Shri Sameer Balasaheb Ladkat, Pune V. ACIT, Pune

ITA 974/PUN/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62764 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-05-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 01-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K SINGH ALOK MISHRA
• Assessee Lawyers: Not Found
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Gift; Income from undisclosed sources; Search and seizure; Document seized; Cost of acquisition; Fair market value; Onus to prove; Retraction; Documents seized
• Section: 143(3); 50C; 54F; 133A; 153A; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER S. NO ITA/CO NO ASSTT.YR APPELLANT/CROSS OBJECTOR RESPOND ENT 1 974/PN/10 2003-04 SAMEER BALASAHEB LADKAT, BUNGLOW NO 46, VARSHA/KHUSHBOO, KOREGAON PARK, PUNE 411 001 ASSTT. COMMISSIONER OF I.T. CEN.CIR.1(2), PUNE 2 975/PN/10 2003-04 LATE SHRI BALASAHEB LADKAT (THROUGH L/H) SAMEER BALASAHEB LADKAT, PUNE ACIT, CEN. CIR 1(2) PUNE 3 1025/PN/10 2004-05 ASSTT. CIT CIR 1(2) PUNE SHRI BALASAHEB M LADKAT, PUNE 4 CO 44/PN/11 2004-05 LATE SHRI BALASAHEB LADKAT (THROUGH L/H) SAMEER BALASAHEB LADKAT, PUNE ACIT, CEN. CIR 1(2) PUNE 5 1018/PN/10 2004-05 ASSTT. CIT CIR 1(2) PUNE SHRI SAMEER BALASAHEB LADKAT, PUNE 6 CO 46/PN/11 2004-05 SHRI SAMEER BALASAHEB LADKAT, PUNE ACIT, CEN. CIR 1(2) PUNE 7 1017/PN/10 2004-05 ASSTT. CIT CIR 1(2) PUNE SHRI GAUTAM BALASAHEB LADKAT, PUNE 8 CO 43/PN/11 2004-05 SHRI GAUTAM BALASAHEB LADKAT, PUNE ACIT, CEN. CIR 1(2) PUNE 9 1015/PN/10 2004-05 ASSTT. CIT CIR 1(2) PUNE SMT A SHA B LADKAT, PUNE 10 CO 42/PN/11 2004-05 SMT ASHA BALASAHEB LADKAT, PUNE ACIT, CEN. CIR 1(2) PUNE 11 972/PN/10 2006-07 M/S SLK PROPERTIES, GAUTAM B LADKAT, B-8 SUCCESS CHAMBERS, 1232 APTE ROAD, DECCAN GYMKHANA, PUNE ACIT, CEN.CIR. 1(2) PUNE 12 973/PN/10 2007-08 -DO- -DO- 13 976/PN/10 2005-06 LATE SHRI BALASAHEB LADKAT (THROUGH L/H) SAMEER BALASAHEB LADKAT, PUNE ACIT, CEN. CIR 1(2) PUNE 14 977/PN/10 2006-07 LATE SHRI BALASAHEB LADKAT (THROUGH L/H) SAMEER BALASAHEB LADKAT, PUNE ACIT, CEN. CIR 1(2) PUNE 15 978/PN/10 2007-08 LATE SHRI BALASAHEB LADKAT (THROUGH L/H) SAMEER BALASAHEB LADKAT, PUNE ACIT, CEN. CIR 1(2) PUNE 16 1026/PN/10 2006-07 ACIT, CEN. CIR. 1(2), PUNE SH RI BALASAHEB M LADKAT, PUNE 17 CO 45/PN/11 2006-07 SHRI BALASAHEB M LADKAT, PUNE ASSTT. CIT, CEN.CIR.1(2), PUNE 18 1019/PN/10 2006-07 ASSTT. CIT CEN.CIR.1(2), PUNE SHRI SAMEER B LADKAT, PUNE 19 CO 47/PN/11 2006-07 SHRI SAMEER B LADKAT, PUNE ASSTT. CIT, CEN. CIR. 1(2), PUNE ASSESSEES BY : SHRI SHARAD SHAH DEPARTMENT BY : S/SHRI S K SINGH, ALOK MISHRA DATE OF HEARING : 18.07.2012 DATE OF PRONOUNCEMENT : .07.2012 ORDER PER G.S. PANNU, A.M .: THE CAPTIONED APPEALS AND CROSS OBJECTIONS RELATE TO ASSESSE ES BELONGING TO ONE GROUP AND THE PROCEEDINGS ARISE OUT O F COMMON SEARCH ACTION CARRIED OUT BY THE REVENUE UNDER SECTION 132(1) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) AND, THEREFORE, THEY HAVE BEEN CLUBBED AND HEARD TOGETHER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE ASSESSEES HAVE PUT ON RECORD RESPECTIVE PAPER BOOKS, WHICH HAVE BEEN REFERRED TO IN THE COURSE OF SUBMISSIONS MADE BEFOR E US. THE RIVAL COUNSELS HAVE ADVANCED THEIR ARGUMENTS BY EXTENSIVELY R EFERRING TO THE RESPECTIVE ORDERS PASSED BY THE INCOME-TAX AUTHORITIES, A S ALSO THE RELEVANT MATERIAL PLACED IN THE PAPER BOOKS AT THE TIME OF HEA RING BEFORE US. 3. IN BRIEF THE BACKGROUND IS THAT ASSESSEES BELONG TO ONE FAMILY WHOSE BUSINESS INTERESTS INTER ALIA INCLUDE DEALING IN PETROLE UM PRODUCTS THROUGH OPERATION OF THREE PETROL PUMPS, ACTIVITY OF POWER GEN ERATION THROUGH WINDMILL PROJECTS AND ALSO MONEY LENDING AND REAL ESTATE BUSINESS. THE DEPARTMENT CARRIED OUT SEARCH ACTION AT OFFICE AS WELL AS RESIDENTIA L PREMISES OF THE ASSESSEES. SIMULTANEOUSLY, SURVEY ACTION UNDER SECTION 133A O F THE ACT WAS ALSO CARRIED OUT AT THE PETROL PUMP AND OTHER ALLIED PREMISES BELONGING TO THE ASSESSEE GROUP. CONSEQUENT TO THE ACTIONS OF SEARCH AND SURV EY, ASSESSMENTS HAVE BEEN CARRIED OUT WHICH HAS RESULTED IN CERTA IN ADDITIONS, WHICH WERE SUBJECT-MATTER OF APPEAL BEFORE THE COMMISSIO NER OF INCOME-TAX (APPEALS). THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS A LLOWED PART RELIEFS, AGAINST WHICH THE CAPTIONED APPEALS HAVE BEEN P REFERRED BY THE ASSESSEES AS WELL AS THE REVENUE. 4. FIRST, WE SHALL TAKE UP THE APPEAL VIDE ITA NO 975/ PN/10 IN THE CASE OF LATE SHRI BALASAHEB A LADKAT (THROUGH L/H SHRI SAMEE R B LADKAT) PERTAINING TO THE ASSESSMENT YEAR 2003-04. THIS APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IIV PUNE, DATE D 19.2.2010 WHICH, IN TURN, HAS ARISEN FROM THE ORDER DATED 31.12.2009 P ASSED BY THE ASSESSING OFFICER UNDER SECTION 153A(B) OF THE ACT, PERTAINING T O THE ASSESSMENT YEAR 2003-04. 5. IN THIS CASE, THE BACKGROUND IS THAT THE ASSESSEE IS IN T HE BUSINESS OF DEALERSHIP OF PETROL AND RELATED PRODUCTS AND ALSO A ME MBER OF M/S PANAMA BUSINESS CENTRE, AN AOP AS WELL AS A DIRECTOR IN VARIOU S GROUP COMPANIES. IN THE CASE OF THIS ASSESSEE, SEARCH WAS CARRIED OUT UNDER SECTION 132(1) OF THE ACT AT THE RESIDENTIAL PREMISES AND SIMULTANEOUSLY SURVEY ACTION UNDER SECTION 133A WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE . IN RESPONSE TO A NOTICE UNDER SECTION 153A OF THE ACT, THE ASSESSEE D ULY FILED HIS RETURN OF INCOME, WHICH WAS SUBJECT TO A SCRUTINY ASSESSMENT. AS AGAINST R ETURNED LOSS OF RS 12,75,374/-, A LOSS OF RS 9,91,950/- WAS DETERMINE D AFTER MAKING ADDITION OF RS 1,50,000/- AND RS 1,33,423/- ON ACCOUNT OF UNACCOUNTED PAYMENTS TO SHRI RIKABCHAND OSWAL AND DISALLOWANCE OUT OF STAFF WELFARE EXPENSES/SALARY AND ALLOWANCES RESPECTIVELY. THE ASSESSEE CARRI ED BOTH THE ADDITIONS IN APPEAL BEFORE THE COMMISSIONER OF INCOME-T AX (APPEALS). THE COMMISSIONER OF INCOME-TAX (APPEALS) ALLOWED PARTIAL R ELIEF WITH RESPECT TO THE DISALLOWANCE OUT OF SALARIES/ALLOWANCES AND STAFF WELFARE AND WITH REGARD TO THE UNACCOUNTED PAYMENTS TO SHRI RIKABCHAND OSWAL OF RS 1, 50,000/-, THE SAME WAS SUSTAINED. AGAINST THE LATTER SUSTENANCE OF ADDIT ION OF RS 1,50,000/- BY THE COMMISSIONER OF INCOME-TAX (APPEALS), ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. THE ADDITION IN QUESTION IS BASED ON A SEIZED MATERI AL REFERRED TO AS PAGES 29 TO 35 OF BUNDLE NO. 3 OF ANNEXURE-A. THE ASSE SSING OFFICER NOTICED THAT THE SEIZED PAPERS REFLECTED THAT THE ASSESSEE HAD EN TERED INTO A MOU WITH ONE SHRI RIKABCHAND OSWAL FOR PURCHASE OF PROPERT Y, NAMELY, FLAT NO 201 IN A BUILDING IN A PROJECT SHAN GANGA. THE ASSESSING OFFICER FURTHER NOTICED THAT THE ASSESSEE ALONGWITH SHRI SAMEER LADKAT HAD ENTE RED INTO SUCH MOU AND THE PAYMENT SCHEDULE ANNEXED TO SUCH MOU INDICATED T HAT A SUM OF RS 3,00,000/- WAS PAID BY THE PURCHASER, I.E ASSESSEE ALONGWI TH SHRI SAMEER LADKAT AND THE SELLER HAD ACKNOWLEDGED THE RECEIPT OF SUCH AMOUNT. THE ASSESSEE WAS REQUIRED TO SHOW AS TO WHETHER SUCH PAYMENT WAS DULY ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNT MAINTAINED . THE PLEA OF THE ASSESSEE WAS TO THE EFFECT THAT NO SUCH PROPERTY WAS INDEED PURCHASED, BUT THE SAID MOU WAS ENTERED INTO MERELY AS SECURITY FOR THE AMOUNT ADVANCED TO SHRI RIKABCHAND OSWAL, AND THAT NO SUCH PAYMENT OF RS 3, 00,000/- WAS ACTUALLY MADE. THE ASSESSEE ALSO EXPLAINED THAT A PAYMEN T OF RS 5,00,000/- BY CHEQUE ON 18.12.2002 WAS MADE AND THAT THE ACKNOWLE DGED PAYMENT OF RS 3,00,000/ REFLECTED BY THE SEIZED COPY OF MOU WAS A P ART OF SUCH PAYMENT OF RS 5,00,000/-.THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT THE PLEA OF THE ASSESSEE. FIRSTLY, THE ASSESSING STATED THAT THE SEIZED PAPER CLEARLY REFLECTED THAT A SUM OF RS 3,00,000/- WAS PAID AND IT S RECEIPT HAS BEEN DULY ACKNOWLEDGED BY THE SELLER ON 23.11.2002, I.E. THE DA TE OF THE MOU. SECONDLY, THE CHEQUE PAYMENT OF RS 5,00,000/- WAS DATE D 18.12.2002, WHICH IS SUBSEQUENT TO THE ACKNOWLEDGED DATE OF PAYMENT OF RS 3 ,00,000/- WHICH IS 23.11.2002, THUS THE LOGICAL INFERENCE WAS THAT UPTO 18.12.2002 ASSESSEE HAD MADE TOTAL PAYMENTS OF RS 8,00,000/-.. ACCORDING T O THE ASSESSING OFFICER, ASSESSEE WAS WRONG IN CLAIMING THAT THE PAYMENT OF RS 3,00,000/- REFERRED TO IN THE MOU ON 23.11.2002 WAS PART OF RS 5,00,000/- PAID BY CHEQUE ON THE SUBSEQUENT DATE. THEREFORE, THE PAYMENT OF RS 3,00,000/- AS REFLECTED BY THE SEIZED DOCUMENT WAS SAID TO BE UNACCOUN TED INVESTMENT AND ACCORDINGLY, THE SUM OF RS 3,00,000/- WAS EQUALLY ASSESSED I N THE HANDS OF THE ASSESSEE AND SHRI SAMEER LADKAT TO THE EXTENT OF RS 1,50,000/- EACH. 7. BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS), ASSE SSEE REITERATED THE SUBMISSIONS AS PUT-FORTH BEFORE THE ASSESSING OFFICER. T HE COMMISSIONER OF INCOME-TAX (APPEALS), HOWEVER, SUSTAINED THE ADDITIO N ON THE GROUND THAT THE INVESTMENT OF RS 3,00,000/- WAS CLEARLY EVIDENCED BY THE SEIZED DOCUMENT AND THAT IN THE ABSENCE OF ANY SPECIFIC AND ACCEPTABLE E XPLANATION, SAME HAS BEEN CORRECTLY TREATED AS AN UNEXPLAINED INVESTMENT. AG AINST THE AFORESAID SUSTENANCE OF ADDITION, THE ASSESSEE IS IN APPEAL BEFORE U S. 8. BEFORE US, THE ONLY POINT MADE OUT BY THE ASSESSEE I S TO THE EFFECT THAT THE AUTHORITIES BELOW HAVE NOT DOUBTED THE EXPLANATI ON THAT THE ASSESSEE WAS ENGAGED IN MONEY LENDING BUSINESS AND, THEREFORE, THE ASSESSEE HAD SOUGHT TO EXPLAIN THAT THE IMPUGNED AGREEMENT FOR PURCHASE O F A FLAT WAS INDEED ENTERED INTO ONLY AS A SECURITY AGAINST THE AMOUNTS OTHE RWISE ADVANCED TO THE BUSINESS CONCERNS OF THE SELLER SHRI RIKABCHAND OSWAL, THUS, THERE WAS NO UNEXPLAINED INVESTMENT. ALTERNATIVELY, A PLEA WAS AL SO ADVANCED TO THE EFFECT THAT IF IT IS ASSUMED THAT ASSESSEE HAD PAID SUCH SUM, THEN T HE PAYMENT OF RS 3,00,000/- WAS TO BE CONSIDERED A PART OF THE CHEQUE P AYMENT OF RS 5,00,000/- MADE SUBSEQUENTLY BY THE ASSESSEE TO SHRI RIKA BCHAND OSWAL. 9. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE DEFENDED THE ACTION OF THE LOWER AUTHORITIES BY PLACING RELIANCE ON THE ORDERS PASSED BY THEM. 10. AFTER HAVING CONSIDERED THE RIVAL SUBMISSIONS, WE FIN D THAT THE SEIZED DOCUMENT CLEARLY REFLECTS THE PAYMENT OF RS 3,00,000/- A ND ITS RECEIPT BY THE SELLER. OSTENSIBLY, AT NO STAGE HAS THE APPELLANT DENIED THE AUTHENTICITY OF THE DOCUMENT SEIZED AND, THEREFORE, IN OUR VIEW, THE CONTE NTS THEREOF, NAMELY, PAYMENT OF RS 3,00,000/- BY THE ASSESSEE ALONGWITH THE CO-SIGNATORY, NAMELY, SHRI SAMEER LADKAT, CANNOT BE DOUBTED. ADMITTEDLY, TH E ONUS IS ON THE ASSESSEE TO EXPLAIN THE SOURCE OF MAKING SUCH PAYMENTS WHICH, IN THE PRESENT CASE, DOES NOT APPEAR TO HAVE BEEN SATISFIED BY THE ASSE SSEE. THEREFORE, IN THIS BACKGROUND, WE FIND NO ERROR IN THE APPROACH OF TH E LOWER AUTHORITIES IN SUSTAINING THE ADDITION OF RS 1,50,000/-IN THE HANDS OF THE ASSESSEE REFLECTING HIS SHARE OUT OF THE TOTAL PAYMENT OF RS 3,00,000/- EV IDENCED BY THE SEIZED DOCUMENT IN QUESTION. THUS, THE ASSESSEE FAILS ON THIS GROUN D. 11. IN THE RESULT, ASSESSEES APPEAL, VIDE ITA NO 975/P N/10 FAILS AND IS DISMISSED. 12. WE SHALL NOW TAKE UP ITA NO 974/PN/10, WHICH IS AN APPEAL FILED BY THE ASSESSEE SAMEER B LADKAT FOR THE ASSESSMENT YEAR 2003-04. T HIS APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOM E-TAX (APPEALS)-IV, PUNE, DATED 22.2.2010 WHICH, IN TURN, HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 153A(B) OF ACT, PERTAINING TO THE ASSESSMENT YEAR 2003-04. 13. THE FIRST ISSUE RAISED IN THIS APPEAL RELATES TO AN A DDITION OF RS 1,50,000/- MADE ON ACCOUNT OF UNACCOUNTED PAYMENT TO SH RI RIKABCHAND OSWAL. THE FACTS AND CIRCUMSTANCES OF THIS ISSUE BEING ONE AND THE SAME AS CONSIDERED BY US IN THE CASE OF LATE SHRI BALASAHEB LADKA T, (ITA NO 975/PN/10), FOLLOWING THE PARITY OF REASONING CONSIDER ED WHILE DISPOSING OF THE AFORESAID APPEAL IN THE EARLIER PARAS, WE CONFIRM THE IMPUGNED ADDITION OF RS 1,50,000/- IN THIS CASE ALSO. 14. THE OTHER ADDITION IN DISPUTE IS OF RS 4,04,809/-, WHICH IS ALSO ON THE BASIS OF A SIMILAR SEIZED DOCUMENT AS WAS THE DOCUMENT IN T HE EARLIER ADDITION. THEREFORE, THERE BEING NO MATERIAL OR COG ENT REASON TO DEVIATE FROM THE VIEW TAKEN BY US IN RESPECT OF THE ADDITION OF RS 1 ,50,000/-, THE IMPUGNED ADDITION OF RS 4,04,809/- MADE ON ACCOUNT OF UNACCOUNTE D PAYMENT TO SHRI RIKABCHAND OSWAL IS ALSO HEREBY CONFIRMED. 