THE A SSESSMENT ORDER WAS INCORRECT. HE ALSO DISPUTED INCLUSION OF THE AMOUNT OF RS.2,80,00,000/- AS ADVANCE MADE DURING APRIL, 2001 W HILE COMPUTING THE PEAK CREDIT. THE APPELLANT ALSO QUESTIONED THE TR EATMENT OF VARIOUS AMOUNTS AS TAXABLE RECEIPTS LIKE INTEREST, PROFIT, ETC. AS PER ANNEXURE A OF THE ASSESSMENT ORDER. IT MAY BE MENTIONED HERE THAT SHR I CHHORIYA WAS MAINTAINING A DAILY CASH BOOK AND MONTH-WISE SUMMARY BALANCES. THE DAILY CASH BOOK CONTAINED DATE-WISE DETAILS OF EACH AN D EVERY RECEIPT & PAYMENT. ON THE OTHER HAND, THE MONTHLY SUMMARY BALA NCES REPRESENTED THE OVERALL POSITION AT THE END OF THE EACH MONTH RE GARDING THE OUTSTANDING RECEIPTS AND PAYMENTS. WHILE COMPLETING TH E ASSESSMENT, THE A.O. SEGREGATED THE TRANSACTIONS INTO TWO CATEGORI ES. THE A.O. CONSIDERED THE INTEREST, PROFIT, ETC. AS TAXABLE RECEI PTS FOR THE A.Y.2002- 2003 AS PER ANNEXURE A. THE OTHER FINANCIAL TRANSACTI ONS WERE CONSIDERED AS RELATED TO MONEY LENDING ACTIVITY AND A DOPTED FOR ADDITION BY PEAK CREDIT METHOD AS PER ANNEXURE B. WHILE WORKI NG OUT THE PEAK CREDIT, THE A.O. CONSIDERED AN AMOUNT OF RS.2,80,00,0 00/- AS ADVANCED Y THE APPELLANT DURING THE F.Y.2001-2002 BASED ON THE SEIZED DOCUMENTS. THIS AMOUNT DO NOT FIND PLACE IN THE DAILY CASH BOOK MAINTAINED BY SHRI CHHORIYA FOR THE F.Y.2001-2002. HOWEVER, THIS AMOUNT WAS SHOWN IN THE MONTHLY SUMMARY SHEET PREPARED AS ON 01/05/2001. THE A PPELLANT SERIOUSLY CONTESTED INCLUSION OF THE SAID .AMOUNT OF RS.2 ,80,00,000/- WHILE WORKING-OUT THE PEAK CREDIT AS THE SAME WAS ADVA NCED PRIOR TO THE F.Y.2001-2002. THE APPELLANT SUPPORTED HIS ARGUMENT O N THE GROUND THAT THIS TRANSACTION WAS NOT ENTERED BY SHRI CHHORIYA IN T HE DAILY CASH BOOK. THEREFORE, IT WAS REQUESTED THAT THE AMOUNT SHOULD NOT BE CONSIDERED FOR WORKING-OUT THE PEAK CREDIT. A PERUSAL OF THE TRANSAC TIONS RELATING TO THE APPELLANT IN THE DAILY CASH BOOK SEIZED FROM SHRI CHH ORIYA DOES NOT INDICATE ANY TRANSACTION OF ADVANCING AN AMOUNT OF R S.2,80,00,000/-. AS POINTED-OUT BY THE APPELLANT, THIS AMOUNT IS SHOWN IN THE MONTHLY SUMMARY SHEET PREPARED AS ON 01/05/2001. THIS FACT HAS BEEN CONFIRMED BY THE A.O. AT PARA 7.6 OF THE ASSESSMENT OR DER. THE APPELLANT ALSO QUESTIONED THE INCLUSION OF THE SAID AMOUNT ON THE GROUND THAT THE NAME WAS WRITTEN AS 'SHRIMAN SETH' AND NOT AS 'R.C.BAF NA' OR ANY OTHER NAMES USED IN THIS REGARD. THE OTHER OBJECTION FOR INC LUSION OF THIS AMOUNT WAS THAT NO SPECIFIC DATE WAS MENTIONED REGARD ING THE ALLEGED ADVANCE. WHILE WORKING-OUT THE PEAK STATEMENT, THE A.O. HAS NOT MENTIONED ANY SPECIFIC DATE REGARDING THE ADVANCE OF RS.2,80,00,000/- CONSIDERED IN THE PEAK STATEMENT. AS THERE IS NO SPECIFI C DATE MENTIONED IN THE MONTHLY SUMMARY SHEETS, THE ARGUMENT OF THE APP ELLANT THAT SUCH AMOUNT WAS NOT ADVANCED DURING THE MONTH OF APRIL, 2 001, APPEARS TO BE STRONG. ONCE THE SEIZED DOCUMENTS ARE ACCEPTED AS REPRE SENTING TRUE AND CORRECT BUSINESS AFFAIRS, THE NORMAL AND LOGICAL REASONI NG SHOULD BE APPLIED WHILE COMPUTING THE INCOME. IT IS AN UNDISPUT ED FACT THAT THE 17 AMOUNT OF RS.2,80,00,000/- IS NOT ENTERED IN THE DAY- WISE CASH BOOK MAINTAINED BY SHRI CHHORIYA. IT IS ONLY FINDING PLAC E IN THE MONTHLY SUMMARY SHEET AS ON 01/05/2001. THE MONTHLY SUMMARY SHEE T IS .A SORT OF TRIAL BALANCE REPRESENTING THE OUTSTANDING TRANSACT IONS. THE AMOUNT OF RS.2,80,00,000/- COULD HAVE BEEN ADVANCED BY THE APP ELLANT IN THE EARLIER PERIOD AND WAS OUTSTANDING AS ON 01/04/2001. THE MONTH LY SUMMARY BALANCE FOR THE MONTH OF MARCH, 2001 NOT AVAILABLE ON RECORD. IT IS ONLY MONTHLY SUMMARY BALANCE FOR THE MONTH OF APRIL, 2001 PREPARED ON 01/05/2001. THUS THERE IS A MISSING LINK BETWEEN MARCH, 2001 AND APRIL, 2001. IN THE ABSENCE OF SPECIFIC ENTRY IN THE CASH BO OK DURING APRIL, 2001, IT IS VERY DIFFICULT TO PRESUME THAT THE AMOUNT WAS AD VANCED BY THE APPELLANT DURING THE MONTH OF APRIL, 2001. IT IS ALSO SEEN FROM THE SEIZED DOCUMENTS THAT THERE ARE ENTRIES ON THE MONTHLY SUMMAR Y SHEETS OF AUGUST, 2001, SEPTEMBER, 2001 AND OTHER MONTHS ABOUT OUTSTANDING AMOUNTS IN THE NAME OF THE APPELLANT. SUCH AMOUNTS HA VE NOT AT ALL BEEN CONSIDERED EITHER FOR INCOME OR AS UNACCOUNTED ADVANC E. IT IS ALSO SEEN FROM THE SEIZED CASH BOOK THAT AN AMOUNT OF RS.2,00,0 00/- AS INTEREST AND RS.5,00,000/- AS PROFIT HAS BEEN CREDITED ON 04/04/200 1 INDICATING THAT THERE IS SUBSTANTIAL OUTSTANDING ADVANCE EVEN BEFORE 01 /04/2001. THUS, IT CLEARLY PROVES THAT THE ENTRY MADE ON THE MONTHLY SUMMARY SHEET OF MAY, 2001, IS NOT REPRESENTING AMOUNT ADVANCED BY THE APPELLANT DURING APRIL, 2001 AND COULD HAVE BEEN ADVANCED IN THE EAR LIER PERIOD. THEREFORE, THE MONTHLY PEAK STATEMENT NEEDS TO BE RE CAST BY EXCLUDING THE AMOUNT OF RS.2,80,00,000/-. SIMILARLY, IT HAS ALR EADY BEEN DECIDED AT PARA 6.6 BELOW THAT THE FINANCIAL TRANSACTIONS AMOUNT ING TO RS.23,00,000/- ARE TO BE CONSIDERED FOR THE WORKING O F THE PEAK STATEMENT. THERE ARE ALSO CERTAIN TRANSACTIONS REPRESENT ING UNRECORDED SALES OF JEWELLERY AS MENTIONED AND THE SAME WERE INCLU DED FOR WORKING- OUT THE PEAK CREDIT IN ANNEXURE B. SINCE THESE TRAN SACTIONS ARE SALE TRANSACTIONS, THEY ARE TO BE EXCLUDED FROM THE PEAK ST ATEMENT AS DISCUSSED ABOVE. THE FOLLOWING TRANSACTIONS INCLUDED IN THE PEAK CREDIT STATEMENT ARE ACTUALLY RELATED TO SALE OF JEWELLERY T RANSACTIONS: 04/04/2001 RS. 26,880/- 04/06/2001 RS. 2,26,751/- 12/11/2001 RS. 2,000/- 02/02/2002 RS. 53,520/- [OUT OF THE AMOUNT OF RS. 7 LACS] THE FOLLOWING TRANSACTIONS REPRESENTING INTEREST ARE AL SO TO BE EXCLUDED WHILE WORKING OUT THE PEAK: 22/06/2001 RS.994/- 14/12/2000 RS. 260/-[OUT OF RS.2,00,260/-] AFTER CONSIDERING ALL THESE ADJUSTMENTS DISCUSSED ABOVE, A REVISED PEAK STATEMENT OF ANNEXURE B OF THE A.O. HAS BEEN WORKED-O UT WHICH IS ANNEXED TO THIS ORDER AND AS PER WHICH THE PEAK WORKS OUT TO RS.9,30,000/-. THEREFORE, THE A.O. IS DIRECTED TO CON SIDER THE PEAK CREDIT FOR THE PURPOSE OF INCOME AT RS.9,30,000/- AS AGAINST R S.2,91,36,825/-. 19. SO FAR AS THE ADDITION OF INTEREST OF RS.82,81, 598/- IS CONCERNED, THE LD.CIT(A) RESTRICTED THE SAME TO RS.62,51,754/- AS AGAINST RS.82,81,598/- DETERMINED BY THE AO. WHILE DOING S O, HE DIRECTED THE 18 ASSESSING OFFICER TO REDUCE UNRECORDED JEWELLERY SA LES OF RS.2,403/- FINANCIAL TRANSACTIONS OF RS.23 LAKHS AND PROFIT ON UNRECORDED SALES OF RS.2,72,00,559/- AT RS.2,72,559/-. 20. SO FAR AS THE ADDITION OF RS.77,026/- ON ACCOUN T OF LABOUR CHARGES IS CONCERNED, HE UPHELD THE ADDITION MADE BY THE AS SESSING OFFICER ON THE BASIS OF THE ADMISSION OF THE SAME BY THE AUTHO RISED REPRESENTATIVE OF THE ASSESSEE BEFORE HIM. SO FAR AS THE DISALLOWANC E OF RS.10,000/- ON ESTIMATE BASIS, HE UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER WHICH WAS BASED ON THE REMARKS OF THE AUDITORS IN F ORM 3CB ACCORDING TO WHICH PERSONAL EXPENDITURE INCLUDED IN THE OFFIC E EXPENDITURE CANNOT BE DENIED. FURTHER, NO SUPPORTING VOUCHERS WERE A LSO MADE AVAILABLE BEFORE THE ASSESSING OFFICER DURING THE COURSE OF A SSESSMENT PROCEEDINGS IN RESPECT OF THE OFFICE EXPENSES. HE ACCORDINGLY CONFIRMED THE DISALLOWANCE OF RS.10,000/- ON ESTIMATE BASIS OUT O F OFFICE EXPENSES. 21. AGGRIEVED WITH SUCH PART RELIEF GIVEN BY THE CI T(A) THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS: GROUNDS BY ASSESSEE : 1] IN THE ABSENCE OF CONDITIONS PRECEDENT FOR ISSUANC E OF NOTICE U/S.148 OF THE I.T ACT, 1961, THE IMPUGNED ASSESSMENT ORDER IS B AD IN LAW, NULL, AND VOID AB INITIO AND WITHOUT JURISDICTION AND HENC E THE SAME MAY PLEASE BE VACATED / ANNULLED. 2] IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, BOTH THE LOWER AUTHORITIES HAVE ERRED IN REJECTING THE SWORN ST ATEMENT OF MR. DEVICHAND MOTILAL CHHORIYA RECORDED BY THE LEARNE D ASSESSING OFFICER U/S.131 OF THE I.T. ACT 1961 ON 16-12-2009, AS UNTRUE , FALSE AND MISLEADING. IT MAY PLEASE BE HELD THAT THE SAID STATEM ENT IS TRUE AND CORRECT AND CONSEQUENTLY THE VARIOUS ADDITIONS SUSTAINED BY THE LEARNED C.I.T(A) ON THE BASIS OF ENTRIES FOUND IN THE DOCUMENT S SEIZED FROM CHHORIYA GROUP ALLEGEDLY IN THE NAME OF THE APPELLA NT, BE DELETED. 3] SHRI. DEVICHAND MOTILAL CHHORIYA, THE AUTHOR OF THE SEIZED DOCUMENTS (ALLEGEDLY SEIZED FROM CHHORIYA GROUP) HAVING ADMITT ED THAT THE ENTRIES MADE BY HIM IN THE ALLEGED SEIZED DOCUMENTS IN THE NA ME OF APPELLANT REPRESENTED THE UNDISCLOSED INCOME OF HIS FAMILY AND H AVING PAID THE 19 TAXES ON THE SAID UNDISCLOSED INCOME DECEITFULLY RECORD ED AS LOAN FROM THE APPELLANT, THE VARIOUS ADDITIONS AS MADE BY THE LE ARNED ASSESSING OFFICER AND AS SUSTAINED BY THE LEARNED CIT(A) ON THE BASIS OF ENTRIES AS APPEARING IN THE ALLEGED SEIZED PAPERS BEING LEGALLY UNSUSTAINABLE, DEVOID OF MERITS, ARBITRARY AND PERVERSE THE SAME MAY PLEASE B E DELETED. 4] THE VARIOUS CONCLUSION DRAWN BY BOTH THE LOWER AU THORITIES ON THE BASIS OF THE ALLEGED SEIZED PAPERS SEIZED FROM CHHORIYA GROUP REGARDING THE ALLEGED UNDISCLOSED TRANSACTIONS OF THE APPELLANT W ITH CHHORIYA GROUP BEING LEGALLY UNSUSTAINABLE, PATENTLY ILLEGAL AND BEI NG CONTRARY TO THE WELL SETTLED PRINCIPLES OF APPRECIATION OF EVIDENCE THE SAM E PLEASE BE VACATED. 5] IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, AND PARTICULARLY ON THE BASIS OF ALLEGED SEIZED PAPERS SEIZE D FROM THE CHHORIYA GROUP, THE LEARNED CIT(A) HAS ERRED IN HOLD ING THAT THE APPELLANT DURING THE RELEVANT PREVIOUS YEAR HAD GIVE N LOANS TO CHHORIYA GROUP AND HAS FURTHER ERRED IN SUSTAINING THE ADDITION OF RS.9,30,000/- ON THE GROUND OF UNDISCLOSED LOAN GIVEN BY THE APPELLAN T TO CHHORIYA GROUP CALCULATED ON THE BASIS OF PEAK CREDIT THEORY. THE SAI D ADDITION BEING ARBITRARY, PERVERSE, DEVOID OF MERITS AND BEING PATEN TLY ILLEGAL AND WITHOUT ANY BASIS THE SAME MAY PLEASE BE DELETED. 6] IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE ADDITION OF RS.62,51,754/- AS SUSTAINED BY THE LEARNED CIT(A) ON THE GROUND OF ALLEGED UNACCOUNTED INTEREST, PROFITS ETC R ECEIVED BY THE APPELLANT DURING THE RELEVANT PREVIOUS YEAR FROM CHH ORIYA GROUP BEING ARBITRARY, PERVERSE, DEVOID OF MERITS AND BEING LEGAL LY UNSUSTAINABLE THE SAME MAY PLEASE BE DELETED. 7] THE ADDITION OF RS.77,026/- ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK AS MADE BY THE LEARNED ASSESSING OFFICER AND AS SUSTAI NED BY THE LEARNED CIT(A) BEING DEVOID OF MERITS THE SAME MAY PL EASE BE DELETED. 8] THE ADHOC DISALLOWANCE OF RS.10,000/- MADE BY THE LEARNED ASSESSING OFFICER AND AS SUSTAINED BY THE LEARNED CIT(A) OUT OF EXPENSES MAY PLEASE BE DELETED. 