15. SO, HOWEVER, WHILE ARGUING THE MATTER IN THIS CASE , THE ASSESSEE RAISED AN ALTERNATIVE PLEA TO THE EFFECT THAT NO SEPARATE A DDITION BE MADE ON THIS SCORE HAVING REGARD TO THE FACT THAT THE ASSESSEE HAD DECL ARED ADDITIONAL INCOME, IN A STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT, OF AN AMOUNT OF RS 35,08,300/- ON ACCOUNT OF UNACCOUNTED CASH LOANS AND INTEREST INCOME THEREOF. IN THIS CONTEXT, THE LEARNED COUNSEL REFERRE D TO THE STATEMENT OF THE ASSESSEE RECORDED UNDER SECTION 132(4) OF THE ACT, WHICH IS P LACED IN THE PAPER BOOK ON PAGE 34. THE SEIZED DOCUMENT ON THE BASIS OF WHICH SUCH AN INCOME WAS SURRENDERED WAS ALSO REFERRED TO AND, ON THAT BASIS, IT IS SOUGHT TO BE POINTED OUT THAT CASH LOANS OF RS 34,00,000/- FOUND RECORDED IN SUCH DOCUMENT REFLECTED INTEREST COMPUTED UPTO CERTAIN PERIO DS AMOUNTING TO RS 1,08,300/-. IT WAS POINTED OUT THAT LOGICALLY AFTER T HE DATES UPTO WHICH INTEREST IS CALCULATED IN THE SEIZED DOCUMENT, SUCH CASH LOANS CAN B E PRESUMED TO BE RETURNED BACK TO THE ASSESSEE AND THAT SUCH AMOUNTS CAN BE S AID TO HAVE BEEN AVAILABLE WITH THE ASSESSEE TO ADVANCE THE IMPUGNE D SUM OF RS 1,50,000/- TO SHRI RIKABCHAND OSWAL AS PER THE AGREEMEN T DATED 23.11.2002. IT WAS, THEREFORE, CONTENDED THAT BENEFIT OF TELESCOPIN G BE ALLOWED TO THE ASSESSEE. 16. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, HAS OPPOSED THE PLEA ON THE GROUND THAT NO NEXUS HAS BEEN ESTABLISHED BY THE ASSESSEE AND, THEREFORE, SUCH A PLEA BE NOT ENTERTAINED AT THE PRESENT STAGE. 17. WE HAVE EXAMINED THE ALTERNATIVE PLEA SET UP BY THE ASSESSEE AND FIND THAT THERE IS ENOUGH POTENT IN THE SAME TO BE E XAMINED BY THE ASSESSING OFFICER. WE, THEREFORE, HOLD THAT THE ASSESSING OFFICER SHALL EXAMINE THE PLEA OF THE ASSESSEE AND IT WOULD BE FOR THE ASSESSEE TO SATISF Y THE ASSESSING OFFICER THAT SUCH FUNDS WERE AVAILABLE TO HIM OUT OF THE INCOME OTHERWISE DECLARED OF RS 35,08,300/- SO AS TO EXPLAIN THE IMPUGNE D ADDITION. THEREFORE, FOR THE LIMITED PURPOSE, THE MATTER IS SET ASIDE TO TH E FILE OF THE ASSESSING OFFICER. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE, VIDE ITA NO 974/PN/10 IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 19. WE SHALL NOW TAKE UP REVENUES APPEAL IN THE CASE OF SHRI BALASAHEB M LADKAT, PUNE, VIDE ITA NO 1025/PN/10 RELATING TO A SSESSMENT YEAR 2004- 05. 20. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, PUNE DATED 19. 2.2010, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFF ICER UNDER SECTION 143(3) R.W.S. 153A(B) OF THE ACT PERTAINING TO THE ASS ESSMENT YEAR 2004-05. 21. IN THIS APPEAL, THE SUBSTANTIVE DISPUTE IS BY THE RE VENUE IS WITH REGARD TO THE ACTION OF THE COMMISSIONER OF INCOME-TAX (APPEAL S) IN DELETING AN ADDITION OF RS 2,00,88,783/- MADE BY THE ASSESSING OFFICE R INVOKING SECTION 68 OF THE ACT. 22. IN BRIEF, THE FACTS ARE THAT SEARCH AND SURVEY ACTION S UNDER SECTION 132(1) AND 133A OF THE ACT RESPECTIVELY CARRIED OUT AT VARIOUS RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE-GROUP REVEALED THAT THE ASS ESSEE HAD CREDITED AN AMOUNT OF RS 2,00,88,783/- AS MATURITY PRO CEEDS OF RESURGENT INDIA BONDS (RIBS) WHICH WERE RECEIVED AS GIFT. THE TO TAL CREDIT ON ACCOUNT OF SUCH GIFTS WAS OF RS 3,95,07,925/- AS PER DETAILS IN PA RA 6.1 OF THE ASSESSMENT ORDER, HOWEVER FOR THE PRESENT PURPOSE, THE RELEVANT AMOUNT IS ONLY RS 2,00,88,783/- WHICH IS THE AMOUNT FOUND CREDIT ED IN THE ACCOUNT BOOKS WITH REFERENCE TO THE ASSESSMENT YEAR UNDER CONSIDER ATION. IN THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE WAS REQUIRED TO FUR NISH THE RELEVANT DETAILS REGARDING THE GIFTS, VIZ. NAME AND A DDRESS, PROOF OF IDENTITY, AGE, OCCUPATION, YEARLY INCOME, RELATIONSHIP, DETAILS O F BANK ACCOUNT, ETC. OF THE DONOR. THE RELEVANT DETAILS FILED BY THE ASSESSEE HA VE BEEN TABULATED BY THE ASSESSING OFFICER IN PARA 6.2 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER NOTED THAT THE GIFTS IN QUESTION WERE OF RIBS, WHICH WERE ISSUED BY THE STATE BANK OF INDIA FOR SUBSCRIPTION BY THE NON-RESIDENT INDIANS, ETC., IN THE YEAR 1998 AND CARRIED AN INTEREST RATE OF 7.75% PER ANNUM AND A MATURITY PERIOD OF 5 YEARS. SUCH BONDS WERE ISSUED IN TERMS OF A SCHEME FORMULATED BY THE GOVERNMENT OF INDIA TO ATTRACT FOREIGN EXCHAN GE AND THE INVESTORS WERE GIVEN IMMUNITY FROM THE PROVISIONS OF FOREIGN EXCHANGE REGULATION ACT , 1973 (FERA) AND THE INTEREST ON SUCH BONDS WAS ALSO DECLARED T O BE TAX FREE. ACCORDINGLY, THE RIBS SO SUBSCRIBED AND ALLOTTED TO THE QU ALIFYING PERSONS, NAMELY, NON-RESIDENT INDIANS WERE DUE FOR MATURITY IN THE MONTH OF OCTOBER, 2003. THESE BONDS WERE CLAIMED TO HAVE BEEN RECEIVED B Y THE ASSESSEE AS GIFTS FROM A NON-RESIDENT INDIAN AND THE SUBSEQUENT PRO CEEDS ON MATURITY OF SUCH BONDS, WAS FOUND CREDITED IN THE CAPITAL ACCOUNT OF T HE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND ON SUCH BASIS, THE ASSESSING OF FICER PROCEEDED TO EXAMINE THE NATURE AND SOURCE OF SUCH CREDITS APPEARI NG IN THE ACCOUNT BOOKS OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. 23. THE ASSESSING OFFICER HAS EXAMINED THE NATURE AND SOU RCE OF THE CREDITS WITH REFERENCE TO THE REQUIREMENTS OF SECTION 68 OF THE ACT. IN TERMS THEREOF, THE ASSESSING OFFICER HAS HELD THAT THE ASSESSEE W AS REQUIRED TO ESTABLISH THE IDENTITY OF THE DONOR, THE FINANCIAL CAPA CITY OF THE DONOR AND GENUINENESS OF THE TRANSACTION. ON ALL THE THREE ASPECTS , AS PER THE ASSESSING OFFICER, THE ASSESSEE DID NOT OFFER A SATISFACTORY EXPL ANATION AND, THEREFORE, HE HAS INVOKED SECTION 68 OF THE ACT TO TREAT THE CREDIT OF RS 2,00,88,783/- AS UNEXPLAINED. ON THE ISSUE OF THE IDENTITY OF THE DONO R, ACCORDING TO THE ASSESSING OFFICER, THOUGH THE ASSESSEE FURNISHED DETAILS REL ATING TO THE NAME AND ADDRESS OF THE DONOR ALONGWITH AFFIDAVITS IN SUPPOR T OF THE GIFT, COPY OF PASSPORT ETC., THE IDENTITY OF THE DONOR COULD NOT BE E STABLISHED, AS THE ASSESSEE HAD FAILED TO PRODUCE THE DONOR BEFORE THE ASSESSI NG OFFICER; ON THE ISSUE OF THE FINANCIAL CAPACITY OF THE DONOR, THE ASSESSING OFFICER NOTED THAT ASSESSEE COULD ONLY PRODUCE COMPUTER-GENERATED BANK STATEM ENTS OF THE DONOR MAINTAINED WITH DIFFERENT BANKS AND THE ASSESSEE F AILED TO PRODUCE FURTHER DOCUMENTS AS REQUIRED BY HIM, AND THEREFORE T HE ASSESSEE HAD FAILED TO DISCHARGE HIS ONUS TO PROVE THE FINANCIAL CAPACITY OF THE DONOR; THAT ON THE ISSUE OF GENUINENESS OF THE TRANSACTION, AS PER THE ASSESSIN G OFFICER, THE TRANSACTION OF GIFT WAS AGAINST PARAMETERS OF HUMAN PROB ABILITY, AS THE DONOR WAS OF 30 YEARS OF AGE AND COULD NOT BE EXPECTED TO GIV E SUCH HUGE GIFTS TO THE ASSESSEE, WHO IS NOT RELATED TO HIM BY BLOOD, CASTE O R COMMUNITY. ON THE ISSUE OF OCCASION OF THE GIFT, THE ASSESSING OFFICER FOUND THAT THERE WAS NO SPECIFIC OCCASION FOR RECEIVING THE GIFT. THE CLAIM OF THE ASSESSEE THAT THE GIFT WAS GIVEN BY THE DONOR FOR THE GRATITUDE THAT THE DO NOR HAD TOWARDS ASSESSEE GROUP WAS ALSO NOT ACCEPTED AND IT WAS NOTED THAT RECIPRO CITY WAS MISSING. THE ASSESSING OFFICER FURTHER HELD THAT IN THE ABSENCE OF BLOOD RELATIONSHIP BETWEEN THE DONOR AND THE DONEE, THE EXPLANATION GI VEN BY THE ASSESSEE THAT THE DONOR WAS AN OLD RESIDENT OF PUNE AND IS A CLOSE AN D OLD FAMILY FRIEND WHO WAS BEING HELPED BY THE ASSESSEE GROUP IN THE TIMES OF REQUIREMENT, WAS ALSO NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER. IN SUM AND SUBSTANCE, AS PER THE ASSESSING OFFICER THE ASSESSEE HAD FAILED TO ESTABLISH T HE CIRCUMSTANCE OR THE INSTANCE OR THE REASONS FOR WHICH THE GIFT CAME TO BE MADE BY THE DONOR AND ACCORDINGLY, THE ASSESSING OFFICER WAS ALSO NOT SATISFIE D WITH THE GENUINENESS OF SUCH GIFTS. ON ALL THESE ASPECTS, THE ASSESSI NG OFFICER HAS MADE DETAILED DISCUSSIONS IN PARA 6.1 TO 6.8 OF THE ASS ESSMENT ORDER AND FINALLY, THE ASSESSING OFFICER CONCLUDED THAT THE EXPLAN ATION OFFERED BY THE ASSESSEE WITH REGARD TO THE AMOUNT OF RS 2,00,88,783/- CR EDITED AS MATURITY PROCEEDS OF RIBS RECEIVED AS GIFT, WAS NOT SATISFACTORY AND ACCORDINGLY, HE TREATED THE SAME AS INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION BY INVOKING SECTION 68 OF THE ACT. 24. IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (A PPEALS), ASSESSEE MADE VARIED SUBMISSIONS BY REFERRING TO THE MATERIAL ON RECORD TO CONTEND THAT THE IDENTITY OF THE DONOR, CAPACITY OF THE DONOR, AND THE GENUINENESS OF THE GIFT STOOD ESTABLISHED. THE DETAILED SUBMISSIONS OF THE ASSESSEE ON THIS ASPECT HAVE BEEN REPRODUCED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IN PARA 4.3 OF HIS ORDER AND WHICH ARE NOT BEING REPEATED FOR THE SAKE OF BREVITY. APART FROM THE AFORESAID, ASSESSEE ALSO SET-UP A PLEA BEFORE T HE COMMISSIONER OF INCOME-TAX (APPEALS) THAT THE ADDITION IN QUESTION WAS BEYOND THE PURVIEW OF AN ASSESSMENT UNDER SECTION 153A OF THE ACT, INASMUCH AS SU CH AN ASSESSMENT IS TO BE BASED ON ANY INCRIMINATING DOCUMENT FOU ND IN THE COURSE OF SEARCH UNDER SECTION 132(1) AND THAT IN THE PRESENT CASE, THE GIFTS IN QUESTION WERE DECLARED BY THE ASSESSEE IN THE RETURNS OF INCOME ORIGINALLY FILED UNDER SECTION 139(1) OF THE ACT AND THAT NO INCRI MINATING MATERIAL WAS FOUND DURING THE SEARCH TO SHOW THAT SUCH GIFTS WERE BOG US. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS CONSIDERED THE M ATERIAL AND EVIDENCE AVAILABLE ON RECORD AND ON THAT BASIS, FOUND T HAT THE IDENTITY AND CAPACITY OF THE DONOR STOOD ESTABLISHED AND EVEN WITH RE GARD TO THE GENUINENESS OF THE TRANSACTION, THE COMMISSIONER OF INCOM E-TAX (APPEALS) HAS FOUND THE SAME ACCEPTABLE, PRIMARILY RELYING ON THE RATIO OF THE JUDGMENT OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF K ANCHAN SINGH V. CIT 221 CTR 456 (ALL). THE FOLLOWING PARA OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IS RELEVANT, WHICH ALSO CONTAINS A PERTINENT FI NDING TO THE EFFECT THAT THE SEARCH AND SURVEY ACTION UNDERTAKEN BY THE REVENUE DI D NOT REVEAL ANY INCRIMINATING MATERIAL SUGGESTING TRANSFER OF MONEY FOR BUYING THE IMPUGNED RIBS:- 4.4.2 IN VIEW OF THE DISCUSSIONS MADE ABOVE AND CO NSIDERING THE FACTS IN THE LIGHT OF THE JUDGMENT QUOTED ABOVE, I FIND THAT THE CASE OF THE APPELLANT IS REQUIRED TO BE EXAMINED DIFFERENTLY THAN HAT THE AO HAS DONE. IF T HE SAME IS DONE IN THE LIGHT OF THE DECISION GIVEN BY THE HONBLE ALLAHABAD HIGH COURT IN A CASE RELATING TO RECEIPT OF GIFT OF RIBS, I FIND THAT THE CASE OF THE APPELLANT GROU P IS ON MUCH STRONGER FOOTING. IN THE JUDGMENT QUOTED ABOVE EVEN THE GENUINITY WAS HELD A CCEPTABLE IN THE LIGHT OF GIFTS BEING OF RIBS. IT IS ALSO SEEN THAT THE A MAJOR PAR T OF MATURITY VALUE RECEIVED BY THE APPELLANT WAS OF THE NATURE OF INTEREST WHICH IS NO N-TAXABLE AS PER APPELLANTS SUBMISSIONS AND THOSE WERE REQUIRED BY THE AO HIMSE LF TO HAVE BEEN EXCLUDED WHILE MAKING THE ADDITION. HE HIMSELF ADMITTED THAT THE C REDIT BEING EXAMINED IS THE CREDIT OF RIBS, WHICH ARE THE FACE VALUE OF RIBS. TE MATUR ITY VALUE RECEIVED WAS OF VALUE OF RIBS AND INTEREST ACCRUED IN CUMULATIVE MANNER OVER THE PERIOD OF HOLDING. IT CAN FURTHER BE SEEN THAT IN THIS CASE SEARCH AND SURVEY OF ALL PREMISES OF APPELLANT GROUP WERE ARRIVED OUT AND NOTHING INCRIMINATING SUGGESTI NG TRANSFER OF MONEY FOR BUYING THESE RIBS WERE FOUND. IN ANY CASE, I DO NOT FIND A NY EVIDENCE OF FACT AVAILABLE ON RECORD WHICH CAN PERMIT ME TO DEVIATE FROM THE FIND ING GIVEN ON SIMILAR FACTS BY HONBLE ALLAHABAD HIGH COURT QUOTED ABOVE. IN VIEW OF THE ABOVE, AND CONSIDERING ALL THE DISCUSSION MADE HEREBEFORE, THE APPEAL FILED BY THE APPELLANT IS TREATED AS ALLOWED. 25. FOR ALL THE ABOVE REASONS, THE COMMISSIONER OF INCO ME-TAX (APPEALS) HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER B Y INVOKING SECTION 68 OF THE ACT. IN VIEW OF THE AFORESAID, THE REVENUE IS IN APPEAL BEFORE US. 26. BEFORE US, THE LEARNED CIT-DEPARTMENTAL REPRESENT ATIVE, APPEARING FOR THE REVENUE SUBMITTED THAT THE COMMISSIONER OF INCOME-T AX (APPEALS) ERRED IN DELETING THE ADDITION INASMUCH AS THE ASSESSING OFFICE R WAS JUSTIFIED IN CONCLUDING THAT THE ASSESSEE WAS UNABLE TO SATISFACTORILY E XPLAIN THE IDENTITY AND CAPACITY OF THE DONOR AS ALSO THE GENUINENESS OF THE TRANSACTION. IN THIS REGARD, THE LEARNED CIT-DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT IN THE ABSENCE OF ANY OCCASION AND REASON WHATSOEVER TO MAKE A GIF T TO THE ASSESSEE, THE IMPUGNED TRANSACTION OF GIFT WAS LIABLE TO BE DIS-REGARDED AND TREATED AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES INV OKING SECTION 68 OF THE ACT. IT WAS ALSO POINTED OUT THAT THE DONOR AND DONEE WERE UNRELATED BY BLOOD, CASTE OR COMMUNITY AND THEREFORE, EVEN ON T HE TEST OF HUMAN PROBABILITY THE TRANSACTION OF GIFT WAS DOUBTFUL AND T HE ASSESSING OFFICER WAS JUSTIFIED IN REJECTING THE SAME. IN SUBSTANCE, THE ARGU MENTS RAISED BY THE LEARNED CIT-DEPARTMENTAL REPRESENTATIVE ARE ON THE SAME LINES AS MADE OUT IN THE ASSESSMENT ORDER, WHICH HAVE BEEN ALREADY ADVERT ED TO BY US IN PARA 23 ABOVE AND ARE ACCORDINGLY NOT BEING REPEATED FOR THE SAKE OF BREVITY. 