9] THE APPELLANT CRAVES THE PERMISSION TO ADD, AMEND, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF THE A PPEAL, IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. GROUNDS BY REVENUE IN ITA NO.1050/PN/2010 : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN WORKING OUT THE REVISED PEAK AFTER EXCLUDING THE ENTRY OF LOAN OF RS.2,80,00,000. THE CIT(A) HAS FAILED TO APPRECIATE THE FACTS THAT, THE ENTRY OF LOAN OF RS.2,80,00,000/- WAS APPEARING AT TH E END OF THE CASH BOOK IN THE MONTHLY SUMMARY SHEET OF MAY 2001 DRAWN O N 01-05-2001 AND THE AMOUNT OF RS. 2,80,00,000/- WAS NOT CARRIED F ORWARD AS ON 01-4- 2001. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE CIT(A) ERRED IN EXCLUDING SO CALLED ENTRY OF GIFT OF RS. 2,26,751/ - WHILE WORKING OUT PEAK. THE CIT(A) HAS FAILED TO APPRECIATE THAT THE A MOUNT OF RS.2,26,751/- IS A GIFT AND NOT SALE TRANSACTION. 20 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE CIT(A) ERRED IN EXCLUDING THE ENTRIES OF CERTAIN TRANSACTION CONSID ERED FOR INCOME AS PER ANNEXURE A, TO THE TUNE OF RS.23,00,000/-. THE C IT(A) HAS FAILED TO APPRECIATE THE FACTS THAT, THOUGH SPECIFIC WORD LIKE INTEREST / PROFIT HAS NOT BEEN WRITTEN IN FRONT OF ENTRIES BUT THE CORRESP ONDING ENTRY IN THE EARLIER OR CORRESPONDING DATE OF EARLIER MONTH CLEAR LY SPEAK ABOUT THE PROFIT AND INTEREST. FURTHER, CIT(A) FAILED TO APPRE CIATE THAT FIX AMOUNT OF RS. 7 TO 7.5 LAKH IS GIVEN AS INTEREST / PROFIT TO THE ASSESSEE EVERY MONTH BY CHHORIYA GROUP. 3. THE APPELLANT CRAVES LEAVE TO AMEND, ALTER OR RAI SE ANY NEW GROUNDS WHICH MAY BE DEEMED NECESSARY. 22. THE ASSESSEE HAS ALSO TAKEN THE FOLLOWING ADDIT IONAL GROUND : SINCE THE LD. ASSESSING OFFICER HAS PASSED THE IMPUGNED REASSESSMENT ORDER AT THE BEHEST AND DIRECTIONS OF THE OFFICERS OF THE INVESTIGATION WING, NASHIK, THE LD.CIT(A) OUGHT TO HAVE ANNULLED T HE SAID ORDER. CONSEQUENTLY, THE REASSESSMENT ORDER PASSED BY THE LD. ASSE SSING OFFICER BE ANNULLED. 23. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO T HE ADDITIONAL GROUND SUBMITTED THAT ALL MATERIAL FACTS ARE AVAILABLE ON RECORD AND THE MATTER DOES NOT REQUIRE FRESH INVESTIGATION. REFERRING TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NTPC REPORTED IN 229 ITR 383 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADD ITIONAL GROUND SHOULD BE ADMITTED FOR ADJUDICATION. HE SUBMITTED THAT UN DER PROVISIONS OF SECTION 254 EVEN IF CERTAIN FACTS ARE REQUIRED TO B E INVESTIGATED THAT IS NO BAR TO ADMIT AN ADDITIONAL GROUND. HE SUBMITTED TH AT WHEN THERE WAS A DIRECTION BY THE INVESTIGATION WING TO PASS THE REA SSESSMENT ORDER IN A PARTICULAR MANNER THE ORDER BECOMES ILLEGAL. HE SU BMITTED THAT A MERE PERUSAL OF THE CORRESPONDENCE BETWEEN THE INVESTIGA TION WING AND THE ASSESSING OFFICER SHOWS THAT THE ORDER HAS BEEN PAS SED AT THE BEHEST OF THE INVESTIGATION WING. 24. REFERRING TO THE DECISION OF THE HONBLE ALLAHA BAD HIGH COURT IN THE CASE OF UNION OF INDIA AND OTHERS VS. SHEO SHAN KAR SITARAM & 21 ANOTHER REPORTED IN 95 ITR 523 (ALL.) HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS AGREED WITH THE FINDING OF THE TRIBUNAL THAT ASSESSMENT PROCEEDINGS AS WELL AS PEN ALTY PROCEEDINGS ARE JUDICIAL IN NATURE. AN OFFICER OR AUTHORITY UPON W HOM JURISDICTION HAS BEEN CONFERRED TO MAKE AN ORDER JUDICIOUSLY HAS TO ACT INDEPENDENTLY. HE CANNOT ACT ON THE ADVICE GIVEN BY AN OUTSIDER EVEN THOUGH THAT STRANGER MAY BE AN AUTHORITY HIGHER IN RANK TO HIM IN THE OF FICIAL HIERARCHY. THE COMMUNICATION BETWEEN THE OFFICER EMPOWERED TO IMPO SE PENALTY AND THE HIGHER AUTHORITIES IN REGARD TO ASSESSMENT OR P ENALTY PROCEEDINGS COULD NOT BE HELD TO BE COMMUNICATIONS MADE IN OFFI CIAL CONFIDENCE BECAUSE IN LAW THOSE OFFICERS WERE NOT ENTITLED TO GIVE OPINIONS OR ADVICE IN REGARD TO JUDICIAL PROCEEDINGS. HE ACCORDINGLY SUBMITTED THAT THE ORDER PASSED BY THE ASSESSING OFFICER U/S.147 OF TH E I.T. ACT AT THE BEHEST OF THE INVESTIGATION WING SHOULD BE HELD AS VOID AN D THEREFORE THE REASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER SHOULD BE ANNULLED. HE ALSO RELIED ON THE FOLLOWING DECISIONS : 1. CIT VS. SALEKCHAND AGARWAL REPORTED IN 300 ITR 42 6 (ALL). 2. STATE OF KERALA VS. K.T. SHADULI YUSUFF ETC. REPOR TED IN 1977 AIR 1627 (SC). 3. RAJINDER PERSHAD VS. SMT. DARSHANA DEVI REPORTED IN 2001-(088)- AIR -3207-SC. 4. KISHORE SAMRITE VS. STATE OF U.P. & OTHERS CRIMIN AL APPEAL NO.1406/2012 ORDER DATED 18-10-2012 (SC). 5. ADDL.CIT VS. MISS LATA MANGESHKAR REPORTED IN 97 IT R 696 (BOM.) 25. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND STRONGLY OBJECTED TO THE ADMISSION OF THE ADDITIONAL GROUND. HE SUBMITTED THAT THE INVESTIGATION WING CONDUCTS SEARCHES AND SEIZURE OP ERATIONS, SUMMONS DIFFERENT PERSONS, RECORDS THEIR STATEMENTS AND PRE PARE APPRAISAL REPORT 22 WHICH IS SENT TO THE ASSESSING OFFICER FOR MAKING A SSESSMENT. SUCH REPORTS ARE NOT BINDING ON THE ASSESSING OFFICER. THE ASSESSING OFFICER IS AT LIBERTY TO CONDUCT INDEPENDENT ENQUIRY AND DE VIATE FROM THE CONCLUSION ARRIVED AT THE APPRAISAL REPORT. HOWEVER , IF DURING ASSESSMENT PROCEEDINGS CERTAIN ISSUES CROP UP THE ASSESSING OF FICER MAY SEEK HELP OF THE INVESTIGATION WING OF THE DEPARTMENT TO MAKE CERTAIN INVESTIGATIONS/ENQUIRY. AT THE TIME OF FRAMING OF THE ASSESSMENT, IT IS THE PREROGATIVE OF THE ASSESSING OFFICER TO ACCEPT OR N OT TO ACCEPT SUCH FINDINGS. HE SUBMITTED THAT IN SEARCH ASSESSMENTS T HE SENIOR OFFICERS OF THE DEPARTMENT ARE INVOLVED. REFERRING TO PAGE 36 OF THE ORDER OF THE CIT(A) THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTE D THAT THE LD.CIT(A), AFTER ANALYSING CERTAIN TRANSACTIONS HAS GIVEN A FINDING THAT THOSE TRANSACTIONS ARE PURELY FINANCIAL TRANSACTION S REPRESENTING RECEIPTS/REPAYMENTS OF OUTSTANDING AMOUNT. 26. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOIND ER REFERRING TO THE LETTER DATED 10-12-2009 BY THE JCIT TO THE DDIT (IN VESTIGATION WING) SUBMITTED THAT THE INVESTIGATION WING HAD REQUESTED THE ASSESSING OFFICER TO TAX THE CASH ADVANCE GIVEN BY SHRI R.C. BAFNA TO CHHORIYA GROUP OF JALGAON FOR THE F.Y. 2001-02 TO F.Y.2007-0 8. REFERRING TO PAGE 26 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE B ENCH TO THE NOTICE ISSUED U/S.148 WHICH IS DATED 17-03-2009 WHICH IS P RIOR TO 10-12-2009. REFERRING TO THE LETTER DATED 14-12-2009 OF THE DDI T (INVESTIGATION), NASHIK TO THE JCIT, RANGE-1, JALGAON, THE LD. COUNS EL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE CONTENTS OF THE LETTER ACCORDING TO WHICH SHRI RATANLAL C. BAFNA HAS GIVEN AN AMOUNT OF RS.2.80 CRORES TO 23 SHRI CHHORIYA DURING F.Y. 2001-02 RELATING TO A.Y. 2002-03. THE LD. COUNSEL FOR THE ASSESSEE WHILE ADMITTING THAT THE A SSESSING OFFICER HAD MATERIAL IN HIS POSSESSION TO RECORD THE REASONS, SUBMITTED THAT THE ASSESSING OFFICER IN THE INSTANT CASE HAS ACTED AT THE BEHEST OF THE INVESTIGATION WING TO PASS THE ORDER IN A PARTICULA R MANNER FOR WHICH THE ORDER IS LIABLE TO BE QUASHED. 27. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES FOR THE ADMISSIBILITY OF THE ADDITIONAL GROUND. SINCE ADMITTEDLY ALL THE MATERIAL FACTS ARE ON RECORD, THEREFORE, THE ADDITI ONAL GROUND RAISED BY THE ASSESSEE IS ADMITTED IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NTPC (SUPRA). HOWEVER, SO FAR AS THE MERIT OF THE ADDITIONAL GROUND IS CONCERNED, WE PROCEED TO ADJUD ICATE THE SAME. AS PER THE PROVISIONS OF THE I.T. ACT, THE INVESTIGATI ON WING OF THE DEPARTMENT CONDUCTS SEARCH AND SEIZURE OPERATIONS T O UNEARTH BLACK MONEY/UNACCOUNTED INCOME. THEY EXAMINE THE SEIZED MATERIALS IN DETAILS AND ALSO RECORD STATEMENTS OF DIFFERENT PER SONS BY ISSUE OF SUMMONS. AFTER THOROUGH ENQUIRY THEY PREPARE THE A PPRAISAL REPORT WHICH IS SENT TO THE FIELD UNITS FOR MAKING ASSESSM ENT OF THE SEARCHED PERSON. SOMETIMES INCRIMINATING DOCUMENTS RELATING TO NON SEARCHED PERSONS ARE ALSO FOUND IN THE PREMISES OF THE SEARC HED PERSON. THE ASSESSING OFFICER OF THE SEARCHED PERSON FORWARDS T HOSE DOCUMENTS TO THE ASSESSING OFFICER HAVING JURISDICTION OF THE NO N SEARCHED PERSON AFTER RECORDING SATISFACTION FOR ESCAPEMENT OF INCOME OF THE NON-SEARCHED PERSON. THE ASSESSING OFFICERS DURING THE COURSE O F ASSESSMENT PROCEEDINGS MAY REQUIRE THE ASSISTANCE OF THE INVES TIGATION WING FOR 24 SUPPLY OF FURTHER MATERIAL. SOMETIMES THE INVESTIG ATION WING SUOMOTO FORWARDS THE DOCUMENTS TO THE ASSESSING OFFICER HAV ING JURISDICTION OVER THE SAID PERSON. THE ASSESSING OFFICER IS NOT BOUN D TO BLINDLY FOLLOW THE RECOMMENDATION, IF ANY, OF THE INVESTIGATION WING. THE ASSESSING OFFICER APPLIES HIS MIND, EXAMINES THE DOCUMENTS, G IVES OPPORTUNITY TO THE ASSESSEE CONCERNED TO REBUT HIS FINDINGS AND TH EN MAKES THE ASSESSMENT. 28. IN THE INSTANT CASE, THE INVESTIGATION WING HAS FORWARDED SUCH DETAILS TO THE ASSESSING OFFICER HAVING JURISDICTIO N OVER THE CASE OF SHRI R.C. BAFNA. THE INVESTIGATION WING HAS NOWHERE DIR ECTED THE ASSESSING OFFICER TO MAKE THE ASSESSMENT IN A PARTICULAR MANN ER. THEREFORE, THE ADDITIONAL GROUND TAKEN BY THE ASSESSEE, IN OUR OPI NION, IS MISPLACED. 29. SO FAR AS THE DECISION OF THE HONBLE ALLAHABA D HIGH COURT IN THE CASE OF SHIVSHANKAR SITARAM AND ANOTHER (SUPRA) IS CONCERNED WE FIND THE FACTS OF THAT CASE ARE DIFFERENT FROM PRESENT A PPEAL. IN THAT CASE, THE ASSESSEE, IN ORDER TO AVOID LITIGATION AND LOSS OF REPUTATION ETC., OFFERED TO BE ASSESSED ON AN AGREED QUANTUM ON THE BASIS OF MA TERIALS OBTAINED BY THE DEPARTMENT AS A RESULT OF THE SEARCH IN SEPTEMB ER 1964. A SETTLEMENT WAS REACHED BY WHICH DEPARTMENTAL AUTHORITIES ASSUR ED THE ASSESSEE THAT NO PENAL ACTION WOULD BE TAKEN. ON MARCH 1965, THE INSPECTING ASSISTANT COMMISSIONER DREW UP FORMAL ORDER IN WHIC H IT WAS DIRECTED THAT PENALTY PROCEEDINGS WOULD BE STOPPED. THE ASS ESSEE WAS ASSESSED FOR A.Y.1959-60 TO 1964-65 ON THE BASIS OF FIGURES AGREED TO BETWEEN THE PARTIES. IN DUE COURSE, THE ITO DREW UP PENALTY PR OCEEDINGS AND LEVIED PENALTY. THE ORDER WAS CONFIRMED BY THE APPELLATE ASSISTANT 25 COMMISSIONER. IN THE APPEAL BEFORE THE TRIBUNAL, T HE ASSESSEE FILED AN APPLICATION PRAYING THAT CERTAIN RECORDS BE SUMMONE D U/S.255(6) R.W.S. 181 OF THE I.T. ACT FROM CERTAIN INCOME-TAX OFFICER S. THE PRINCIPAL GRIEVANCE OF THE ASSESSEE WAS THAT THE PENALTY HAD BEEN IMPOSED INSPITE OF CLEAR STATEMENT THAT NO PENALTY WOULD BE IMPOSED . THE DEPARTMENTAL OFFICERS CLAIMED PRIVILEGE U/S.124 OF THE EVIDENCE ACT ON THE GROUND THAT THE DOCUMENTS IN QUESTION WERE COMMUNICATIONS MADE IN OFFICIAL CONFIDENCE AND THEIR DISCLOSURE WOULD INJURE PUBLIC INTEREST. AS PRIMA- FACIE IT APPEARED THAT THE MATERIALS SOUGHT TO BE S UMMONED WERE RELEVANT FOR THE PURPOSE OF PROVING THAT THERE WAS A SETTLEM ENT, THE TRIBUNAL DIRECTED THE DEPARTMENTAL REPRESENTATIVE TO PRODUCE THE RECORDS MENTIONED IN THE APPLICATION. THE UNION OF INDIA, THE CIT AND THE ITO FILED A WRIT PETITION CHALLENGING THE ORDER OF THE TRIBUNAL. UNDER THESE CIRCUMSTANCES, THE HONBLE HIGH COURT AGREED WITH T HE VIEW OF THE TRIBUNAL THAT THE ASSESSMENT PROCEEDINGS AND PENALT Y PROCEEDINGS ARE JUDICIAL IN NATURE AND THAT AN OFFICER OR AUTHORITY UPON WHOM JURISDICTION HAS BEEN CONFERRED TO MAKE AN ORDER JUDICIALLY HAS TO ACT INDEPENDENTLY. HE CANNOT ACT ON THE ADVICE GIVEN BY AN OUTSIDER EV EN THOUGH THAT STRANGER MAY BE AN AUTHORITY HIGHER IN RANK TO HIM IN THE OFFICIAL HIERARCHY. 