27. ON THE OTHER HAND, THE LEARNED REPRESENTATIVE FO R THE ASSESSEE HAS PRIMARILY RELIED UPON THE ORDER OF THE COMMISSIONER O F INCOME-TAX (APPEALS) IN SUPPORT OF THE CASE OF THE ASSESSEE. IN JUSTIFYING THE CON CLUSIONS DRAWN BY THE COMMISSIONER OF INCOME-TAX (APPEALS), THE LEARNED REPR ESENTATIVE HAS TAKEN US THROUGH THE VOLUMINOUS PAPER BOOK FILED WHEREIN IS PLACED THE RELEVANT DOCUMENT AND MATERIAL ON THE BASIS OF WHICH THE COMMISSIO NER OF INCOME-TAX (APPEALS) HAS FOUND THAT EXPLANATION OF THE ASSESSEE SATIS FACTORY WITHIN THE MEANING OF SECTION 68 OF THE ACT. APART THEREFROM, TH E LEARNED REPRESENTATIVE SUBMITTED THAT SUCH GIFTS WERE DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME ORIGINALLY FILED UNDER SECTION 139(1) OF THE AC T AND FURTHER IN THE COURSE OF SEARCH AND SURVEY OPERATION, NO INCRIMINATING MATER IAL WAS FOUND TO SUGGEST ANY FALSITY OR INGENUINENESS OF THE TRANSACTION. THEREFORE, IT IS SUBMITTED THAT THE ADDITION IS NOT JUSTIFIED IN THE AB SENCE OF ANY INCRIMINATING EVIDENCE FOUND DURING SEARCH AND RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: (I) M.S. AGGARWAL V. DCIT 83 TTJ 692 (DEL); (II) DCIT V. RAMDEO KUMAR CHITLANGIA 89TTJ 346 (JD); AND, (III) NARINDER KUMAR SEKHRI V. ACIT 81 TTJ 1036(ASR) 28. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. TH E DISPUTE BEFORE US INVOLVES A CREDIT OF RS 2,00,88,783/- STATED TO BE TH E MATURITY PROCEEDS OF GIFT RECEIVED IN THE FORM OF BONDS OF $ 3,00,000. TH E GIFT IS STATED TO HAVE BEEN RECEIVED FROM ONE MR GURMEET AJITSINGH RAJPAL, A N NRI LIVING IN DUBAI, UAE. IT EMERGES THAT SUCH BONDS WERE INITIALLY SUBSCRIBED BY MR GURMEET AJITSINGH RAJPAL AND ALLOTTED BY STATE BANK OF INDIA IN FOREIGN EXCHANGE. SUCH BONDS WERE TRANSFERRABLE AND WERE TRANSFERRED IN FAVO UR OF THE ASSESSEE BY SHRI GURMEET AJITSINGH RAJPAL BY MAKING NECESSARY DECLAR ATIONS IN THIS REGARD TO THE STATE BANK OF INDIA ON 16.7.2003, COPIES OF WH ICH HAVE BEEN PLACED IN THE PAPER BOOK AT PAGES 143 TO 150. SUBSEQUENTLY, ON MATURITY, THE STATE BANK OF INDIA REDEEMED THE BONDS AND CREDITED THE AMOU NTS TO THE ASSESSEE ALONGWITH INTEREST THEREON WHEREBY THE AMOUNT OF RS 2 ,00,88,783/- HAS BEEN DEPOSITED IN THE ACCOUNT OF THE ASSESSEE. ACCORDINGLY, I T WAS CLAIMED THAT THE AMOUNT REFLECTED GIFT RECEIVED FROM MR GURMEET AJITSIN GH RAJPAL TO THE ASSESSEE, AND SUCH A CLAIM HAS NOT SINCE BEEN ACCEPTED BY THE ASSESSING OFFICER. INSTEAD, THE ASSESSING OFFICER HAS INVOKED SECTION 68 OF THE ACT AND HAS HELD SUCH CREDIT AS UNEXPLAINED AND ACCORDINGLY THE SAM E HAS BEEN TREATED AS INCOME ASSESSABLE IN THE HANDS OF THE ASSESSEE. I N THIS BACKGROUND, THE CONTROVERSY THUS INVOLVES THE PROVISIONS O F SECTION 68 OF THE ACT. 29. SECTION 68 OF THE ACT PRESCRIBES AND EMPOWERS AN ASSESSIN G OFFICER TO CHARGE TO INCOME-TAX AN AMOUNT CREDITED IN THE ACCOUNT BOOKS WHICH, IN THE OPINION OF THE ASSESSING OFFICER, HAS NOT BEEN SATISFACTOR ILY EXPLAINED. UNDER SECTION 68 OF THE ACT, IF ANY SUM IS FOUND CREDITED IN TH E ACCOUNT BOOKS OF AN ASSESSEE AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE N ATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE ASSESSING OFFICER SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS INCOME OF THE ASSESSEE FOR THAT PREVIOUS YEAR. OSTENSIBLY, SECTION 68 OF THE ACT REQUIRED THE ASSESSEE TO SATISFACTORILY EXPLAIN THE NA TURE AND SOURCE OF THE CREDIT IN QUESTION. IT IS QUITE WELL-SETTLED THAT FOR T HE PURPOSES OF SECTION 68 OF THE ACT, AN ASSESSEE IS REQUIRED TO PROVE THREE CONDITIO NS, NAMELY, IDENTITY OF THE CREDITOR, CAPACITY OF THE CREDITOR TO PAY THE STATED MONEY, AND GENUINENESS OF THE TRANSACTION. IT IS ALSO AN EQUALLY WELL SETTLED P ROPOSITION THAT ONCE THE ASSESSEE PRIMA FACIE COMPLIES THE AFORESAID THREE REQUIREM ENTS, THEREAFTER THE BURDEN SHIFTS ON THE REVENUE TO ESTABLISH THE FALSIT Y OF THE TRANSACTION OR TO PROVE THAT THE DISPUTED CREDIT REPRESENTED MONEY BELON GING TO THE ASSESSEE. ON THE LATTER PROPOSITION, A GAINFUL REFERENCE CAN BE MADE TO THE JUDGMENT OF THE HONBLE KERALA HIGH COURT IN THE CASE OF M A UNN EERI KUTTY V CIT 198 ITR 147 (KER.) AND SLP AGAINST SAID JUDGMENT HAS ALSO BEEN DISMISSED BY THE HONBLE SUPREME COURT. 30. FURTHER, EVEN WITH REGARD TO AN AMOUNT FOUND CRE DITED AS A GIFT, THE REQUIREMENTS OF SECTION 68 OF THE ACT ARE LIABLE TO BE CONSIDERED, AS LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT V. P MOHANKALA 291 ITR 278 (SC). IN NUT-SHELL, IN THE CONTEXT OF THE DISPUTE BEFO RE US, IT HAS TO BE OBSERVED THAT HAVING REGARD TO SECTION 68 OF THE ACT, IN ORDER TO PROVE THE NATURE AND SOURCE OF THE IMPUGNED CREDIT, THE BURDEN IS ON THE ASSE SSEE TO ESTABLISH THE IDENTITY OF THE DONOR, THE CAPACITY OF THE DONOR TO P AY AND THE GENUINENESS OF THE TRANSACTION OF GIFT. IN THIS LIGHT, WE MAY NOW EX AMINE THE MATTER FURTHER. 31. AT THE OUTSET, WE MAY REFER TO A TABULATION MAD E BY THE ASSESSING OFFICER WHICH ENUMERATES THE FACTUAL DETAILS THAT WERE FILED BY THE ASSESSEE WITH RESPECT TO IMPUGNED TRANSACTION OF GIFT. THE TABU LATION CONTAINED IN PARA 6.2 OF THE ASSESSMENT ORDER READS AS UNDER: S.NO. DETAILS REQUIRED TO BE FILED BY THE ASSESSEE DETAILS SUBMITTED BY THE ASSESSEE. 1 FULL NAMES OF THE DONORS THE NAMES OF DONORS ARE AS MENTIONED IN THE FOREGOING TABLES. 