30. HOWEVER, IN THE INSTANT CASE, IF WE ACCEPT THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSING OFFICER HAS ACTED AT THE BEHEST OF THE INVESTIGATION WING, THEN IN THAT CASE HE WOULD HAVE MADE ADDITION OF RS.9,83,50,000/- WHICH IS AS PER THE RE ASONS FOR ISSUE OF NOTICE U/S.148 FOR THE A.Y. 2002-03, A COPY OF WHIC H IS PLACED AT PAGE 28 26 OF THE PAPER BOOK. FURTHER, FROM THE LETTER DATED 10-12-2009 BY THE JCIT, RANGE-1, JALGAON TO JDIT (INVESTIGATION) JALGAON, W E FIND THE JCIT HAS MENTIONED THAT PEAK DETERMINED BY THE INVESTIGATION WING IS INCORRECT AND THE PEAK IS COMING TO NEGATIVE FOR WHICH HE HAS REQUESTED FOR FURTHER MATERIAL AT THE DISPOSAL OF THE INVESTIGATION WING. THEREFORE IT IS NOT A CASE WHERE THE ASSESSING OFFICER HAS ACTED AT THE B EHEST OF THE JDIT. HE HAS ACTED IN A VERY JUDICIOUS MANNER ACTING INDEPEN DENTLY WHICH IS IN THE LINE OF THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT CITED (SUPRA). IN THIS VIEW OF THE MATTER, WE DISMISS THE ADDITION AL GROUND RAISED BY THE ASSESSEE. 31. NOW COMING TO THE OTHER GROUNDS OF APPEAL, THE LD. COUNSEL FOR THE ASSESSEE DURING THE COURSE OF HEARING BEFORE US DID NOT PRESS GROUNDS OF APPEAL NO. 1, 7 & 8 FOR WHICH THE LD. DEPARTMENT AL REPRESENTATIVE HAS NO OBJECTION. ACCORDINGLY, THE ABOVE GROUNDS A RE DISMISSED AS NOT PRESSED. GROUND OF APPEAL NO.9 BEING GENERAL IN NA TURE IS DISMISSED. 32. SO FAR AS GROUNDS OF APPEAL NO. 2 TO 6 BY THE A SSESSEE AND THE GROUNDS BY THE REVENUE ARE CONCERNED, THEY RELATE T O THE ORDER OF THE LD.CIT(A) IN GIVING PARTIAL RELIEF TO THE ASSESSEE BY SUSTAINING AN AMOUNT OF RS.9,30,000/- OUT OF THE ADDITION OF RS.2,91,36, 825/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED ADVANCE S AND RESTRICTING THE ADDITION TO THE EXTENT OF RS.62,51,754/- OUT OF THE ADDITION OF RS.82,81,598/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF UNACCOUNTED INTEREST. 33. THE LD. COUNSEL FOR THE ASSESSEE WHILE STRONGLY CHALLENGING THE ADDITION SUSTAINED BY THE CIT(A) SUBMITTED THAT A S EARCH AND SEIZURE 27 ACTION AT THE BUSINESS-CUM-RESIDENTIAL PREMISES OF THE CHHORIYAS TOOK PLACE ON 22-08-2008 DURING WHICH CERTAIN DIARIES AN D INCRIMINATING DOCUMENTS FOUND WERE SEIZED BY THE DEPARTMENT. IN THE SAID SEIZED DIARY CASH LOANS/TRANSACTIONS WRITTEN BY THE ONE SHRI DEV ICHAND MOTILAL CHHORIYA WERE FOUND. HIS SON MR. KANYAIYALAL CHHOR IA WHEN CONFRONTED ABOUT THE NOTINGS IN THE DIARY, HAD CATE GORICALLY STATED THAT THOSE NOTINGS WERE BY HIS FATHER. HE HAS ALSO ADMI TTED THAT THESE ARE THE UNDISCLOSED INCOME EARNED BY THE FAMILY MEMBERS SHO WN AS FICTITIOUS LOANS IN NAME OF REPUTED PERSONS. IN THE STATEMENT RECORDED U/S.132(4), AN AMOUNT OF RS.13 CRORES WAS DECLARED AS UNACCOUNT ED INCOME. DURING THE COURSE OF REASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE, THE ASSESSING OFFICER HIMSELF HAS SUMMONED THE AUTHOR O F THE DIARY MR. DEVICHAND MOTILAL CHHORIYA WHOSE STATEMENT WAS RECO RDED ON 01-12- 2009, A COPY OF WHICH IS PLACED AT PAPER BOOK PAGES 36 AND 37. REFERRING TO THE COPY OF THE TRANSACTIONS OF THE S AME, A COPY OF WHICH IS PLACED AT PAPER BOOK PAGES 38 AND 39, LD. COUNSEL F OR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO STATEMENT GIVEN BY SH RI DEVICHAND MOTILAL CHHORIYA IN RESPONSE TO QUESTION NO.4 WHEREIN SHRI CHHORIYA IN HIS REPLY HAD CATEGORICALLY STATED THAT HE HAS NEVER TA KEN ANY LOAN FROM SHRI R.C. BAFNA. IN HIS REPLY TO QUESTION NO.5 HE HAD C ATEGORICALLY STATED THAT THE ENTIRE MONEY BELONGS TO DIFFERENT FIRMS AND THE NAMES ARE IMAGINARY. THEREFORE, WHEN THE AUTHOR OF THE SEIZED DOCUMENTS/ DIARY HIMSELF HAS EXPLAINED THE NATURE OF THE ENTRIES AND HAS OWNED U P THE UNDISCLOSED INCOME AS HIS INCOME THE DEPARTMENT SHOULD HAVE ACC EPTED THAT EXPLANATION AND NO ADDITION SHOULD HAVE BEEN MADE I N THE HANDS OF THE ASSESSEE. 28 34. REFERRING TO THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. SALEK CHAND AGARWAL REPORTED IN 30 0 ITR 426 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THAT CAS E A SEARCH WAS CONDUCTED ON THE BUSINESS PREMISES OF ONE KAIHAIYAL AL OM PRAKASH AND BALDEV PRASAD OF MUZAFFARNAGAR IN WHICH CERTAIN BOO KS OF ACCOUNT AND OTHER DOCUMENTS WERE SEIZED. THERE WERE CREDIT ENTR IES OF RS. 2,20,000 STANDING IN THE NAME OF THE RESPONDENT-ASSESSEE IN THE SEIZED BOOKS. ON BEING ASKED TO EXPLAIN THE NATURE AND THE SOURCE OF THE INVESTMENT SO MADE WITH THE AFORESAID FIRM, THE RESPONDENT-ASSESS EE DENIED TO HAVE MADE ANY SUCH INVESTMENT OR HAVING GIVEN ANY ADVANC E TO THE SAID FIRM. THE ASSESSING OFFICE NOT BEING SATISFIED WITH THE S TATEMENT OF THE RESPONDENT-ASSESSEE MADE ADDITION OF THE SAID AMOUN T WHICH WAS AFFIRMED IN APPEAL BY THE CIT(A). ON FURTHER APPEAL , THE TRIBUNAL DELETED THE ADDITION ON THE GROUND THAT THERE WAS NO MATERI AL ON RECORD WHICH MAY EITHER ESTABLISH OR INDICATE THAT THE AMOUNT OF RS. 2,20,000 WAS DEPOSITED BY THE RESPONDENT-ASSESSEE. ON FURTHER A PPEAL BY THE REVENUE THE HONBLE HIGH COURT UPHELD THE ORDER OF THE TRIB UNAL. THE HONBLE HIGH COURT HELD THAT APART FROM THE ENTRIES FOUND I N THE BOOKS OF THE ASSESSEE THERE WAS NO MATERIAL WHICH COULD LINK THE ADVANCE/DEPOSIT OF RS.2,20,000/- TO THE RESPONDENT ASSESSEE, MORE SO, WHEN THE RESPONDENT ASSESSEE HAD DENIED TO MAKE ANY SUCH ADVANCE/DEPOSI T WITH THE SAID FIRM. IT WAS ACCORDINGLY HELD THAT THE PROVISIONS OF SECT ION 69 OF THE ACT ARE NOT ATTRACTED. HE ALSO RELIED ON THE DECISION OF T HE HONBLE BOMBAY HIGH COURT IN THE CASE OF ADDL.CIT VS. LATA MANGESH KAR REPORTED IN 97 ITR 696, THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF STATE 29 OF KERALA VS. K.T. YOUSUF ETC. REPORTED IN 1979 A IR 1627 AND THE DECISION IN THE CASE OF KR VS. STATE OF UP AND OTH ERS IN CRIMINAL APPEAL NO.1406/2012 ORDER DATED 18-12-2012. 35. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO T HE STATEMENT GIVEN BY SHRI DEVICHAND MOTILAL CHHORIYA, A COPY OF WHICH IS PLACED AT PAGES 36 TO 39 AGAIN REITERATED THAT SHRI CHHORIYA IN HIS REPLY TO QUESTION NO.3 HAD CATEGORICALLY STATED THAT THE NAME OF SHRI RATA NLAL C. BAFNA IS IMAGINARY. THE STATEMENT WAS RECORDED DURING ASSES SMENT PROCEEDINGS. THE STATEMENT OF SHRI DEVICHAND MOTILAL CHHORIYA WA S ALSO RECORDED DURING THE SEARCH WHICH IS REPRODUCED BY THE LD.CIT (A) AT PAGE 37 OF THE ORDER OF THE CIT(A) FOR A.Y. 2008-09. IN VIEW OF T HE ABOVE, HE SUBMITTED THAT THE ENTIRE ADDITION MADE BY THE ASSE SSING OFFICER ALONG WITH INTEREST SHOULD BE DELETED. 36. WITHOUT PREJUDICE TO THE ABOVE, THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO PAPER BOOK NO.2 WHICH CONTAINED CASH BOOK OF THE CHHORIYA GROUP FOR THE PERIOD FROM 01-0 1-2001 TO 31-03- 2001. REFERRING TO PAGE 70 OF THE PAPER BOOK, THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE ENT RY OF RS. 200 WHICH AS PER THE DEPARTMENT IS RS.200 LAKHS, I.E. RS.2 CRORE S. REFERRING TO THE ABOVE, HE SUBMITTED THAT THIS IS THE LOAN FOR THE P ERIOD 01-01-2001 TO 31- 03-2004 TO BE REPAID OVER A PERIOD OF 40 MONTHS @ R S. 5 LAKHS PER MONTH. THE INTEREST RATE IS ALSO MENTIONED AT 2% P ER MONTH. THERE IS ALSO ANOTHER ENTRY OF 100 LAKHS TAKING THE TOTAL LO AN TO RS. 3 CRORES, I.E., RS.200 LAKHS +100 LAKHS, I.E. RS.3 CRORES. REFERRI NG TO THE ABOVE ENTRIES IN PAGE 70 OF THE CASH BOOK FOR THE PERIOD FROM 01- 01-2001 TO 31-03- 30 2001, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED TH AT THIS DOCUMENT WAS IN POSSESSION OF DEPARTMENT, HOWEVER, THE DEPARTMEN T WAS NOT COMING WITH CLEAN HANDS INSPITE OF THE FACT THAT THEY HAVE THE DIARY FOR THE PERIOD FROM 01-01-2001 TO 31-03-2001. THE DEPARTMENT DID NOT PRODUCE THE RECORDS DESPITE DIRECTIONS BY THE TRIBUNAL. THE AS SESSEE OBTAINED THE SAME BY APPLYING UNDER THE RTI ACT. 37. REFERRING TO PAPER BOOK PAGE 139 THE LD. COUNSE L FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE MONTHLY SUMM ARY AS ON 01-05- 2001 ACCORDING TO WHICH THE FIGURE WRITTEN AGAINST SETH SAHEB IS 280, I.E. 280 LAKHS. THIS ACCORDING TO HIM TALLIES WITH THE FIGURES AND CALCULATION AT PAGE 70. 38. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. REFE RRING TO THE ORDER OF THE LD.CIT(A) FOR A.Y. 2008-09 THE LD. DEPARTMENTAL REPRESENTATIVE DREW THE ATTENTION OF THE BENCH TO PARA 11 ONWARDS WHERE THE LD.CIT(A) HAD DEMOLISHED THE STATEMENT GIVEN BY SHRI CHHORIYA THAT THE NAMES APPEARING IN THE SEIZED DIARY ARE IMAGINARY. HE HA S HELD THAT IF ALL THESE NAMES WERE FICTITIOUS AND THAT SHRI CHHORIYAS WERE WRITING BOOKS FOR THEMSELVES, THEN THERE WAS NO NEED OR NECESSITY FOR SHRI CHHORIYA TO WRITE SUCH DETAILED TRANSACTIONS SO MINUTELY, METIC ULOUSLY AND PRECISELY. NATURE OF TRANSACTIONS MENTIONED IN THE SEIZED DIAR Y COMPLETELY DEMOLISH THE STATEMENT OF THE ASSESSEE AS WELL AS THAT OF CH HORIYAS THAT TRANSACTIONS PERTAIN TO ON MONEY RECEIVED ON SALE O F PLOTS AND THE PERSONS APPEARING IN THE SEIZED BOOKS WERE FICTITIOUS AND I MAGINARY. 31 39. THE LD. DEPARTMENTAL REPRESENTATIVE REFERRING T O THE STATEMENT OF SHRI KANYAIHALAL CHHORIYA RECORDED ON 23/24-08-2008 , WHICH HAS BEEN EXTRACTED BY THE CIT(A) AT PAGES 34 TO 37 OF HIS OR DER FOR A.Y. 2008-09 DREW THE ATTENTION OF THE BENCH TO THE SAME AND STA TED THAT THE CHHORIYAS NEVER STATED DURING THE COURSE OF SEARCH THAT THE P ERSONS APPEARING IN THE SEIZED BOOKS WERE IMAGINARY AND FICTITIOUS. THE TH EORY OF IMAGINARY PERSONS/FICTITIOUS PERSONS SURFACED ONLY AFTER 2 MO NTHS OF THE SEARCH WITH SHRI KANHAIYALAL CHHORIYA IN HIS STATEMENT RECORDED ON 16-10-2008 IN RESPONSE TO A QUESTION ON SEIZED ANNEXURES B1 TO B4 0 STATED THAT HIS FATHER RECORDED THE ON MONEY RECEIVED ON SALE OF PL OTS BY VARIOUS CONCERNS IN THE NAME OF IMAGINARY PERSONS MENTIONED IN ANNEXURES B1 TO B40. HE SUBMITTED THAT ON 23-08-2008, I.E., IM MEDIATELY AFTER THE SEARCH SHRI DEVICHAND MOTILAL CHHORIYA IN HIS REPLY TO QUESTION NO.18 HAD ANSWERED AS UNDER : QUE. NO. 18. GIVE, ME DETAILS IN WHOSE HANDWRITING A RE THE ANNEXURES B AS MENTIONED AT PG. 1 TO 2 OF THE PANCHNA MA. SEE & CHECK EVERY BOOK AND FURNISH YOUR INFORMATION ABOUT THE RELATIONSHIP AND CONTEXT OF ABOVE DIARIES, REGISTER AND NOTE BOOK SEIZED UNDER SECTION 132 OF THE I.T. ACT. THESE ARE FO UND IN YOUR RESIDENTIAL PREMISES MEANS YOUR BUSINESS PREMISES - G-128, MIDC, NEAR MUKESH IND. JALGAON. ANS: YOU ASKED ME ABOUT THE ABOVE DIARIES. I AGREE THA T THESE DIARIES WERE FOUND IN MY RESIDENTIAL PREMISES. ALL DIAR IES ARE HANDWRITTEN BY ME. THESE DIARIES ARE RELATED TO BUSINE SS OF MY FAMILY MEMBERS. PERSONS WHO HAVE DEPOSITED AMOUNTS HAVE BEEN MENTIONED IN THESE DIARIES. HOW THIS DEPOSITED MONEY HA S BEEN SPENT HAS ALSO BEEN WRITTEN IN THE DIARIES. PRESENTLY I CANNOT GIVE DETAILS. HOWEVER, I WILL FURNISH ALL INFORMATION WELL -IN-TIME. 39.1 REFERRING TO ABOVE, HE SUBMITTED THAT THE AUTH OR OF THE DIARY NEVER CONFESSED THAT THE NAMES ARE FICTITIOUS OR IMAGINAR Y. THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE ADDIT ION ON ACCOUNT OF 32 UNEXPLAINED ADVANCES AND ADDITION ON ACCOUNT OF INT EREST ON SUCH ADVANCES. 40. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. IN THE INSTANT CASE, A SEARCH AND SEIZURE ACTION U/S.132 OF THE I.T. ACT WAS CONDUCTED AT THE RESIDENTIAL AND OFFICE PREMISES OF THE CHHORIYA GROUP OF JALGAON ON 22-08- 2008. DURING THE COURSE OF SUCH SEARCH OPERATION CERTAIN DOCUMENTS A S PER ANNEXURE-B ITEM NO.1 TO 40 WERE SEIZED WHICH ARE ROUGH CASH BO OKS OF THE CHHORIYA GROUP. THE SAID DIARIES CONTAIN CERTAIN ENTRIES AC CORDING TO WHICH SHRI RATANLAL C. BAFNA HAD GIVEN CERTAIN ADVANCES TO CHH ORIYA GROUP OF JALGAON DURING THE PERIOD FROM 01-04-2001 TO 31-03- 2002. SINCE THE ASSESSEE IN HIS BALANCE SHEET HAD NOT DISCLOSED SUC H ADVANCES, THE ASSESSING OFFICER ISSUED NOTICE U/S.148 AND SOUGHT TO BRING THE AMOUNT TO TAX AS UNDISCLOSED INCOME OF THE ASSESSEE. THE ASS ESSING OFFICER QUANTIFIED SUCH ADVANCES FOR THE PERIOD FROM 01-04- 2001 TO 31-03-2002 AT RS.2,91,36,825/-. FURTHER, THE ASSESSING OFFICE R ALSO COMPUTED THE TOTAL AMOUNT OF INTEREST THAT HAS BEEN GIVEN BY THE CHHORIYAS TO SHRI RATANLAL C. BAFNA AT RS.82,81,598/-. ON BEING QUES TIONED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, THE ASSESSEE SUBMITTED THAT THE AUTHOR OF THE DIARY SHR I DEVICHAND MOTILAL CHHORIYA IN HIS STATEMENT RECORDED U/S.131 HAD STAT ED THAT THE NAMES APPEARING IN THE SEIZED DIARY ARE IMAGINARY AND FIC TITIOUS NAMES. 33 40.1 FURTHER, THE ASSESSEE ALSO STRONGLY DENIED TO HAVE GIVEN ANY LOAN TO CHHORIYA AND RECEIVED ANY INTEREST ON THE ADVANCES GIVEN TO HIM. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WI TH THE EXPLANATION GIVEN BY THE ASSESSEE AND MADE ADDITION ON THE GROU ND THAT SHRI DEVICHAND MOTILAL CHHORIYA IS A LAND DEVELOPER AND RUNNING A DAL MILL. SHRI RATANLAL C. BAFNA HAS PURCHASED VARIOUS PLOTS FROM THE CHHORIYA GROUP AND IS HAVING BUSINESS RELATIONS WITH THE CHH ORIYA GROUP. THE WIFE OF THE ASSESSEE SMT. TARADEVI R. BAFNA IS ALSO ASSOCIATED WITH THE CHHORIYA AS A MEMBER OF AN AOP UNDER THE D.P.JAIN-A OP, CHANDWAD. SRI RATANLAL C. BAFNA IS ALSO ASSOCIATED WITH THIS GROUP AS A MEMBER OF ANOTHER AOP UNDER THE NAME S.D. JAIN-AOP, BHAMBORI. FURTHER, THE ASSESSEE WHO IS TRADING IN GOLD AND SILVER ARTICLES HAD SOLD GOLD AND SILVER ITEMS TO THE CHHORIYAS. THEREFORE, HE HELD THAT WH EN THE ENTRIES OF PURCHASE OF GOLD AND SILVER FROM SHRI RATANLAL C. B AFNA ARE CORRECT, THE LOAN AND INTEREST ENTRIES IN WHICH THE NAME OF SHRI RATANLAL C. BAFNA IS APPEARING CANNOT BE TREATED AS ENTRIES IN IMAGINARY NAME. THUS, THE ASSESSING OFFICER BASED ON THE THEORY OF PEAK CREDI T MADE ADDITION OF RS.2,91,36,825/-. SIMILARLY, HE ALSO MADE ADDITION OF RS.82,81,598/- WHICH IS THE INTEREST RECEIVED BY THE ASSESSEE FROM TIME TO TIME. WE FIND IN APPEAL THE LD.CIT(A) DELETED AN AMOUNT OF RS.2,8 0,00,000/- ON THE GROUND THAT THE SAID AMOUNT OF RS.2,80,00,000/- IS NOT ENTERED IN THE DAY- WISE CASH BOOK MAINTAINED BY SHRI CHHORIYA. IT IS ONLY FINDING PLACE IN THE MONTHLY SUMMARY SHEET AS ON 01-05-2001. ACCORD ING TO HIM, THE AMOUNT OF RS.2,80,00,000/- COULD HAVE BEEN ADVANCED BY THE ASSESSEE IN THE EARLIER PERIOD AND WAS OUTSTANDING AS ON 01-04- 2001. HE OBSERVED THAT THE MONTHLY SUMMARY BALANCE IN THE MONTH OF MA RCH 2001 IS NOT 34 AVAILABLE ON RECORD. IT IS ONLY MONTHLY SUMMARY BA LANCE FOR THE MONTH OF APRIL 2001 PREPARED ON 01-05-2001. THUS, THERE IS A MISSING LINK BETWEEN MARCH 2001 AND APRIL 2001. THEREFORE, HE H ELD THAT IN THE ABSENCE OF ANY SPECIFIC ENTRY IN THE CASH BOOK DURI NG APRIL 2001, IT IS VERY DIFFICULT TO PRESUME THAT THE AMOUNT WAS ADVAN CED BY THE ASSESSEE DURING THE MONTH OF APRIL 2001. HE ACCORDINGLY DEL ETED THE AMOUNT OF RS.2,80,00,000/-. 40.2 THE LD.CIT(A) FURTHER OBSERVED THAT THERE ARE CERTAIN TRANSACTIONS INCLUDED IN THE PEAK CREDIT/STATEMENT ACTUALLY RELA TED TO SALE OF JEWELLERY TRANSACTIONS, THE DETAILS OF WHICH ARE AS UNDER : 04/04/2001 RS. 26,880/- 04/06/2001 RS. 2,26,751/- 12/11/2001 RS. 2,000/- 02/02/2002 RS. 53,520/- SIMILARLY, HE ALSO HELD THAT THE FOLLOWING AMOUNTS REPRESENTING INTEREST ARE TO BE EXCLUDED WHILE WORKING OUT THE PEAK: 22/06/2001 RS.994/- 14/12/2000 RS. 260/- 40.3 HE ACCORDINGLY CALCULATED A REVISED PEAK STATE MENT AS PER ANNEXURE B TO THE APPEAL ORDER ACCORDING TO WHICH T HE PEAK WORKS OUT TO RS.9,30,000/-. HE ACCORDINGLY DIRECTED THE ASSESSI NG OFFICER TO CONSIDER THE PEAK CREDIT FOR THE PURPOSE OF CALCULATING UNAC COUNTED ADVANCES AT RS.9,30,000/- AS AGAINST RS.2,91,36,825/-. AS REGA RDS THE ADDITION ON ACCOUNT OF INTEREST AND OTHER RECEIPTS AMOUNTING TO RS.82,81,598/-, THE LD.CIT(A) THOROUGHLY ANALYSED THE CALCULATION FOR S UCH INTEREST AND DETERMINED THE FIGURE AT RS.62,51,754/- AS AGAINST RS.82,81,598/-. 35 40.4 IT IS THE SUBMISSION OF THE LD. COUNSEL FOR TH E ASSESSEE THAT THE SO- CALLED ADDITION ON ACCOUNT OF UNEXPLAINED ADVANCE A ND UNEXPLAINED INTEREST ARE UNWARRANTED SINCE THE ASSESSEE FROM TH E VERY BEGINNING IS DENYING TO HAVE GIVEN ANY ADVANCE AS NOTED IN THE S EIZED DOCUMENTS. SHRI KANHAIYALAL CHHORIYA HIMSELF HAS ADMITTED IN S WORN STATEMENT RECORDED DURING THE COURSE OF SEARCH U/S.132 THAT T HE TRANSACTIONS WERE RELATED TO THE FAMILY MEMBERS OF THEIR GROUP. EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS SHRI DEVICHAND MOTILAL CHHOR IYA HAD STATED THAT THE NAMES APPEARING IN THE SEIZED DIARY ARE IMAGINA RY. FURTHER, WHEN THE PERSON SEARCHED HAD ADMITTED THAT THE SAME BELONGS TO HIM AND AGREED FOR THE ADDITION IN HIS CASE, NO ADDITION CAN BE MA DE BASED ON THE SEIZED DOCUMENTS. ACCORDING TO THE LD. COUNSEL FOR THE AS SESSEE, MERE ENTRIES IN THE ACCOUNT OF THE THIRD PARTY REGARDING THE PAY MENTS WERE NOT SUFFICIENT TO MAKE ADDITIONS. THE SEIZED DOCUMENTS DO NOT CONTAIN ANY SIGNATURE OF THE ASSESSEE OR THE BORROWER. FURTHER , THERE WAS NO CORROBORATIVE EVIDENCE TO CONCLUDE THAT THE ENTRIES RECORDED IN THE SEIZED DOCUMENTS WERE REPRESENTING THE REAL TRANSACTIONS R ELATING TO THE ASSESSEE. IT IS ALSO THE SUBMISSION OF THE LD. COU NSEL FOR THE ASSESSEE THAT DESPITE THE DEPARTMENT HAVING THE SEIZED DIARI ES FOR THE PERIOD 01-01- 2001 TO 31-03-2001 THE SAME WAS NOT CONSIDERED BEFO RE WORKING OUT THE PEAK CREDIT. AS PER THE ENTRIES APPEARING IN THE S EIZED DOCUMENT, THERE APPEARS AN ENTRY IN THE NAME OF SHRIMANSETH SAHEB 200 WHICH IN THE OWN VERSION OF THE DEPARTMENT SHOULD BE READ AS 200 LAKHS, I.E. RS.2 CRORES. AS PER THE ENTRIES APPEARING IN THE SAID P AGE, THE SAID AMOUNT HAS TO BE REPAID IN 40 INSTALMENTS OF RS.5 LAKHS. THER E IS ALSO ANOTHER ENTRY OF 100 LAKHS TO BE REPAID AS UNDER : 36 30 LAKHS - 31-12-2001 30 LAKHS - 31-12-2002 30 LAKHS - 31-12-2003 10 LAKHS - 30-08-2004 OUT OF THE ABOVE ENTRY OF 200 +100 THE AMOUNT OF 20 HAS BEEN PAID AND THE OUTSTANDING AMOUNT IS 280 WHICH TALLIES WITH TH E AMOUNT 280 SHOWN IN THE NAME OF SHRIMANSETH SAHEB AT PAGE 139 OF THE PAPER BOOK. 40.5 AS REGARDS THE ARGUMENTS OF LD. COUNSEL FOR TH E ASSESSEE THAT NO ADDITION IS CALLED FOR SINCE THE AUTHOR OF THE DOCU MENT HAS DENIED TO HAVE RECEIVED ANY ADVANCE FROM PERSONS AS NOTED IN THE S EIZED DOCUMENT THAT SHRI KANHAILAL CHHORIYA HIMSELF HAS ADMITTED THE TR ANSACTIONS AS RELATED TO FAMILY MEMBERS OF THEIR GROUP FOR WHICH THEY OFF ERED TO PAY THE TAXES ON THE SAME AND THAT SHRI DEVICHAND MOTILAL CHHORIY A HAS STATED THE NAMES AS IMAGINARY ARE CONCERNED, WE DO NOT FIND AN Y SUBSTANCE IN THE ABOVE. A PERUSAL OF THE ORDER OF THE CIT(A) FOR A. Y. 2008-09 GIVES THE SEQUENCE OF EVENTS THAT TOOK PLACE. ADMITTEDLY, TH E SEARCH IN THE INSTANT CASE TOOK PLACE ON 22-08-2008 AND IN THEIR STATEMEN TS RECORDED ON THAT DAY OR IMMEDIATELY AFTER THE SEARCH NO MEMBER OF TH E CHHORIYA GROUP HAD EVER STATED THAT THE TRANSACTIONS MENTIONED IN THE ANNEXURE B1 TO B40 WERE IN FICTITIOUS NAMES. IN HIS STATEMENT REC ORDED U/S.132(4) ON 23- 08-2008 SHRI KANHAIYALAL CHHORIYA HAD ADMITTED THAT THE SEIZED BOOKS OF ANNEXURE B RELATED TO HIS BUSINESS AND WERE WRITTEN BY HIS FATHER SHRI DEVICHAND MOTILAL CHHORIYA. HE HOWEVER COULD NOT A NSWER WHETHER THE FIGURES MENTIONED IN THE TRANSACTIONS REFLECTED IN THE SAID SEIZED BOOKS OF ANNEXURE B3 SHOWN IN HIS REGULAR BOOKS OF ACCOUNT O R NOT. NOWHERE DID HE SAY THAT THE NAMES APPEARED IN THE SEIZED ANNEXU RES WERE IMAGINARY. 37 INFACT HE CONFIRMED THE CONTENTS OF THE SEIZED DOCU MENTS AT PAGE 65 OF ANNEXURE B19 AND PAGE 191 OF B14 SHOWN TO HIM. SIM ILARLY, THE STATEMENT OF SHRI DEVICHAND MOTILAL CHHORIYA, FATHE R OF SHRI KANHAIYALAL CHHORIYA WAS ALSO RECORDED ON OATH ON 23-08-2008. IN REPLY TO QUESTION NO.18, SHRI DEVICHAND MOTILAL CHHORIYA HAD STATED T HAT THESE ARE RELATED TO THE BUSINESS OF HIS FAMILY MEMBERS. THE PERSONS WHO HAVE DEPOSITED AMOUNTS HAVE BEEN MENTIONED IN THESE DIARIES. HOW THIS DEPOSITED MONEY HAS BEEN SPENT HAS ALSO BEEN WRITTEN IN THE D IARIES. HE HOWEVER STATED THAT HE WILL FURNISH THE INFORMATION WELL IN TIME. THE EXTRACTS OF SUCH STATEMENT HAS ALREADY BEEN REPRODUCED AT PARA 39 OF THE IMPUGNED ORDER. THEREFORE, AT THE INITIAL STAGE, THE CHHORI YAS HAD NEVER STATED THAT THE PERSONS APPEARING IN THE SEIZED BOOKS WERE IMAG INARY AND FICTITIOUS ON THE DATE OF SEARCH. THE AUTHOR OF THE DIARY HAD CATEGORICALLY STATED THAT NAMES OF THE PERSONS WHO HAVE DEPOSITED AMOUNT S HAVE BEEN MENTIONED IN THESE DIARIES ALONG WITH THE MANNER OF SPENDING OF THE DEPOSITED MONEY. IT HAS ALSO BEEN ESTABLISHED BY T HE ASSESSING OFFICER AND THE CIT(A) THAT SHRI CHHORIYA AND THE ASSESSEE WERE BUSINESS PARTNERS UNDER DIFFERENT AOPS. UNDER THESE CIRCUMS TANCES, THE NAMES CANNOT BE TREATED AS IMAGINARY NOR THE TRANSACTIONS BE TREATED AS FICTITIOUS. 40.6 NOW COMING TO THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT WHEN THE CHHORIYAS HAVE OWNED UP THE INCOME, THEREFORE, THE SAME CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE WE FIN D FOR THE IMPUGNED ASSESSMENT YEAR SHRI CHHORIYAS HAVE NOT OFFERED ANY AMOUNT TO TAX ON ACCOUNT OF SUCH ENTRIES. THE LD. COUNSEL FOR THE A SSESSEE COULD NOT BRING 38 ANY MATERIAL BEFORE US TO SHOW THAT THE INCOME HAS BEEN OFFERED TO TAX BY SHRI CHHORIYA. THE ENTRIES WHICH ARE METICULOUSLY AND SYSTEMATICALLY MAINTAINED CLEARLY SHOW THAT THE TRANSACTIONS HAVE TAKEN PLACE, MONEY HAS BEEN ADVANCED BY SRI RATANLAL C. BAFNA TO SHRI CHHRORIYA AS PER THE ENTRIES IN SEIZED DOCUMENTS, WHICH ARE DIARIES HAND WRITTEN BY THE SEARCHED PERSON, HAVING ENTRIES NOT ONLY IN THE NAM E OF THE ASSESSEE, BUT VARIOUS OTHER PERSONS ALSO AND INTEREST HAS BEEN RE CEIVED BY SRI RATANLAL C. BAFNA FROM THE CHHORIYAS. THEREFORE, IN ABSENCE OF ANY MATERIAL TO PROVE THAT THE AMOUNT HAS BEEN OWNED UP AND OFFERED TO TAX BY THE CHHORIYAS, THE SAME HAS TO BE TAXED IN THE HANDS OF SHRI RATANLAL C. BAFNA. THEREFORE, IN PRINCIPLE, WE UPHOLD THE ORDE R OF THE ASSESSING OFFICER AS WELL AS THE CIT(A) FOR TAXATION OF THE U NEXPLAINED INVESTMENT AND INTEREST THEREON IN THE HANDS OF SHRI RATANLAL C. BAFNA. 40.7 NOW COMING TO THE QUANTUM OF ADDITION, WE FIND THERE ARE SERIOUS CALCULATION MISTAKES AND ERROR OF JUDGMENT. THE AS SESSEE HAS FILED THE COPY OF CASH BOOK FOR THE PERIOD FROM 01-01-2001 TO 31-03-2001 WHICH HE HAS OBTAINED FROM THE DEPARTMENT BY FILING AN RT I APPLICATION. AS PER PAGE 70 OF THE SAID CASH BOOK THERE APPEARS AN ENTR Y OF RS.200 IN THE NAME OF SRIMANSETH SAHEB. SIMILARLY, THERE IS ON E MORE ENTRY OF 100 UNDER THE SAME NAME. AS PER THE VERSION OF THE DEP ARTMENT, THE SAME HAS TO BE CONSIDERED AS 200 LAKHS AND 100 LAKHS TOTALLI NG 300 LAKHS, I.E. 3 CRORES. THE MANNER OF REPAYMENT IS ALSO NARRATED I MMEDIATELY BELOW THE ABOVE 2 ENTRIES. THE AMOUNT OF RS.200 LAKHS TO BE REPAID @ RS.5,00,000/- IN 40 INSTALMENTS. THE AMOUNT OF 100 LAKHS TO BE PAID AS UNDER : 39 31-12-2001 30 31-12-2002 30 31-12-2003 30 30-08-2004 10 OUT OF THE ABOVE ENTRIES OF 200+100, I.E. 300 LAKHS AN AMOUNT OF RS.20 LAKHS HAVE BEEN PAID AND THE OUTSTANDING AMOUNT IS 280 LAKHS TALLIES WITH THE FIGURE OF 280 APPEARING AT PAGE 139 OF THE PAPE R BOOK AGAINST THE NAME OF SRIMAN SETH SAHEB. 40.8 IT MAY BE PERTINENT TO NOTE HERE THAT PAGE 139 OF THE PAPER BOOK IS FOUND IN THE SEIZED COPY OF CASH BOOK FOR THE PERIO D 01-04-2001 TO 30- 09-2001. THIS IS THE SUMMARY SHEET AS ON 01-05-200 1 FROM WHICH THE ASSESSING OFFICER PICKED UP THE FIGURE OF 280 LAKHS FOR CALCULATING THE PEAK CREDIT. DESPITE HAVING THE CASH BOOK FOR THE P ERIOD 01-01-2001 TO 31-03-2001 AT THEIR DISPOSAL, THE REVENUE AUTHORITI ES NEVER CONSIDERED THE SAME BEFORE CALCULATING THE PEAK. UNDER THESE CIRCU MSTANCES, WE FIND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ADDITION OF RS.2,80,00,00/- OR RS.2.80 CRORES HAS T O BE REDUCED FROM THE PEAK CREDIT SO COMPUTED BY THE ASSESSING OFFICER SI NCE THE SAME RELATES TO THE PERIOD PRIOR TO A.Y. 2002-03 AND CANNOT BE C ONSIDERED FOR THE IMPUGNED ASSESSMENT YEAR. WE ACCORDINGLY UPHOLD TH E ORDER OF THE CIT(A) IN DELETING RS.2,80,00,000/- FROM THE PEAK C REDIT. 40.9 SIMILARLY, THE LD.CIT(A) WHILE RESTRICTING THE PEAK CREDIT TO RS.9,30,000/- AS AGAINST RS.2,91,36,825/- HAD GIVEN FURTHER CREDIT OF RS.2,06,825/-. THE BASIS OF SUCH CALCULATION IS AS PER ANNEXURE B. THE LD.CIT(A) WHILE CALCULATING PEAK CREDIT HAS NOTED T HAT CERTAIN 40 TRANSACTIONS RELATING TO SALE OF JEWELLERY AND INTE REST HAVE BEEN WRONGLY INCLUDED FOR CALCULATING THE PEAK CREDIT FOR WHICH HE DELETED THE SAME FROM THE PEAK CREDIT AND A REVISED STATEMENT WAS PR EPARED WHICH HAS BEEN ANNEXED TO THE APPELLATE ORDER ACCORDING TO WH ICH THE HIGHEST PEAK COMES TO RS.9,30,000/-. NEITHER THE LD. DEPARTMENT AL REPRESENTATIVE NOR THE LD. AUTHORISED REPRESENTATIVE COULD POINT O UT ANY MISTAKE IN THE COMPUTATION OF SUCH PEAK. UNDER THESE CIRCUMSTANCE S, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) SUSTAINING ADDITION OF RS.9,30,000/- AS AGAINST RS.2,91,36,825/- MADE BY T HE ASSESSING OFFICER. ACCORDINGLY, THE SAME IS UPHELD. 40.10 SIMILARLY, THE LD.CIT(A) WHILE COMPUTING THE INTEREST THAT HAS TO BE ADDED TO THE TOTAL INCOME HAS ALSO THOROUGHLY AN ALYSED THE ENTRIES ITEM-WISE. AFTER THOROUGHLY ANALYSING HE CONSIDER ED CERTAIN TRANSACTIONS WHICH ACCORDING TO HIM DO NOT APPEAR T O BE TAXABLE RECEIPTS. SUCH TRANSACTIONS ARE WITHOUT ANY REFERENCE TO INTE REST OR PROFIT ON SALE AND ARE JUST FINANCIAL TRANSACTIONS INVOLVING RECEI PTS BY THE ASSESSEE AND CANNOT BE CONSIDERED AS INCOME FOR THE IMPUGNED ASS ESSMENT YEAR. HE THEREFORE ADDED THESE LOANS FOR THE PURPOSE OF WORK ING OUT THE PEAK CREDIT BUT DID NOT CONSIDER THE SAME AS INCOME. SI MILARLY, CERTAIN TRANSACTIONS REPRESENTED SALE OF JEWELLERY WHICH AC CORDING TO HIM CANNOT BE SAID AS INCOME AS SUCH. ACCORDING TO HIM, ONLY THE PROFIT ELEMENT CAN BE CONSIDERED AS TAXABLE. HE ACCORDINGLY RESTRICTE D SUCH INTEREST AND OTHER INCOME TO RS.62,51,754/- AS AGAINST RS.82,81, 598/- DETERMINED BY THE ASSESSING OFFICER. THIS REASONED FINDING GIVEN BY THE CIT(A) IN OUR 41 OPINION DOES NOT SUFFER FROM ANY INFIRMITY AND ACCO RDINGLY THE SAME IS UPHELD. THE GROUNDS RAISED ON THIS ISSUE ARE ACCOR DINGLY DISMISSED. 41. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE AS WELL AS THE REVENUE FOR THE A.Y. 2002-03 ARE DISMISSED. ITA NO.204/PN/2012 (BY ASSESSEE-SHRI RATANLAL C. BA FNA) (A.Y. 2008-09) : 42. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE FILED HIS RETURN OF INCOME ON 30-09-2008 DECLARING INCOME OF RS.99,09, 470/-. THE ASSESSEE IS A JEWELLER RUNNING A PROPRIETARY CONCER N UNDER THE NAME AND STYLE OF RATANLAL CHUNINAL BAFNA (SILVER PALACE) AND R.C. BAFNA METAL INDUSTRIES. HE DEALS IN GOLD AND SILVER ORNAMENTS AND UTENSILS AND MANUFACTURING OF SILVER ORNAMENTS. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT A SEARCH AND SEIZUR E ACTION U/S.132 OF THE I.T. ACT WAS CONDUCTED IN THE CHHORIYA GROUP OF JAL GAON ON 22-08-2008 DURING WHICH CERTAIN DOCUMENTS AT THE RESIDENTIAL C UM BUSINESS PREMISES OF SHRI KANHAIYALAL D. CHHORIYA, G-128, MIDC, JALGA ON WERE SEIZED. ON PERUSAL OF THE SEIZED DOCUMENTS AS PER ANNEXURE B ITEM NO.1 TO 40 WHICH ARE ROUGH CASH BOOKS OF THE CHHORIYA GROUP, I T WAS NOTICED THAT SHRI RATANLAL C. BAFNA OF JALGAON HAD ADVANCED VAR IOUS AMOUNTS DURING THE YEAR UNDER CONSIDERATION TO CHHORIYA GROUP AND SUCH TRANSACTIONS OF PAYMENT AND RECEIPT ALONG WITH INTEREST ON THE SAME WERE RECORDED THEREIN. HOWEVER, ON PERUSAL OF THE BALANCE SHEET FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME FOR THE IMPUGNED AS SESSMENT YEAR, THE AO NOTED THAT NEITHER THESE ADVANCES WERE REFLECTED IN THE BALANCE SHEET 42 NOR THE ASSESSEE HAD OFFERED ANY SUCH INTEREST EARN ED ON SUCH ADVANCES AS HIS INCOME IN THE RETURN OF INCOME FILED. THE AO Q UANTIFIED SUCH ADVANCES FOR THE IMPUGNED ASSESSMENT YEAR AT RS.87, 25,360/- AND THE INTEREST EARNED ON ACCOUNT OF SUCH ADVANCES AT RS.2 0,31,360/- AND ASKED THE ASSESSEE TO EXPLAIN AS TO WHY ADDITION SHOULD N OT BE MADE TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF SUCH UNEXPLAIN ED ADVANCES GIVEN AND THE INTEREST THEREON. 43. THE ASSESSEE VIDE HIS REPLY DATED 20-12-2010 IN TERALIA SUBMITTED AS UNDER WHICH HAS BEEN REPRODUCED BY THE AO IN THE BODY OF THE ASSESSMENT ORDER : '...... IN THIS CONTEXT, I HAVE TO SUBMIT THAT I AM N OT AT ALL CONNECTED WITH ANY OF SUCH TRANSACTION NOTED IN THE SIMILAR NAME OF MINE, ON THE SAID ALLEGED PAPERS. MERELY BECAUSE OF THERE IS SIMILAR NAME TO MY NAME, THESE TRANSACTIONS CANNOT BE CONSIDERED OR RELATED TO ME. I CATEGORICALLY DENY OF ALL THE SAID TRANSACTION SHOWN TO ME. IN ABSENCE OF ANY FURTHER CORROBORATIVE EVIDENCE, THE TRANSACTED AMOUNT CANNOT BE TAXED IN MY HAND. FURTHER, IT IS SIGNIFICANT TO NOTE HERE THAT YOUR KIN D HONOUR HAS THOROUGHLY VERIFIED OUR AUDITED BOOKS OF ACCOUNTS AND SATISFIED YOURSELF THAT IN NO WAY WE ARE HAVING ANY TRANSACTION WITH MR . CHHORIYA GROUP OF CASE. NEITHER I HAVE PROVIDED HIM ANY FUND NOR RECEI VED ANY INTEREST AND ALSO NOT SOLD OUT ANY GOLD AS ALLEGED DURING THE ASSESSMEN T PROCEEDINGS. IT IS TO BE NOTED THAT YOUR KIND HONOUR HAS RECORDED THE STATEMENT OF MR. CHHORIYA ON 1-12-2009 IN EARLIER ASSESSMENT PROCEED INGS, WHEREIN HE HAS CATEGORICALLY DENIED TO HAVE ANY TRANSACTION WITH ME. MR. CHHORIYA HAS ALSO AFFIRM THAT THESE ALL NAMES WERE IMAGINARY ONE AN D OFFERED THE SAME AS INCOME OF HIS GROUP. IT MAY NOT BE OUT OF PLACE TO MENTION HERE THAT A SSESSMENT PROCEEDINGS MUST HAVE BEEN INITIATED IN MR. CHHORIYA A GROUP OF CASES FOR THE YEAR UNDER CONSIDERATION. THUS, FOR THE NATURAL J USTICE, IT IS ABSOLUTELY NECESSARY TO ASCERTAIN WHAT SORT OF TREATMENT HAS BEEN G IVEN TO ALL TRANSACTION NOTED IN ABOVE ALLEGED PAPERS IN THE HAND S OF MR. CHHORIYA GROUP OF CASES, BY THE SAID ASSESSING AUTHORITY, WHO ASSESSED TO MR. CHHORIYA. NECESSARY ENQUIRIES IN THIS REGARDS MAY PLEASE BE CONDUCTED WITH THE SAID ASSESSING AUTHORITY, AS TO WHETHER MR. CHHO RIYA GROUP OF CASE HAS CONSIDERED/SHOWN ALL THESE TRANSACTIONS RECORDED IN THE ALLEGED PAPERS IN THEIR HANDS....' 44. HOWEVER, THE AO DID NOT ACCEPT THE ABOVE CONTEN TION OF THE ASSESSEE. HE OBSERVED THAT THE ENTRIES IN THE ROUG H CASH BOOK HAVE BEEN 43 WRITTEN BY SHRI DEVICHAND MOTILAL CHHORIYA WHO IS A LAND DEVELOPER AND RUNNING A DAL MILL. THE SEIZED DOCUMENTS CONTAIN T HE NAME OF THE ASSESSEE AS RATANLAL BAFNA, R.C. BAFNA, BAFNAJI, R. BAFNA ETC. IN RESPECT OF VARIOUS FINANCIAL TRANSACTIONS. FURTHER, SHRI B AFNA IS HAVING BUSINESS TRANSACTION WITH CHHORIYA GROUP. SHRI BAFNA HAD PU RCHASED VARIOUS PLOTS FROM CHHORIYA GROUP AND HIS FAMILY IS HAVING BUSINE SS RELATIONSHIP WITH THE ASSESSEE. SMT. TARADEVI R. BAFNA, WIFE OF THE ASSESSEE IS ASSOCIATED WITH CHHORIA GROUP AS A MEMBER OF AOP BY NAME D.D. JAIN, CHANDWAD WHICH HAS DEVELOPED A LAY OUT AND SOLD THE PLOTS. SHRI R.C. BAFNA IS ALSO ASSOCIATED WITH THIS GROUP AS A MEMBER OF AOP OF S. D. JAIN, BHAMBHORI. FURTHER, THE ASSESSEE IS TRADING IN GOLD AND SILVER ARTICLES AND THERE ARE ENTRIES IN THE SEIZED CASH BOOK ACCORDING TO WHICH GOLD AND SILVER ARTICLES WERE PURCHASED FROM THE ASSESSEE BY THE CHHORIYA GR OUP. THESE ENTRIES ARE IN THE NAME OF SHRI R.C. BAFNA AS FOLLOWS : DATE AMOUNT DESCRIPTION 3-10-2007 RS.67,640/- GOLD SALE 29-11-2007 RS.6,000/- GOLD/SILVER SALE 13-02-2008 RS.66,945/- GOLD SALE 45. THE SUBMISSION OF THE ASSESSEE THAT SHRI DEVICH AND M. CHHORIYA IN HIS STATEMENT RECORDED ON 01-12-2009 HAD CATEGOR ICALLY DENIED TO HAVE ANY TRANSACTION WITH THE ASSESSEE AND THE NAME APPE ARING IN THE SEIZED DOCUMENTS WERE STATED TO BE IMAGINARY ONE AND THAT THE CHHORIYAS HAD OFFERED THE SAME AS INCOME OF THEIR GROUP WAS ALSO REJECTED BY THE AO ON THE GROUND THAT THE ASSESSEE WAS HAVING FINANCIAL/B USINESS TRANSACTION WITH CHHORIYA GROUP AND ALL THESE TRANSACTIONS ARE REGARDING THE SAME AND NAME OF SHRI R.C. BAFNA IS NOT IMAGINARY ONE. FURTHER, DURING THE COURSE OF SEARCH AND SEIZURE ACTION U/S.132 OF THE I.T. ACT, STATEMENTS OF 44 SHRI KANHAIYALAL CHHORIYA AND SHRI DEVICHAND M. CHH ORIYA WERE RECORDED AND THEY HAD ADMITTED THE FACT OF TRANSACT IONS IN RESPECT OF THE BUSINESS AFFAIRS OF THE FAMILY MEMBERS IN THIS CASH BOOK. HE THEREFORE WAS OF THE OPINION THAT THE STATEMENT OF SHRI DEVIC HAND M. CHHORIYA ON 1-12-2009 IS FALSE AND MISLEADING AND CANNOT BE REL IED UPON. HE FURTHER HELD THAT ADMISSION OF FINANCIAL TRANSACTION BY SHR I CHHORIYA IN HIS GROUP WILL NOT ABSOLVE THE ASSESSEE FROM EXPLAINING THE T RUE TRANSACTIONS RELATING TO SEIZED DOCUMENTS. ACCORDING TO THE AO, MR.CHHORIYAS WOULD NOT HAVE WRITTEN THE NAME OF THE ASSESSEE WITHOUT R EALLY HAVING THE TRANSACTIONS WITH ASSESSEE AND SUMMARY SHEETS MAINT AINED BY HIM. THEREFORE, SUCH TRANSACTIONS PARTICULARLY MADE AND INTEREST RECEIVED ON THE SAME HAVE TO BE BROUGHT TO TAX. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT CROSS EXAMINATION OF SHRI DEVICHAND M . CHHORIYA SHOULD BE ALLOWED, THE AO HELD THAT SHRI DEVICHAND M. CHHO RIYA HAS GIVEN THE STATEMENT ON 01-12-2009 U/S.131 OF THE I.T. ACT AND THE STATEMENT IS NOT AGAINST THE ASSESSEE. THEREFORE, THERE IS NO POINT IN CROSS EXAMINING SHRI DEVICHAND M. CHHORIYA. AS REGARDS THE CONTENTION O F THE ASSESSEE THAT NO SUCH TRANSACTIONS ARE MENTIONED IN HIS AUDITED B OOKS OF ACCOUNT, THE AO REJECTED THE SAME ON THE GROUND THAT THESE FINAN CIAL TRANSACTIONS WERE NOT MEANT TO BE DISCLOSED TO THE DEPARTMENT AND WER E SECRET. THEREFORE, NEITHER SHRI CHHORIYA NOR THE ASSESSEE HAS RECORDED THESE TRANSACTIONS IN THEIR AUDITED BOOKS OF ACCOUNT. IN VIEW OF THE ABO VE, THE AO MADE ADDITION OF RS.87,25,360/- AS UNEXPLAINED ADVANCES AND RS.20,31,360/- BEING INTEREST ON SUCH ADVANCES TO THE TOTAL INCOME OF THE ASSESSEE. 45 46. IN APPEAL THE ASSESSEE MORE OR LESS REITERATED THE SAME ARGUMENTS. IT WAS ARGUED THAT THE AO PASSED THE ORDER WITHOUT PROVIDING AN OPPORTUNITY OF EXAMINATION/CROSS EXAMINATION OF THE PERSON IN WHOSE PREMISES THE SAID ALLEGED PAPERS WERE FOUND AND THE REFORE THE ORDER PASSED BY THE AO RESULTED IN TOTAL MISCARRIAGE OF J USTICE. THE ASSESSEE ALSO ARGUED THAT THE PAPERS WERE SEIZED FROM THE PR EMISES OF CHHORIYA AND INFACT DO NOT BELONG TO THE ASSESSEE. THEREFOR E, THE SEPARATE PROCEDURE AS LAID DOWN IN THE I.T. ACT SHOULD HAVE BEEN FOLLOWED. UNLESS THE AO OF CHHORIYA RECORDED HIS SATISFACTION BEFORE COMPLETION OF ASSESSMENT OF CHHORIYA THAT THE SAID TRANSACTION S PERTAIN TO THE ASSESSEE AND EXCLUDED IN THE HANDS OF SHRI CHHORIYA AND FORWARDED TO THE AO NO SUCH ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. THE ASSESSEE STRONGLY DENIED TO HAVE ANY TRANSACTIONS M ADE WITH SHRI CHHORIYA. 47. HOWEVER, THE LD.CIT(A) WAS NOT SATISFIED WITH T HE EXPLANATION GIVEN BY THE ASSESSEE AND UPHELD THE ADDITION MADE BY THE AO. WHILE DOING SO, HE OBSERVED THAT THE PERUSAL OF THE SEIZE D ANNEXURES B4 TO B17 RELEVANT FOR THE IMPUGNED ASSESSMENT YEAR PRIMA-FAC IE INDICATES THAT THESE ARE IN THE NATURE OF MONEY LENDING WHERE CHHO RIYS HAVE CLEARLY WRITTEN THE PRINCIPAL AMOUNTS AND INTEREST PAID THE REON DURING THE A.Y. 2008-09. TERMS LIKE MUDDAL, BYAZ, ROKH ETC., HAV E BEEN EXTENSIVELY USED IN THE SAID TRANSACTIONS WHICH IS EVIDENT FROM THE SEIZED DOCUMENTS. IT IS ESTABLISHED THAT THE DOCUMENTS AR E MAINTAINED ON TWO COLUMN BASIS. THE LEFT HAND COLUMN REPRESENTS THE RECEIPTS AND THE RIGHT HAND SIDE COLUMN PAYMENTS. THE CONTENTS OF BOTH TH E COLUMNS ARE SELF 46 EXPLANATORY. THE ENTRIES PERTAINING TO THE ASSESSE E CLEARLY GIVE AWAY INDICATION OF NATURE OF TRANSACTION, I.E. MONEY LEN DING. THE NAMES OF THE PERSONS INCLUDING THE ASSESSEE ARE CLEARLY WRITTEN AND THE FIGURES MENTIONED BRIEFLY AGAINST THEIR RESPECTIVE NAMES SO METIMES SPEAK THAT UNITS SUCH A LAKH/CRORE ETC. INCLUDING SPECIFICALLY TOTAL AMOUNTS. FURTHER, THE NATURE OF SEIZED ANNEXURES IS VERY MUC H SIMILAR TO CASH BOOK WHERE THE TRANSACTIONS ARE RECORDED ON DAILY BASIS OF EACH MONTH. THE OPENING AND CLOSING BALANCE IN WHICH IT IS WORKED OUT AND THE MONTHLY SUMMARY BALANCES OF VARIOUS LENDERS SHOWN AT THE EN D OF THE MONTH. THE DOCUMENTS UNMISTAKABLY SHOWED THAT ACCOUNTS OF BUSI NESS REGARDING RECEIPT AND PAYMENTS OF MONEY DURING 01-04-2007 TO 31-03-2008 WERE REGULARLY MAINTAINED. HE OBSERVED THAT CHHORIYAS H AVE ALREADY ADMITTED IN THEIR STATEMENTS DURING THE SEARCH THAT THE SAID BOOKS WERE IN THE HAND WRITING OF SHRI DEVICHAND M. CHHORIYA. THE DATES F OR EACH RECEIPTS AND PAYMENTS ARE MENTIONED. THE FULL NAMES OF THE PERS ONS FROM WHOM THE RECEIPTS WERE TAKEN AND TO WHOM PAYMENTS WERE MADE ARE AVAILABLE IN THE SEIZED ANNEXURES. THEREFORE, HE HAD NO HESITAT ION IN HOLDING THAT THE SEIZED DOCUMENTS WERE BOOKS OF ACCOUNTS KEPT IN THE REGULAR COURSE OF BUSINESS AND THEREFORE ADMISSIBLE FOR THE PURPOSE O F INCOME-TAX. THE CONTENTS OF THE SEIZED BOOKS ACCORDING TO THE LD.CI T(A) ARE SUFFICIENT ENOUGH TO TAKE COGNIZANCE AGAINST THE ASSESSEE WHO IS SHOWN TO HAVE ADVANCED HUGE LOANS TO CHHORIYAS ON INTEREST OUTSID E HIS REGULAR BOOKS OF ACCOUNTS. THE SEIZED PAPERS PROVIDE COMPLETE DETAI LS OF THE NATURE OF TRANSACTIONS. THE CHHORIYAS HAVE WRITTEN THE TRANS ACTIONS VERY MINUTELY AND METICULOUSLY SHOWING THE PRINCIPAL AMOUNTS AS W ELL AS THE MONTHLY INTEREST PAYMENTS TO VARIOUS LENDERS INCLUDING THE ASSESSEE. 47 48. SO FAR AS THE CONTENTION OF THE ASSESSEE THAT D URING SURVEY U/S.133A AT HIS PREMISES ON 19-09-2008 NO CORROBORA TIVE EVIDENCE WAS FOUND IS CONCERNED, HE HELD THAT THE SAME IS TOTALL Y MISPLACED AND UNTENABLE. ACCORDING TO HIM SINCE THE SURVEY TOOK PLACE ON 19-09-2008, I.E. AFTER ALMOST 1 MONTH OF THE SEARCH ON 22-08-2 008 NO PRUDENT PERSON WILL KEEP ANY CORROBORATIVE EVIDENCE AFTER THE SEAR CH TOOK PLACE AT THE PREMISES OF HIS CLOSE BUSINESS ASSOCIATE DURING WHI CH PAPERS/BOOKS SHOWING THE HUGE UNACCOUNTED TRANSACTIONS BETWEEN T HE TWO ARE FOUND AND SEIZED. ACCORDING TO HIM, THE VERY FACT THAT S URVEY DID TAKE PLACE AT THE BUSINESS PREMISES OF THE ASSESSEE IN CONNECTION WITH THE TRANSACTIONS REFLECTED AGAINST HIS NAME IN THE SEIZED BOOKS OF C HHORIYAS CORROBORATES THE EXISTENCE OF BUSINESS RELATIONSHIP BETWEEN THE ASSESSEE AND THE CHHORIYAS. 49. SO FAR AS THE HEAVY RELIANCE ON STATEMENT OF CH HORIYAS RECORDED ON 22-08-2008 STATING THAT ALL TRANSACTIONS RECORDED I N THE SEIZED BOOKS ARE IN FICTITIOUS NAMES IS CONCERNED, THE LD.CIT(A) OBS ERVED THAT THE CHHORIYAS IN THEIR STATEMENTS RECORDED U/S.132(4) O N 22-08-2008 NEVER STATED THAT THE NAMES APPEARING IN THE SEIZED ANNEX URES B1 TO B40 ARE IMAGINARY. IT WAS ONLY ON 16-10-2008 THAT THE CHHO RIYAS TOOK A STAND THAT THE NAMES APPEARING IN THE SEIZED ANNEXURES B1 TO B40 WERE IMAGINARY. THE CHANGED VERSION OF THE CHHORIYAS AF TER A GAP OF 2 MONTHS ACCORDING TO THE LD.CIT(A) IS AN AFTERTHOUGH T EXERCISE TO SAVE VARIOUS WELL KNOWN PERSONS OF JALGAON INCLUDING THE ASSESSEE WHOSE NAMES WERE MENTIONED IN THE SEIZED BOOKS AND WHO HA D GIVEN HUGE LOANS 48 IN CASH TO THEM. THEREFORE, THE STATEMENT OF THE CH HORIYAS AND AFFIDAVIT GIVEN AFTER SEARCH CANNOT BE RELIED UPON. 50. SO FAR AS THE CONTENTION OF THE ASSESSEE THAT N O OPPORTUNITY OF CROSS EXAMINATION OF CHHORIYAS WAS GIVEN TO THE ASSESSEE IS CONCERNED, HE OBSERVED THAT THE STATEMENT OF SHRI DEVICHAND M. CH HORIYA RECORDED ON 01-12-2009 U/S.131 OF THE I.T. ACT WAS NOT AGAINST THE ASSESSEE. HE ACCORDINGLY REJECTED THE ARGUMENT OF EXAMINATION/CR OSS EXAMINATION OF CHHORIYA. AS REGARDS THE ARGUMENT OF THE ASSESSEE THAT THE AO HAS NOT CORROBORATED THE GENUINENESS OF THE TRANSACTION SHO WN AGAINST HIS NAME BY BRINGING ON RECORD ANY INDEPENDENT EVIDENCE IS C ONCERNED, THE LD.CIT(A) REJECTED THE SAME ON THE GROUND THAT THE ABOVE CONTENTION IS DEVOID OF ANY REASONING. HE OBSERVED THAT SHRI R.C . BAFNA IS A BUSINESS ASSOCIATE OF CHHORIYAS AS THE BUSINESS RELATIONSHIP OF THE ASSESSEE AND HIS WIFE WITH THE CHHORIYAS HAS ALREADY BEEN ESTABLISHE D. FURTHER, SHRI R.C. BAFNA HAS PURCHASED PLOTS AT SHIRDI FROM THE CHHORI YAS. TRANSACTIONS RELATING TO PURCHASE OF PLOTS HAS BEEN ACCEPTED BY THE ASSESSEE ALSO. ACCORDING TO THE LD.CIT(A) THE CIRCUMSTANTIAL EVIDE NCE GATHERED DURING THE COURSE OF SEARCH CLEARLY DEMONSTRATES THAT THE ASSESSEE HAD MADE UNDISCLOSED INVESTMENTS WITH THE CHHORIYAS WHICH WA S NOT REFLECTED BY HIM IN HIS BOOKS OF ACCOUNT. HE ACCORDINGLY HELD TH AT THE AO WAS JUSTIFIED IN RELYING ON THE SEIZED MATERIAL WHILE C OMPUTING THE INCOME OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR. THE LD.CIT(A) THOROUGHLY EXAMINED THE RELEVANT SEIZED DOCUMENTS W HICH ARE SCANNED IN THE ORDER ITSELF AND HELD THAT THE ENTRIES IN THE S CANNED DOCUMENTS ESTABLISH BEYOND DOUBT THE NATURE OF THE TRANSACTIO N AND THE 49 IDENTITIES/GENUINENESS OF THE PERSONS AND CLEARLY E STABLISH THAT THE ASSESSEE WAS INDULGING IN OUT OF BOOKS TRANSACTIONS WITH THE CHHORIYAS. HE OBSERVED THAT THE DOCUMENTS CLEARLY ESTABLISH BE YOND A REASONABLE DOUBT THAT THE ASSESSEE HAD GIVEN HUGE SUMS TO CHHO RIYA AS LOAN ON WHICH HE RECEIVED INTEREST @ 1.5% PER MONTH. THE L D.CIT(A) ACCORDINGLY DETERMINED THE UNACCOUNTED ADVANCE TO T HE CHHORIYAS AT RS.64,47,000/- AND INTEREST THEREON AT RS.73,31,192 /-. 51. THE LD.CIT(A) FURTHER HELD THAT THE ASSESSEE'S CONTENTION IN REGARD TO SATISFACTION NOTE BY THE AO OF CHHORIYAS OR THE VALIDITY OF THE ASSESSMENT I.E. U/S 143(3) INSTEAD OF 153A OF THE A CT ARE NOT IN CONFORMITY WITH THE PROVISIONS OF THE ACT. THE ASSE SSEE ACCORDING TO HIM HAS NOT APPRECIATED THE PROVISIONS OF SEC. 153A/153 C CORRECTLY. ACCORDING TO LD.CIT(A) THE SAID PROVISIONS ARE APPL IED IN CASE OF A PERSON SEARCHED U/S 132 OF THE ACT OR WHERE THE SEI ZED MONEY, BUILLION, BOOKS OF ACCOUNTS/DOCUMENTS BELONG TO A PERSON OTHE R THAN THE PERSON SEARCHED. IN THIS SITUATION ONLY THERE IS REQUIREME NT OF A SATISFACTION NOTE BY THE AO OF THE PERSON SEARCHED. IN VIEW OF THE AB OVE THE ASSESSEE'S GROUND ON VALIDITY OF ASSESSMENT ORDER WAS REJECTED BY HIM. HE ACCORDINGLY DISMISSED THE APPEAL FILED BY THE ASSES SEE. 52. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY TAKING THE FOLLOWING GROUNDS : 1. SINCE THE IMPUGNED ASSESSMENT IS BASED ON THE ENTRIE S FOUND IN SEIZED DOCUMENTS, SEIZED DURING THE COURSE OF SEARCH AND SEIZURE ACTION ON CHHORIYA GROUP ON 22-08-2009, THE LD.CIT[A] OUGH T TO HAVE ANNULLED THE IMPUGNED ASSESSMENT ORDER AS THE SAME WAS NOT FRAMED B Y THE LD. ASSESSING OFFICER U/S.153A R.W.S.153C R.W.S. 143(3) OF THE I.T. ACT, 1961. 50 2. SINCE THE LEARNED ASSESSING OFFICER IN THE CASES OF CHHORIYA GROUP OF CASES HAS FAILED TO RECORD HIS SATISFACTION ABOUT THE ALLEGED INCOME OF THE APPELLANT RECORDED IN THE SEIZED MATERIAL, SEIZED FROM CHHORIYA GROUP DURING SEARCH AND SEIZURE ACTION, THE LEARNED C IT[A] OUGHT TO HAVE ANNULLED THE IMPUGNED ASSESSMENT ORDER. 