2 COMPLETE ADDRESS OF THE DONORS ADDRESS OF THE DON OR HAS BEEN FURNISHED TO ME AS FOLLOWS: MR GURMEET SINGH RAJPAL, NO. 406, 4 TH FLOOR, BMI BUILDING, KHALID-BIN- WALID ROAD, BANK STREET, BUR DUBAI, UAE. POSTAL ADDRESS: P.O BOX NO 51L731, DUBAI, UAE 3 IDENTITY OF THE DONOR WITH PROOF AND NATIONALITY, SUPPORTED BY HIS/HER PASSPORT THE ASSESSEE HAS SUBMITTED THE COPY OF THE INITIAL PAGE OF PASSPORT. 4 AGE OF THE DONORS 30 YEARS 5 OCCUPATION OF THE DONORS OCCUPATION OF THE DONORS : IT HAS BEEN STATED BY THE ASSESSEE THAT THE DONOR IS ENGAGED IN IMPORT AND EXPORT FROM DUBAI AND INVESTMENT IN PROPERTY. NO SPECIFIC DETAILS ARE GIVEN. 6 YEARLY INCOME OF THE DONORS WITH PROOF, THE SOUR CE OF INCOME OF DONORS ALONGWITH DETAILS LIKE NATURE OF BUSINESS/PROFESSION/DETAILS OF EMPLOYER IF DRAWING SALARY, COPIES OF RETURNS OF INCOME OF DONORS FOR ASSESSMENT YEARS CORRESPONDING TO THE PREVIOUS YEAR IN WHICH GIFT WAS RECEIVED BY DONEE AND THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, COPIES OF BALANCE SHEETS OF THE DONOR FOR ASSESSMENT YEAR CORRESPONDING TO THE PREVIOUS YEAR IN THE ASSESSEE HAS SUBMITTED SUPPOSEDLY COMPUTER GENERATED CERTIFICATES OF DEPOSITS FROM VARIOUS BANKS LIKE ABN AMRO BANK, DUBAI, MASHREQ BANK, DUBAI, ABU DHABI COMMERCIAL BANK, THE WALL STREET BANKING CORPORATION LTD, COOK ISLANDS, COMMERCIAL BANK OF DUBAI, ETC. THESE FDS ARE THE SUPPOSEDLY COMPUTER GENERATED COPIES AND DO NOT BEAR ANY AUTHENTICATION FROM THE CONCERNED BANK AUTHORITIES. THE STATEMENT OF WHICH GIFT WAS RECEIVED BY DONEE AND THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. ASSET HAS BEEN SUBMITTED. 7 RELATIONSHIP OF THE DONORS WITH THE DONE THERE IS NO BLOOD RELATIONSHIP BETWEEN THE DONORS AND THE DONEE. IT HAS BEEN CLAIMED THAT THE DONOR IS A PERSONAL FRIEND OF THE FAMILY OF ASSESSEE. IT HAS FURTHER BEEN CLAIMED THAT THE DONOR IS RESIDENT OF PUNE, NOW SETTLED IN DUBAI. 8 HOW MANY TIMES THE DONOR HAS VISITED INDIA BEFORE GIVING GIFT (TO BE SUPPORTED BY HIS/HER PASSPORT)? IT HAS BEEN CLAIMED THAT THE PERSON WHO GAVE GIFT VISITS INDIA AND PUNE INNUMERABLE TIMES AS HE HAILS FROM PUNE. 9 HOW MANY TIMES THE ASSESSEE HAS VISITED DUBAI TO MEET THE DONOR? NO DETAILS GIVEN 10 WHO ARE THE DONORS RELATIONS IN INDIA AND WHAT ARE THEIR ADDRESSES AND OCCUPATION? NO DETAILS GIVEN 11 TO FILE THE AFFIDAVIT OF THE DONOR, DULY SWORN, BEFORE THE INDIAN HIGH COMMISSION IN UAE, DETAILING THE ABOVE MENTIONED INFORMATION THE ASSESSEE HAS FILED AFFIDAVIT OF THE DONOR NOTARIZED IN INDIA AND THAT BEFORE THE VICE CONSUL, CONSULATE GENERAL OF INDIA IN DUBAI. 12 DATE OF RECEIPT OF GIFT THE DATES OF RECEIPTS OF GIFTS ARE MENTIONED IN THE FOREGOING TABLES 13 THE DETAILS OF BANK ACCOUNTS FROM WHICH THE GIFTS HAVE BEEN RECEIVED THE GIFTS HAVE NOT BEEN RECEIVED BY WAY OF REMITTANCES. THEY ARE RE3CEIVED BY WAY OF TRANSFER OF ALREADY SUBSCRIBED RESURGENT INDIA BONDS ISSUED BY SBI. HENCE, DETAILS OF BANK ACCOUNT ARE NOT SUBMITTED. 14 COPY OF BANK ACCOUNT WHEREFROM AMOUNT OF GIFT HAS BEEN TRANSFERRED TO ASSESSEES ACCOUNT THE GIFTS HAVE NOT BEEN RECEIVED BY WAY OF REMITTANCES. THEY ARE RECEIVED BY WAY OF TRANSFER OF ALREADY SUBSCRIBED RESURGENT INDIA BONDS ISSUED BY SBI. HENCE, DETAILS OF BANK ACCOUNT ARE NOT SUBMITTED. 15 THE OCCASION OF THE GIFT IT HAS BEEN CLAIMED THA T THE ASSESSEE AND HIS FAMILY HAS ALWAYS STOOD BY THE DONOR IN HIS DIFFICULT TIMES. NO SPECIFIC OCCASION OF GIFT HAS BEEN MENTIONED. 16 THE REASONS FOR GIVING THE GIFT IT HAS BEEN CLAI MED THAT THE ASSESSEE AND HIS FAMILY HAS ALWAYS STOOD BY THE DONOR IN HIS DIFFICULT TIMES. NO SINGLE INSTANCE OF SUCH OCCASION OF GIFT HAS BEEN MENTIONED. 17 ANY FORM OF CORRESPONDENCE BETWEEN THE DONORS AND DONEE, PRIOR TO AND AFTER THE GIFT TRANSACTIONS NO DETAILS GIVEN 18 THE FAMILY SIZE OF THE DONOR AND DETAILS OF GIFTS GIVEN BY DONOR ON ANY OCCASION OR OTHERWISE TO THE FAMILY MEMBERS OF ASSESSEE NO DETAILS GIVEN 19 DETAILS OF GIFTS, IF ANY, GIVEN BY THE ASSESSEE OR THE FAMILY MEMBERS OF ASSESSEE TO THE DONORS OR THE FAMILY MEMBERS OF DONORS NO GIFTS GIVEN BY ASSESSEE OR HIS FAMILY MEMBERS TO THE DONOR OR HIS FAMILY MEMBERS. 20 IT WAS REQUESTED TO PRODUCE THE DONORS BEFORE THE UNDERSIGNED WITH PRIOR INTIMATION OF ATLEAST 8 DAYS THE DONOR IS NOT PRODUCED BEFORE THE UNDERSIGNED. 32. FACTUALLY, IT IS TO BE OBSERVED THAT THE GIFT IN Q UESTION IS OF RIBS WHICH HAVE BEEN SUBSCRIBED BY SHRI GURMEET AJITSINGH RAJPAL, AN NRI IN TERMS OF AN ISSUE BY THE STATE BANK OF INDIA. IN THIS CONNECTION, IT IS NOTICEABLE THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS MADE A REFERE NCE TO THE MANNER IN WHICH SUCH BONDS WERE ISSUED BY THE STATE BANK OF INDIA IN PURSUANCE TO A SCHEME FORMULATED BY THE GOVERNMENT OF INDIA IN ORDER TO GARNER FOREIGN EXCHANGE DEPOSITS AND INVOLVED SUBSCRIPTION BY NRIS AND NR I CONTROLLED OVERSEAS CORPORATE BODIES (OCBS). THE INVESTORS WERE GIVE N IMMUNITY FROM FERA AND INTEREST EARNED FROM SUCH BONDS WAS MADE TAX- FREE. SUCH BONDS WERE OPEN FOR SUBSCRIPTION FOR A BRIEF PERIOD DURING AUGUST-SEPTEMBER, 1998, AND IT CARRIED AN INTEREST RATE OF 7.75% PER ANNUM A ND WERE TO MATURE AFTER A PERIOD OF 5 YEARS. THE MATURITY PROCEEDS OF SUCH BONDS HA VE BEEN CREDITED TO THE ACCOUNT OF THE ASSESSEE BY STATE BANK OF INDIA, AFTE R SUCH BONDS WERE TRANSFERRED TO THE ASSESSEE BY WAY OF GIFT BY THE ORIGI NAL SUBSCRIBER NAMELY, SHRI GURMEET AJITSINGH RAJPAL. 32.1 BEFORE PROCEEDING FURTHER, IT WOULD BE PERTINE NT TO NOTE HERE THAT THE DONOR NAMELY, SHRI GURMEET AJITSINGH RAJPAL AND THE ASSESSEE ARE NOT RELATIVES. IN THIS CONTEXT, THE HONBLE ALLAHABAD HI GH COURT IN THE CASE OF KANCHAN SINGH (SUPRA) NOTED THAT PRIOR TO AMENDMENT B Y FINANCE ACT (NO.2) OF 1992, AN NRI COULD MAKE GIFT OF THE BONDS ONLY TO RELATIVES, BUT SUCH RESTRICTION WAS TAKEN AWAY BY FINANCE (NO 2) ACT 1991 BY INSERTION OF SECTION 5(IIIE) OF THE GIFT-TAX ACT 1958 WHICH READ AS UNDER: SEC.5. EXEMPTION IN RESPECT OF CERTAIN GIFTS (1) GIFT-TAX SHALL NOT BE CHARGED UNDER THIS ACT IN RESPECT OF GIFTS MADE BY ANY PERSON- (IIIE), BEING AN INDIVIDUAL WHO IS A NON-RESIDENT I NDIAN, OF PROPERTY IN THE FORM OF THE BONDS SPECIFIED UNDER SUB-CL.