3. THE LEARNED CIT[A] HAS FAILED TO APPRECIATE THAT THE TRANSACTIONS OF ALLEGED UNDISCLOSED INVESTMENT IN THE NAME OF THE APPE LLANT AS ALLEGEDLY RECORDED IN THE DIARIES SEIZED FROM CHHORIYA GROUP IN SEARCH AND SEIZURE ACTION ON 22-08-2008 WERE CONSIDERED WHILE COMPUTING THE INCOME OF CHHORIYA GROUP, THE SAME ALLEGED UNDISCLOSED TRANSACTI ONS CANNOT BE TAXED IN THE HANDS OF THE APPELLANT AGAIN. IN THE CI RCUMSTANCES THE ADDITIONS MADE IN THE IMPUGNED APPELLATE ORDER BY TH E LEARNED CIT[A] MAY PLEASE BE DELETED. 4. THE LEARNED CIT[A] HAS FAILED TO APPRECIATE THAT THE FINDINGS OF THE LEARNED ASSESSING OFFICER IN RESPECT OF THE ALLEGED ENTR IES IN THE ALLEGED SEIZED PAPERS IN THE CHHORIYA GROUP OF CASES WERE BINDI NG UPON THE DEPARTMENT PARTICULARLY WHEN THE SAID ASSESSMENTS HAD ATT AINED FINALITY AND IN THE CIRCUMSTANCES THE LEARNED CIT[A] OUGHT TO HAVE VACATED THE IMPUGNED ORDER PASSED BY THE LEARNED ASSESSING OFFICER. 5. MR. DEVICHAND CHHORIYA THE AUTHOR OF THE SEIZED P APERS, HAVING DENIED TO HAVE ACCEPTED ANY LOANS / ADVANCES FROM THE APPELL ANT AND HAVING IN AN UNEQUIVOCAL MANNER ADMITTED THAT THE NAME OF THE APPELLANT WAS WRITTEN IN THE SEIZED DOCUMENTS IN A FICTITIOUS MANNER AND FURTHER HAVING ADMITTED THAT THE UNACCOUNTED MONEY OF CHHORIYA GRO UP WAS RECORDED IN THE SEIZED MATERIALS IN THE NAMES OF FICTITIOUS PERSONS, ALL THE ADDITIONS MADE BY THE LEARNED CIT[A] ON THE BASIS OF THE IMPUGN ED SEIZED MATERIALS BEING PATENTLY ILLEGAL, BAD IN LAW, ARBITRARY, PERV ERSE AND BEING LEGALLY UNSUSTAINABLE AND DEVOID OF MERITS THE SAME MAY PLEASE B E DELETED. 6. THE LEARNED CIT[A] HAS GROSSLY ERRED IN DRAWING A C ONCLUSION THAT THE ALLEGED SEIZED MATERIAL SEIZED IN THE CASES OF CHHORIYA GROUP BEING METICULOUSLY MAINTAINED THE SAME CONSTITUTED BOOKS OF A CCOUNT FOR WHICH NO FURTHER CORROBORATIVE EVIDENCE WAS NECESSARY. THE AFORESAID CONCLUSION/FINDING, IN THE FACTS AND CIRCUMSTANCES OF THE CASE BEING ARBITRARY, PERVERSE AND ILLEGALLY UNSUSTAINABLE THE SAM E MAY PLEASE BE VACATED AND THE ADDITIONS BASED ON THE IMPUGNED SEIZED MATERIALS MAY PLEASE BE DELETED. 7. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LEARNED CIT[A] HAS ERRED IN DRAWING A CONCLUSION THAT THE APP ELLANT HAD FINANCED LOANS TO CHHORIYA GROUP UNDER DIFFERENT NAMES. THE AF ORESAID FINDING BEING ARBITRARY, PERVERSE AND LEGALLY UNSUSTAINABLE TH E SAME MAY PLEASE BE VACATED AND THE ADDITIONS BASED ON THE IMPUGNED SEI ZED MATERIALS MAY PLEASE BE DELETED. 8. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W THE LEARNED CIT[A] HAS GROSSLY ERRED IN REJECTING THE EXPLANATION OF MR. DEVICHAND CHHORIYA IN RESPECT OF THE ALLEGED ENTRIES IN THE NAME OF THE APPELLANT IN THE IMPUGNED SEIZED DIARIES, ON THE GROUND THAT THE SWORN STATEMENT OF MR. DEVICHAND CHHORIYA WAS AN AFTERTHOUGHT AND WAS GIVEN IN COLLUSION WITH THE APPELLANT. THE SAID FINDING OF THE LEARNED CIT[A ] MAY PLEASE BE VACATED AND THE BY THE LEARNED CIT[A] MAY PLEASE BE DELETED. 51 9. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LEARNED CIT[A] HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS. 64,47,000.00 ON THE GROUND OF ALLEGED UNEXPLAINED INVESTMENT MADE BY THE APPELLANT WITH CHHORIYA GROUP OUT OF ADDITION OF RS.87,25,360.00 MA DE BY THE LEARNED ASSESSING OFFICER. THE IMPUGNED ADDITION BEING PATENTLY ILLEGAL, ARBITRARY, AND PERVERSE AND BASED ON NO EVIDENCE AND BEING LEGAL LY UNSUSTAINABLE AND DEVOID OF MERITS THE SAME MAY PLEASE BE DELETED. 10. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT[A] HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.20,31,360.00 ON THE GROUND OF ALLEGED INTEREST RECEIVED ON ALLEGED U NEXPLAINED INVESTMENT MADE BY THE APPELLANT WITH CHHORIYA GROUP AND HAS FURTHER ERRED IN MAKING AN ENHANCEMENT OF RS.52,99,832.00 TO THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER ON THIS GROUND. THUS TH E TOTAL ADDITION OF RS.52,99,832.00 BEING PATENTLY ILLEGAL, ARBITRARY , PERVERSE AND BASED ON NO EVIDENCE AND BEING LEGALLY UNSUSTAINABLE AND DEVOI D OF MERITS THE SAME MAY PLEASE BE DELETED. 11. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT[A] HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.74,404.00 MADE BY THE LEARNED ASSESSING OFFICER ON THE GROUND OF ALLEG ED PROFITS EARNED BY THE APPELLANT ON ALLEGED UNRECORDED SALES. THE AD DITION BEING PATENTLY ILLEGAL, BAD IN LAW, ARBITRARY, PERVERSE AND BEING L EGALLY UNSUSTAINABLE AND DEVOID OF MERITS THE SAME MAY PLEASE BE DELETED. 12. SINCE THE APPELLANT WAS DENIED THE OPPORTUNITY T O CROSS EXAMINE MR. DEVICHAND CHHORIYA THE AUTHOR OF THE SEIZED DOCU MENTS, THE IMPUGNED ORDER IS BAD IN LAW AND HENCE THE SAME MAY P LEASE BE ANNULLED. 13. THE APPELLANT CRAVES THE PERMISSION TO ADD, AMEND, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF APPEAL , IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 53. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET DID NOT PRESS GROUND OF APPEAL NO.11 FOR WHICH THE LD. DEPARTMENTAL REPR ESENTATIVE HAS NO OBJECTION. ACCORDINGLY, GROUND OF APPEAL NO.11 CHA LLENGING THE ADDITION OF RS.74,404/- IS DISMISSED AS NOT PRESSED. 54. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET CHALLENGED THE VALIDITY OF THE ASSESSMENT MADE U/S.143(3) OF THE I .T. ACT. HE SUBMITTED THAT SINCE THE ASSESSMENT HAS BEEN MADE ON THE BASI S OF ENTRIES FOUND IN THE BOOKS OF ACCOUNT MAINTAINED BY THE CHHORIYAS WH ICH ARE FOUND DURING THE COURSE OF SEARCH, THEREFORE, THE ASSESSM ENT SHOULD HAVE BEEN 52 COMPLETED U/S.153A R.W.S. 153C R.W.S.143(3) OF THE I.T. ACT. SINCE THE SAME HAS NOT BEEN DONE IN THE INSTANT CASE, THEREFO RE, THE ASSESSMENT ORDER PASSED BY THE AO U/S.143(3) SHOULD BE HELD AS NULL AND VOID. FOR THE ABOVE PROPOSITION, THE LD. COUNSEL FOR THE ASSE SSEE REFERRED TO THE FOLLOWING DECISIONS : 1. ITO VS. SHRI MIRZA RAFIULLAH BAIG VIDE ITA NOS.90 9/HYD/13 ORDER DATED 08-01-2014 FOR A.Y. 2008-09. 2. M/S. KUMAR COMPANY VS. ADDL.CIT ITA NO.463/PN/20 08 FOR A.Y. 2000-01 ORDER DATED 02-02-2010. 3. M/S. KUMAR COMPANY VS. ADDL.CIT AND VICE VERSA IT A NOS. 1020 TO 1022/PN/2008 AND ITA NOS. 1050 TO 1052/PN/2008 FO R A.YRS. 2001- 02 TO 2003-04 ORDER DATED 02-02-2010. 4. THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. M/S. KUMAR COMPANY ITA NO.894/2011 ORDER DATED 10 -06-2014 AND IN CASE OF M/S. KUMAR COMPANY VS. ADDL.CIT ITA NO.534 1/2010 ORDER DATED 23-04-2014. 55. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE DREW THE AT TENTION OF THE BENCH TO PARA 10 OF THE ORDER OF THE CIT(A) WHERE THE SAME H AS BEEN DISCUSSED BY HIM. REFERRING TO THE SAME HE SUBMITTED THAT THE L D.CIT(A) HAS CATEGORICALLY HELD THAT THE PROVISIONS OF SECTION 1 53A/153C ARE APPLICABLE IN CASE OF A PERSON SEARCHED U/S.132 OF THE ACT OR WHERE THE SEIZED MONEY, BULLION, BOOKS OF ACCOUNT/DOCUMENTS B ELONG TO A PERSON OTHER THAN THE PERSON SEARCHED. HOWEVER, IN THE IN STANT CASE, NO SUCH MONEY, BULLION, BOOKS OF ACCOUNT OR DOCUMENTS BELON GING TO THE ASSESSEE HAS BEEN FOUND FROM THE PREMISES OF THE SEARCHED PE RSON. IT IS ONLY THE ENTRIES ON THE BASIS OF WHICH THE ASSESSMENT HAS BE EN MADE AND THEREFORE THE ARGUMENT OF THE ASSESSEE IS MISPLACED. SO FAR AS THE VARIOUS DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ARE C ONCERNED, HE SUBMITTED 53 THAT THE SAME ARE DISTINGUISHABLE AND NOT APPLICABL E TO THE FACTS OF THE PRESENT CASE. 56. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DIS PUTE TO THE FACT THAT IN THE INSTANT CASE THE SEARCH TOOK PLACE IN THE RESID ENTIAL AND BUSINESS PREMISES OF THE CHHORIYA GROUP ON 22-08-2008 DURING WHICH CERTAIN BOOKS OF ACCOUNT MARKED AS ANNEXURE B ITEM NOS. 1 T O 4 WERE SEIZED. THESE ARE ROUGH CASH BOOKS OF THE CHHORIYA GROUP WH ICH CONTAIN VARIOUS ENTRIES ACCORDING TO WHICH THE VARIOUS LENDERS HAD ADVANCED VARIOUS AMOUNTS DURING THE IMPUGNED ASSESSMENT YEAR. THE E NTRIES IN THE ROUGH CASH BOOKS ON ONE HAND REFLECTED THE RECEIPT OF MON EY AND SIMULTANEOUSLY ENTRIES AGAINST WHICH THE SAID MONEY WAS UTILISED WAS ALSO MENTIONED. METICULOUS DETAILS HAVE BEEN WRITT EN IN THE SEIZED DIARY. ENTRIES RELATING TO THE ASSESSEE ARE ALSO FOUND IN THE SEIZED DIARIES, WHICH REFLECT THAT THE ASSESSEE SHRI RATANLAL C. BAFNA HA D ADVANCED VARIOUS AMOUNTS DURING THE IMPUGNED YEAR. NO BOOKS OF ACCO UNT OR OTHER DOCUMENTS BELONGING TO THE ASSESSEE SHRI RATANLAL C . BAFNA WAS FOUND FROM THE PREMISES OF CHHORIYA. 56.1 THE PROVISIONS OF SECTION 153C AS IT STOOD AT THE RELEVANT TIME READ AS UNDER : (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 13 9, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JE WELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOC UMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUN T OR DOCUMENTS OR 54 ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO TH E ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AN D ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PE RSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56.2 FROM THE ABOVE, IT IS CLEAR THAT FOR INVOKING PROVISIONS OF SECTIONS 153C OF THE I.T. ACT IN CASE OF A NON-SEARCHED PERS ONS MONEY, BULLION, JEWELLERY, BOOKS OF ACCOUNT OR DOCUMENTS ARE REQUIR ED TO BE FOUND FROM THE PREMISES OF THE SEARCHED PERSON. 56.3 HOWEVER, IN THE INSTANT CASE AS MENTIONED EARL IER, NO MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE ASSESSEE HAS BEEN FOUND OR SEIZED FROM THE RESIDENCE/BUSINESS PREMISES OF THE CHHORIYAS. ONLY DIARIES BELONGING TO CHHORIYAS CONTAINING ENTRIES IN THE NAME OF DIFFERE NT PERSONS INCLUDING THAT OF THE ASSESSEE WERE FOUND. IT IS ONLY THE EN TRIES RELATING TO ASSESSEE RECORDED IN THE BOOKS OF ACCOUNT OF CHHORIYA WERE T HE BASIS ON WHICH THE ASSESSMENT HAS BEEN COMPLETED IN THE CASE OF SHRI R ATANLAL C. BAFNA. IN OUR OPINION THE ENTRIES IN THE BOOKS OF CHHORIYA CA NNOT BE EQUATED WITH ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE ASSESSEE. THEREFORE, THE PROVISIONS OF SECTION 153C IN OUR OPINION ARE NOT A PPLICABLE TO THE FACTS OF THE PRESENT CASE. 56.4 SO FAR AS THE VARIOUS DECISIONS RELIED ON BY T HE LD. COUNSEL FOR THE ASSESSEE ARE CONCERNED, THESE DECISIONS IN OUR OPIN ION ARE DISTINGUISHABLE ON FACTS AND NOT APPLICABLE TO THE FACTS OF THE PRE SENT CASE. IN THE CASE OF 55 MIRZA RAFIULLAH BAIG (SUPRA) A DOCUMENT BELONGING T O THE ASSESSEE WAS FOUND IN THE COURSE OF SEARCH ON THE PREMISES OF JA NPRIYA ENGINEERING SYNDICATE WHICH WAS HANDED OVER TO THE AO WHO HAD J URISDICTION OVER THE CASE. SINCE IN THAT CASE PROCEEDINGS U/S.147 W AS INITIATED THE ASSESSEE CHALLENGED THE VALIDITY OF THE SAME ON THE GROUND THAT PROCEEDINGS OUGHT TO HAVE BEEN INITIATED U/S.153C O F THE I.T. ACT AS THE BASIS FOR INITIATION OF PROCEEDINGS U/S.147 RELATES TO DISCOVERY OF A DOCUMENT BELONGING TO THE ASSESSEE. ACCORDINGLY, T HE TRIBUNAL UPHELD THE ORDER OF LD.CIT(A) HOLDING SUCH ASSESSMENT U/S. 147 INSTEAD OF 153C AS VOID AB-INITIO. HOWEVER, IN THE INSTANT CASE, NO SUCH DOCUMENT BELONGING TO THE ASSESSEE WAS FOUND, THEREFORE, THI S DECISION IN OUR OPINION IS NOT APPLICABLE. 