(IID) OF CLAUSE (15) O F SECTION 10 OF THE IT ACT: PROVIDED THAT WHERE AN INDIVIDUAL, WHO IS A NON-RES IDENT INDIAN IN ANY PREVIOUS YEAR IN WHICH THE BONDS ARE ACQUIRED, BECOMES A RESIDENT IN INDIA IN ANY SUBSEQUENT YEAR, THE PROVISIONS OF THIS CLAUSE SHALL APPLY IN RESPEC T OF THE GIFTS OF PROPERTY REFERRED TO IN THIS CLAUSE IN SUCH SUBSEQUENT YEAR OR ANY YEAR THE REAFTER. EXPLANATION: FOR; THE PURPOSES OF THIS CLAUSE, THE EXPRESSIONS (A).. (B) NON-RESIDENT INDIAN SHALL HAVE THE MEANING AS SIGNED TO IN CLAUSE (E) OF SECTION 115C OF THE IT ACT. 33. THEREFORE, IN THIS BACKGROUND ONE HAS TO EXAMINE WH ETHER THE EXPLANATION OFFERED BY THE ASSESSEE WITH REGARD TO THE IDENTITY, CAPACITY OF THE DONOR AND THE GENUINENESS OF THE GIFT TRANSACTION IS SAT ISFACTORY OR NOT. IN SO FAR AS THE IDENTITY OF THE DONOR IS CONCERNED, THE SAME , IN OUR VIEW HAS BEEN RIGHTLY ACCEPTED BY THE COMMISSIONER OF INCOME-TAX (APPE ALS) INASMUCH AS SAME IS SUPPORTED BY COPY OF THE PASSPORT OF THE DONOR, C OPY OF VISA, SWORN AFFIDAVIT MADE IN THE PRESENCE OF CONSULATE GENERAL OF INDIA, DUBAI AND ALSO THE DECLARATION OF THE GIFT BEFORE THE NOTARY. THE C OPIES OF AFORESAID MATERIAL HAVE BEEN PLACED IN THE PAPER BOOK AND ON THAT BASIS, I N OUR VIEW, THE COMMISSIONER OF INCOME-TAX (APPEALS) MADE NO MISTAKE IN H OLDING THAT THE IDENTITY OF THE DONOR STOOD PROVED. AT THIS POINT, WE MAY ALSO NOTICE AN ASSERTION MADE BY THE ASSESSEE BEFORE THE COMMISSIONER OF I NCOME-TAX (APPEALS) THAT DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE ASSESSING OFFICER INDEPENDENTLY CONFIRMED BEFORE THE NOTARY BE FORE WHOM THE DONOR HAD EXECUTED THE AFFIDAVIT. THERE IS NO NEGATION TO THE A FORESAID PLEA. ALL THESE FACTORS, IN OUR VIEW, SUPPORT THE FINDING OF THE COMM ISSIONER OF INCOME-TAX (APPEALS) TO THE EFFECT THAT IDENTITY OF THE DONOR STO OD PROVED. THE OBJECTION OF THE ASSESSING OFFICER THAT THE DONOR WAS NOT PRODUCED BEF ORE HIM AND THEREFORE, THE ASSESSEE COULD NOT ESTABLISH THE IDENTITY OF THE DONOR, IN OUR VIEW, IS NOT JUSTIFIED. IN THE FACE OF THE MATERIAL O N RECORD, AND WHOSE AUTHENTICITY WAS OPEN FOR VERIFICATION BY THE ASSESSING OF FICER AND IN THE ABSENCE OF ANY ADVERSE FINDINGS BY HIM ON SUCH MATERIAL, THE INSISTENCE OF THE ASSESSING OFFICER TO BE SATISFIED ON THE ASPECT OF IDENTITY ONLY ON PRODUCTION OF THE DONOR, IS QUITE UNJUSTIFIED. IN FACT, IN OUR VI EW, THE IDENTITY OF THE DONOR ALSO STANDS ESTABLISHED BY THE TRANSFER DOCUMENTS SIGNED BY THE DONOR AND THE ASSESSEE JOINTLY WHICH IS ADDRESSED TO THE STATE BANK O F INDIA, NARIMAN POINT, MUMBAI IN TERMS OF WHICH THE BONDS HAVE BEEN TRANSFERRED IN THE NAME OF THE ASSESSEE AS GIFT. AN ILLUSTRATIVE COPY OF ONE SUCH DE CLARATION DATED 27.6.2003 HAS BEEN PLACED AT PAGE 145 OF THE PAPER B OOK WHICH CONTAINS THE RELEVANT BOND CERTIFICATE NUMBERS, REGISTER FOLIO NUMBE RS OF THE BONDS ISSUED BY STATE BANK OF INDIA, NARIMAN POINT, MUMBAI IN THE NAME OF THE DONOR SHRI GURMEET AJITSINGH RAJPAL. SIMILARLY AT PAGE 144 OF T HE PAPER BOOK IS THE COMMUNICATION RECEIVED FROM STATE BANK OF INDIA, NARIMA N POINT, MUMBAI, WHEREBY THE STATED BONDS ARE SAID TO HAVE BEEN TRANSF ERRED IN THE NAME OF THE ASSESSEE FROM SHRI GURMEET AJITSINGH RAJPAL AS GIFT. THIS EVIDENCE ITSELF SHOWS THE IDENTITY OF THE DONOR. BE THAT AS IT MAY, IN OUR VIEW, THE OBJECTION OF THE REVENUE THAT THE ASSESSEE COULD NOT ESTABLISH THE IDE NTITY OF THE DONOR IS MISPLACED AND THE COMMISSIONER OF INCOME-TAX (APPEALS) R IGHTLY REJECTED SUCH ASSERTION OF THE ASSESSING OFFICER. 34 SECONDLY, EVEN WITH REGARD TO THE CAPACITY OF THE D ONOR TO GIFT SUCH BONDS IS CONCERNED, HEREIN ALSO WE FIND THAT THE COMMISSI ONER OF INCOME-TAX (APPEALS) MADE NO MISTAKE IN ACCEPTING THE EXPLANATIONS F URNISHED BY THE ASSESSEE. PERTINENTLY, SUCH BONDS COULD ONLY BE ORIGINALLY SUBSCRIBED BY AN NRI AND THAT TOO AGAINST FOREIGN CURRENCY. IN FACT, TH E GIFT TRANSFER FORM SUBMITTED TO THE STATE BANK OF INDIA, NARIMAN POINT, MUMBAI, COPY OF WHICH IS ON RECORD, CLEARLY SHOWS THAT THE BONDS WERE PURCHASED A GAINST US DOLLARS. THEREFORE, THE SOURCE OF MONEY FOR THE PURCHASE OF SUCH BONDS IN 1998 WAS IN FOREIGN CURRENCY OUTSIDE INDIA. IN FACT, IN SO FAR AS TH E YEAR UNDER CONSIDERATION IS CONCERNED, ONE HAS TO EXAMINE ONLY THE SOURCE AND NAT URE OF THE AMOUNT CREDITED IN THE ACCOUNT OF THE ASSESSEE, NAMELY, THE MATU RITY PROCEEDS OF SUCH BONDS AND NOT WITH REGARD TO THE INVESTMENTS MADE IN PURCHASING SUCH BONDS WHICH COULD BE MADE ONLY IN THE FINANCIAL YEAR 1998-99 AND NOT IN THE YEAR UNDER CONSIDERATION. IN FACT, THE HONBLE ALLAHABAD HI GH COURT HAS CONSIDERED AN IDENTICAL SITUATION WHEREIN ALSO, SECTION 68 WAS INVOL VED, VIS--VIS THE MATURITY PROCEEDS OF RESURGENT INDIA BONDS GIFTED TO TH E ASSESSEE THEREIN. IN THAT CASE TOO, THE REVENUE HAD DOUBTED THE NATURE AND SOURCE OF THE AMOUNT CREDITED BY WAY OF MATURITY PROCEEDS IN THE ACCOUNT OF T HE DONEE AND IN THIS CONTEXT, IT WAS NOTICED AS UNDER: 5. UNDISPUTEDLY, IN PURCHASING THE FOUR BONDS THE INVESTMENTS WERE MADE ON 1 ST OCTOBER, 1998 AND NOT IN THE YEAR UNDER CONSIDERATI ON AND IN THE YEAR UNDER CONSIDERATION, NAMELY, IN THE ASST. YR. 2004-05 ONL Y THE MATURITY AMOUNTS OF THE BOND WERE RECEIVED. 6. THUS, SO FAR AS THE YEAR UNDER CONSIDERATION IS CONCERNED, THE SOURCE AND NATURE OF DEPOSIT ARE FULLY ESTABLISHED AND THE QUE RY WITH REGARD TO THE INVESTMENT MADE IN PURCHASING THE BONDS COULD BE MADE ONLY IN THE FINANCIAL YEAR 1998-99 RELEVANT TO THE ASST. YR. 1999-2000 AND NO N THE YE AR UNDER CONSIDERATION. 7. AFTER THE AMENDMENT IN S. 5(IIIE) OF THE GT ACT BY THE FINANCE (NO 2) ACT OF 1991, GIFT COULD BE MADE TO THE PERSON OTHER THAN R ELATIVES ALSO. THE OMISSION OF THE WORD RELATIVE IN THE SECTION SHOWS THAT THE AMEND MENT WAS MADE TO PROMOTE THE GIFT BY NRI TO THE PERSONS OTHER THAN RELATIVES TO ENCOU RAGE INFLOW OF FOREIGN MONEY IN INDIA THROUGH GIFTS. 