56.5 SO FAR AS THE CASE OF M/S. KUMAR COMPANY VS. A DDL.CIT AND VICE VERSA VIDE ITA NO. 463/PN/2008 AND AS RELIED ON BY LD. COUNSEL FOR THE ASSESSEE IS CONCERNED, WE FIND IN THAT CASE THE ASS ESSEE WAS A LAND DEVELOPER AND BUILDER. HE HAD TRANSACTIONS WITH ON E RAUT GROUP OF CASES WHO WERE SUBJECTED TO SEARCH U/S.132. DURING SUCH SEARCH LOOSE PAPERS WERE SEIZED FROM THEIR RESIDENTIAL PREMISES. SHRI SANDIP DEO IS THE TDR CONSULTANT OF RAUT GROUP AND HE IS THUS CONNECTED T O THE ASSESSEE. DURING THE SAID SEARCH OPERATIONS CERTAIN LOOSE PAP ERS AND DOCUMENTS WERE FOUND AND SEIZED WHICH CONTAINED CERTAIN REFER ENCES INVOLVING THE ASSESSEE FIRM. ON THE BASIS OF THE SAME, THE AO IS SUED A NOTICE U/S.153C OF THE I.T. ACT. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE QUESTIONED THE INITIATION OF ASSESSMENT PROCEEDINGS U/S.153C. THE AO REJECTED SUCH CONTENTION OF THE ASSESSEE WHICH WERE UPHELD BY THE 56 CIT(A). ON FURTHER APPEAL BY THE ASSESSEE THE TRIB UNAL HELD THAT THE PROCEEDINGS INITIATED U/S.153C IS NOT VALID. ACCOR DINGLY, THE APPEAL FILED BY THE ASSESSEE WAS ALLOWED. ON FURTHER APPEAL BY THE REVENUE, THE HONBLE HIGH COURT DISMISSED THE APPEAL FILED. THE REFORE, THIS DECISION AS RELIED ON BY THE LD.COUNSEL FOR THE ASSESSEE INF ACT GOES AGAINST THE ASSESSEE AND NOT IN FAVOUR OF THE ASSESSEE. FURTHE R, IN THAT CASE THE DOCUMENT WAS SEIZED FROM THE PREMISES OF SANDIP DEO WHICH REFERS TO FAMILY PORTION AND ASSIGNMENT OF LOANS/TDRS TO LALI T KISHORE JAIN (LKJ) PARTNER OF THE ASSESSEE FIRM IN GENERAL AND THE PAR TICULARS MENTIONED AT PAGE 82 WHICH CONTAINS THE SPECIFIC REFERENCE TO TH E SAID TRANSFER OF LAND/TDRS TO LKJ. HOWEVER, IN THE INSTANT CASE, NO SUCH DOCUMENT WAS SEIZED. IT WAS ONLY THE BOOKS OF ACCOUNT OF CHHORI YA WHICH CONTAIN CERTAIN ENTRIES ACCORDING TO WHICH THE ASSESSEE SHR I RATANLAL C. BAFNA HAS ADVANCED MONEY TO CHHORIYA AND RECEIVED INTEREST ON SUCH ADVANCES. THEREFORE, THIS DECISION IS ALSO NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 56.6 AS REGARDS THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S. KUMAR COMPANY VS. ADDL.CIT AND VICE VERSA FOR A.YRS. 2001 -02 TO 2003-04 VIDE ITA NOS. 1020 TO 1022 AND 1250 TO 1252/PN/2008 ARE CONCERNED, HERE ALSO THE FACTS ARE SIMILAR TO THAT OF ITA NO.4 63/PN/2008 IN THE CASE OF M/S. KUMAR COMPANY. THEREFORE, THE VARIOUS DECI SIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. ACCORDINGLY, THE IST ISSUE RAISED BY THE ASSESSEE IN THE GROUNDS CHALLENGING THE VALIDITY OF THE ASSESSMENT IS DISMISSED. 57 57. NOW COMING TO THE ORDER OF THE CIT(A) SUSTAININ G THE ADDITION OF RS.64,47,000/- AS AGAINST RS.87,25,360/- BY THE AO ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IS CONCERNED, WE FIND THE FA CTS OF THE IMPUGNED ASSESSMENT YEAR ARE IDENTICAL TO THE FACTS IN ITA N O.951/PN/2010 FILED BY THE ASSESSEE FOR A.Y. 2002-03. WE HAVE ALREADY DISCUSSED THE ISSUE AND THE ADDITION SUSTAINED BY THE CIT(A) HAS BEEN U PHELD. FOLLOWING THE SAME REASONING AND CONSIDERING THE FACT THAT THE LD .CIT(A) WHILE DECIDING THE ISSUE HAS EXHAUSTIVELY GIVEN THE REASO NS AND AFTER THOROUGHLY ANALYSING HAS SUSTAINED THE ADDITION OF ONLY RS.64,47,000/- OUT OF RS.87,25,360/- AS MADE BY THE ASSESSING OFFI CER, THEREFORE, WE FIND NO INFIRMITY IN HIS ORDER. ACCORDINGLY, THE S AME IS UPHELD AND THE GROUNDS RAISED BY THE ASSESSEE ON THIS ISSUE OF ADD ITION ON ACCOUNT OF UNEXPLAINED INVESTMENT ARE DISMISSED. 58. THE THIRD ISSUE RAISED BY THE ASSESSEE IN THE G ROUNDS RELATES TO THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITION OF R S.20,31,360/- ON ACCOUNT OF ALLEGED INTEREST RECEIVED ON THE UNEXPLA INED INVESTMENT AND FURTHER ENHANCING THE SAME BY RS.52,99,835/-. 59. AFTER HEARING BOTH THE SIDES, WE FIND THE LD.CI T(A) AFTER THOROUGHLY EXAMINING THE NATURE OF ADVANCES GIVEN B Y THE ASSESSEE ON WHICH HE RECEIVES OF INTEREST @1.5% PER MONTH HAS C ALCULATED THE DETAILS OF SUCH RECEIPT OF INTEREST INCLUDING INTEREST RECE IVED ON BEHALF OF HIS PARTIES AND WAREHOUSE RECEIPTS. THE COMPUTATION OF SUCH INTEREST AS WELL AS RECEIVABLE FOR THE IMPUGNED ASSESSMENT YEAR ARE AS UNDER : 58 SR. NO. ANNEX/ PAGE NO DATE RECEIPT REMARK 01. B - 18/84 30/05/2007 49,500/ - INTEREST APRIL 02. 98 09/06/2007 91,500/ - INTEREST OTHERS 03. 124 29/06/2007 4,95,000/ - INTEREST MAY 04. B - 17/04 09/07/2007 45,000/ - INTEREST OTHERS JUNE 05. 06 10/07/2007 19,500/ - INTEREST OTHERS JUNE 06. 24 26/07/2007 22,500/ - INTEREST OTHERS JUNE 07. 32 31/07/2007 4,95,000/ - INTEREST JUNE 08. 67 27/08/2007 87,000/ - INTEREST OTHERS(JULY) 09. 73 3 1/08/2007 46,500/ - INTEREST (JULY) 10. B - 16/29 26/09/2007 45,000/ - INTEREST OTHERS (JULY) 11. 37 30/09/2007 4,65,000/ - INTEREST AUGUST 12. 37 30/09/2007 87,000/ - INTEREST OTHERS AUGUST 13. 40 03/10/2007 4,65,000/ - INTEREST SEPTEMB ER 14. 40 03/10/2007 87,000/ - INTEREST OTHERS SEPTEMBER 15. B - 16/15 25/10/2007 87,000/ - INTEREST OTHERS OCTOBER 16. 4,33,500/ - INTEREST OCTOBER 17. B - 15/100 31/12/2007 57,000/ - INTEREST OTHERS NOVEMBER 18. 111 07/01/2008 30,000/ - INTEREST OTHERS NOVEMBER 19. 4,33,500/ - INTEREST NOVEMBER 20. B - 14/22 13/02/2008 19,98,692/ - INTEREST DEC., JAN, FEB, PRINCIPAL + WAREHOUSE 2,55,000 INTEREST OTHER DEC., JAN., FEB 3,85,500/ - INTEREST MARCH 84,000/ - INTEREST OTHERS MARCH 2,02,500/ - INTEREST WAREHOUSE RECEIPT MARCH TOTAL 73,31,192/ - THUS, HE HAS COMPUTED UNEXPLAINED INTEREST INCOME F OR THE ASSESSEE AT RS.73,31,192/-. SINCE THE AO HAD CONSIDERED INTERE ST OF RS.20,31,360/- ONLY THE LD.CIT(A) HAD ISSUED ENHANCEMENT NOTICE TO THE ASSESSEE. AFTER CONSIDERING THE REPLY OF THE ASSESSEE TO SUCH ENHAN CEMENT NOTICE, THE LD.CIT(A) ENHANCED THE INCOME AND DIRECTED THE AO T O ADOPT INTEREST OF RS.73,31,192/-. NOTHING CONTRARY WAS BROUGHT TO OU R NOTICE BY THE LD. COUNSEL FOR THE ASSESSEE AGAINST THE SAID CALCULATI ON. UNDER THESE 59 CIRCUMSTANCES, THE THIRD ISSUE RAISED BY THE ASSESS EE IN THE GROUND IS DISMISSED. THE APPEAL FILED BY THE ASSESSEE FOR TH IS YEAR IS ACCORDINGLY DISMISSED. ITA NO.718/PN/2011 (BY ASSESSEE SHRI SHANKARLAL A MOLAKCHAND CHORDIA) (A.Y. 2002-03) : 60. GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : 1. IN THE ABSENCE OF CONDITIONS PRECEDENT FOR ISSUANCE OF NOTICE U/S.148 OF THE I.T. ACT, 1961, THE IMPUGNED REASSESSMENT PROCEEDINGS ARE BAD IN LAW, NULL AND VOID AB INITIO AND WITHOUT JUR ISDICTION AND HENCE THE IMPUGNED REASSESSMENT ORDER BE VACATED/QUASHED/ANNULLED. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LD.CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS.5,45,000/- M ADE BY THE LD. ASSESSING OFFICER SOLELY ON THE BASIS OF ENTRIES IN THE ROU GH BOOK OF THIRD PARTY, WITHOUT ANY CORROBORATIVE EVIDENCE AND ESPECI ALLY WHEN THE THIRD PARTY ITSELF HAD EXPLAINED THAT THE ENTRIES WERE FALSE AND THE SAME REPRESENTED UNDISCLOSED INCOME OF THE THIRD PARTY ENTE RED IN BOGUS NAMES INCLUDING THE NAMES OF THE APPELLANT. THE IMPU GNED ADDITION OF RS.5,45,000/- BEING ARBITRARY, PERVERSE AND LEGALLY U NSUSTAINABLE THE SAME MAY PLEASE BE DELETED. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LD.CIT(A) HAS ERRED IN SUSTAINING THE FOLLOWING ADDITIONS MADE BY THE LD. ASSESSING OFFICER, WITHOUT ANY BASIS : I. ADDITION OF RS.25,751/- ON ACCOUNT OF ALLEGED LO W G.P. II. DISALLOWANCE OF RS.6,786/- OUT OF REPAIRING CHAR GES III. DISALLOWANCE OF RS.16,697/- OUT OF INTEREST EXPE NDITURE ALL THE AFORESAID ADDITIONS BEING BASED ON SURMISES AND C ONJECTURE AND BEING ARBITRARY AND BASED ON NO EVIDENCE THE SAME MAY PLEASE BE DELETED. 4. THE APPLICANT CRAVES THE PERMISSION TO ADD, AMEND, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF APPEAL , IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 61. THE ASSESSEE AT THE TIME OF HEARING DID NOT PRE SS GROUNDS OF APPEAL NO.1 & 3 FOR WHICH THE LD. DEPARTMENTAL REPRESENTAT IVE HAS NO OBJECTION. ACCORDINGLY, THE ABOVE 2 GROUNDS ARE DI SMISSED AS NOT PRESSED. GROUND OF APPEAL NO.4 BEING GENERAL IN N ATURE IS DISMISSED. 60 62. SO FAR AS GROUND OF APPEAL NO.2 IS CONCERNED, W E FIND THE ABOVE GROUND IS IDENTICAL TO GROUNDS OF APPEAL IN ITA NO. 951/PN/2010. BOTH THE PARTIES AT THE TIME OF HEARING ALSO HAD STATED THAT THE OUTCOME OF THE RESULT IN THE ABOVE CASE WILL BE APPLICABLE TO THE IMPUGNED APPEAL. WE HAVE ALREADY DECIDED THE ISSUE IN THE PRECEDING PAR AGRAPHS AND THE GROUNDS RAISED BY THE ASSESSEE ON THIS ISSUE HAVE B EEN DISMISSED. FOLLOWING THE SAME REASONING, THE ABOVE GROUND BY T HE ASSESSEE IS DISMISSED. ITA NO.101/PN/2012 (BY ASSESSEE - SHRI DALICHAND H. OSWAL (JAIN) (A.Y. 2002-03) : 63. GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : 1. THAT THE LD.CIT(A) ERRED IN CONFIRMING THE ADDI TION OF RS.2,16,000/- BEING THE AMOUNT OF INTEREST ALLEGEDLY RECEIVED BY THE APPELLANT. 2. THAT THE LD.CIT(A) ERRONEOUSLY CONCLUDED THAT THE APPELLANT HAD LOANED RS.9,00,000/- TO CHHORIYAS (PRIOR TO ASST. YR. 2 002-03) WHEN IN FACT HE HAD NEVER ADVANCED ANY SUM TO CHHORIYAS AT AN Y TIME. 3. THAT THE LD.CIT(A) ERRED IN REJECTING APPELLANT S CONTENTION THAT THERE WAS NO VALID EVIDENCE WITH THE AO IN SUPPORT O F THE ADDITION MADE. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ADDITION OF RS.2,16,000/- SUSTAINED BY THE LD.CIT(A) BE DELETED AND THE APPELLANTS CONTENTION THAT HE HAD NEVER ADVANCED ANY SUM TO THE CHHORIYA BE UPHELD. 64. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROUNDS ARE IDENTICAL TO THE GROUNDS OF APPEAL IN ITA NO.951/PN /2010. BOTH THE PARTIES AT THE TIME OF HEARING ALSO HAD STATED THAT THE OUTCOME OF THE RESULT IN THE ABOVE CASE WILL BE APPLICABLE TO THE IMPUGNED APPEAL. WE HAVE ALREADY DECIDED THE ISSUE IN THE PRECEDING PAR AGRAPHS AND THE GROUNDS RAISED BY THE ASSESSEE ON THIS ISSUE HAVE B EEN DISMISSED. FOLLOWING THE SAME REASONING, THE ABOVE GROUNDS BY THE ASSESSEE ARE DISMISSED. 61 65. IN THE RESULT, THE APPEALS FILED BY THE RESPECT IVE ASSESSEES AND THE ONLY APPEAL FILED BY THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 31-03-2015. SD/- SD/- (SUSHMA CHOWLA) ( R.K. PAN DA ) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, DATED 31 ST MARCH, 2015 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-II, NASHIK 4. THE CIT-II, NASHIK 5. THE DR A BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR, INCOME TAX APPELLATE T RIBUNAL, PUNE