35 CONSIDERED IN THE AFORESAID LIGHT, WE, THEREFORE, FIND THAT THE ASSESSING OFFICER MISDIRECTED HIMSELF. MOREOVER IN THE PRESENT CASE WE FIND THAT THE ASSESSEE PRODUCED COPIES OF BANK STATEMENTS OF THE DONOR SH RI GURMEET AJITSINGH RAJPAL IN VARIOUS BANKS ON THE BASIS OF WHICH I T WAS SOUGHT TO BE MADE OUT THAT THE DONOR WAS A MAN OF MEANS. IN THE CO URSE OF THE HEARING, THE LEARNED COUNSEL REFERRED TO PAGES 73 TO 96 OF THE PAP ER BOOK WHEREIN SUCH DOCUMENTATION HAS BEEN PLACED, NAMELY, COPIES OF FIXED D EPOSITS OF THE DONOR WITH VARIOUS BANKS AND THEIR CONFIRMATIONS. OSTENSIBLY, SU CH MATERIAL PERTAINING TO THE RELEVANT PERIOD OF BOND SUBSCRIPTION BY THE DONOR WAS BEFORE THE ASSESSING OFFICER ALSO. THERE DOES NOT EMERGE TO BE A NY ADVERSE FINDINGS ON SUCH MATERIAL WHICH, IN OUR VIEW, DOES PRIMA FACIE SUP PORT THE ASSERTIONS OF THE ASSESSEE. IN THE ABSENCE OF ANY ADVERSE MATERIAL WITH THE ASSESSING OFFICER SUCH PRIMA FACIE EVIDENCE CANNOT BE BRUSHED ASIDE. MOREOVER, IT IS A WELL-SETTLED PROPOSITION THAT IN THE CONTEXT OF SECTIO N 68 OF THE ACT, THE ASSESSEE CAN AT-BEST BE CALLED UPON TO PROVE AND ESTABLISH THE SOURCE OF THE CREDIT, BUT NOT TO PROVE THE SOURCE OF THE SOURCE AND F OR SUCH PROPOSITION, RELIANCE CAN BE PLACED ON THE FOLLOWING DECISIONS: (I) S HASTIMAL V CIT 49 ITR 273 (MAD); (II) CIT V DAULAT RAM RAWATMULL 87 349 (SC); AND, (IV) SAROGI CREDIT CORPORATION V. CIT 103 ITR 344 ( PATNA). UNDISPUTABLY, THE DONOR INVESTED IN THE RIBS IN FINANCI AL YEAR 1997-98 AND THERE CANNOT BE A PRESUMPTION ON THE PART OF THE ASSESSIN G OFFICER THAT THE DONOR LACKED ADEQUATE FINANCIAL CAPACITY WITHOUT BRINGIN G ANY MATERIAL ON RECORD. THEREFORE, IN VIEW OF THE AFORESAID DISCUSSION, WE ARE UNABLE TO ACCEPT THE VIEW OF THE ASSESSING OFFICER AND RATHER WE AFFIRM THE FINDING OF THE COMMISSIONER OF INCOME-TAX (APPEALS) THAT THE CAPACITY OF THE DONOR TO MAKE GIFT IS ESTABLISHED HAVING REGARD TO THE MATERIAL ON R ECORD. 36 EVEN WITH REGARD TO THE GENUINENESS OF THE TRANSACTI ON, WE FIND THAT THE PARITY OF REASONING LAID DOWN BY THE HONBLE ALLAHA BAD HIGH COURT IN THE CASE OF KANCHAN SINGH (SUPRA) CLEARLY SUPPORTS THE ASSERTIONS O F THE ASSESSEE. EVEN IN THE CASE BEFORE THE HONBLE ALLAHABAD HIGH C OURT, THE REVENUE HAD DOUBTED THE GENUINENESS OF THE GIFTS ON THE GROUND THA T THE DONEE WAS NOT PROVED TO BE IN CONTACT WITH THE DONOR FOR A LONG TI ME. IN THE CASE BEFORE THE HONBLE HIGH COURT, APART FROM THE DECLARATION OF TH E DONOR STATING THAT HE MADE THE GIFT TO THE DONEE, THE DONOR WAS NEITHER FO UND AVAILABLE ON THE ADDRESS GIVEN IN THE DECLARATION NOR WAS THE DONEE FOU ND AWARE OF HIS PRESENT ADDRESS. UNDER THESE CIRCUMSTANCES IN THE CASE BEFORE THE HO NBLE ALLAHABAD HIGH COURT, THE REVENUE CONTENDED THAT THE GIFT WAS A SSESSEES OWN MONEY ROUTED THROUGH SOME FICTITIOUS PERSON AND THEREFORE IT WAS ASSESSED AS INCOME FROM OTHER SOURCES. IN THIS BACKGROUND, THE HONBLE HIGH COURT HAS MADE A DETAILED REASONING TO CONCLUDE THAT THE NATURE AND SOURCE OF THE CREDIT IN THE BANK ACCOUNT NAMELY THE MATURITY PROCEEDS OF THE BONDS RECEIVED AS GIFT, WAS ESTABLISHED BY THE ASSESSEE. THE RELEVANT DISCUSSION CONTAINED IN PARAS 22 & 23 IS AS UNDER: 22. THE REASONS FOR ARRIVING AT A CONCLUSION ARE A S FOLLOWS: 1. FOUR RESURGENT INDIA BONDS OF 10,000 US DOLLARS EACH WERE PURCHASED ON 1 ST OCTOBER, 2003 ON THE APPLICATION OF SRI K C KAPADIA , WHICH IS ESTABLISHED FROM THE APPLICATION SENT BY THE CHIEF MANAGER, SBI, NRI BRA NCH, MUMBAI. 2. SUCH BONDS COULD BE PURCHASED ONLY BY NRI AGAINS T THE FOREIGN CURRENCY. ADMITTEDLY, THE BONDS WERE PURCHASED AGAINST US DOL LARS. THUS, THE SOURCE OF THE MONEY FOR THE PURCHASE OF THE BOND, BEING US DOLLAR S IS OUTSIDE INDIA. 3. THE BONDS REVEAL THAT THEY WERE TRANSFERABLE AND , ACCORDINGLY, THEY ERE TRANSFERRED IN FAVOUR OF THE ASSESSEE BY SHRI K C K APADIA. 4. AS A RESULT OF TRANSFERS OF SUCH BONDS IN FAVOUR OF THE ASSESSEE, THE ASSESSEE RECEIVED THE MATURITY AMOUNT FROM THE SBI AND CREDI TED IN HER ACCOUNT. LETTER OF THE CHIEF MANAGER, SBI NRI BRANCH, MUMBAI DATED 28 TH FEB. 2006 CONFIRMS THE TRANSFERS BY WAY OF GIFT TO THE ASSESSEE BY SRI K.C . KAPADIA. 5. UNDISPUTEDLY, IN PURCHASING THE FOUR BONDS THE I NVESTMENTS WERE MADE ON 1 ST OCT., 1998 AND NOT IN THE YEAR UNDER CONSIDERATION AND IN THE YEAR UNDER CONSIDERATION, NAMELY, IN THE ASST. YR. 2004-05 ONL Y THE MATURITY AMOUNTS OF THE BOND WERE RECEIVED. 6. THUS, SO FAR AS THE YEAR UNDER CONSIDERATION IS CONCERNED, THE SOURCE AND NATURE OF DEPOSIT ARE FULLY ESTABLISHED AND THE QUERY WITH REGARD TO THE INVESTMENT MADE IN PURCHASING THE BONDS COULD BE MADE ONLY IN THE F INANCIAL YEAR 1998-99 RELEVANT TO THE ASST. YR. 1999-2000 AND NOT IN THE YEAR UNDE R CONSIDERATION. 7. AFTER THE AMENDMENT IN S. 5(IIIE) OF THE GT ACT BY THE FINANCE (NO.2) ACT OF 1991, GIFT COULD BE MADE TO THE PERSON OTHER THAN RELATIV ES ALSO. THE OMISSION OF THE WORD RELATIVE IN THE SECTION SHOWS THAT THE AMEND MENT WAS MADE TO PROMOTE THE GIFT BY NRI TO THE PERSONS OTHER THAN RELATIVES TO ENCOURAGE INFLOW OF FOREIGN MONEY IN INDIA THROUGH GIFTS. 8. SHRI K.C. KAPADIA, BY CONFIRMATORY LETTER DT. 8 TH FEB. 2006 DULY NOTARIZED BY NOTARY PUBLIC OF NEW JERSEY, HAS CONFIRMED THE GIFT OF FOUR SUCH BONDS. THE LETTERS WRITTEN BY THE ASSESSING AUTHORITY WERE RET URNED UNSERVED WITH THE REMARK NOT DELIVERABLE AS ADDRESSED UNABLE TO FORWARD DO ES NOT MEAN THAT SRI K.C. KAPADIA WAS NOT TRACEABLE AND WAS NOT IN EXISTENCE. THERE MAYBE SO MANY REASONS THAT THE LETTER COULD NOT BE DELIVERED. MER ELY BECAUSE THE ASSESSEE COULD NOT TELL ANY OTHER ADDRESS OF SRI K.C. KAPADIA, IT CANNOT BE INFERRED THAT SRI K.C.KAPADIA WAS/IS NOT IN EXISTENCE AND HIS IDENTIT Y IS DOUBTFUL. 9. THE APPLICATION MOVED BY SRI K C KAPADIA FOR THE PURCHASE OF FOUR BONDS WITH THE SBI, THE ISSUE OF THE BONDS IN THE NAME OF SRI K C KAPADIA AGAINST US DOLLARS IS BY ITSELF AN EVIDENCE TO PROOF THE IDENTITY OF SRI K C KAPADIA. 23. IN THE FACTS AND CIRCUMSTANCES AND THE REASONS GIVEN ABOVE, WE ARE OF THE VIEW THAT THERE IS NO REASON TO DOUBT THE GENUINENE SS OF THE GIFT BY SRI K C KAPADIA TO THE ASSESSEE. IN ANY VIEW OF THE MATTER, THE ASSESS EE WAS ABLE TO ESTABLISH THE NATURE AND SOURCE OF THE MONEY. THE NATURE AND SOURCE OF T HE MONEY FOUND DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE WERE THE MATURITY AMOU NTS OF THE FOUR BONDS WHICH WERE PURCHASED BY SRI K.C. KAPADIA ON 1 ST OCT. 198. THEREFORE, SO FAR AS YEAR UNDER CONSIDERATION IS CONCERNED, THE NATURE AND SOURCE A RE FULLY ESTABLISHED. THERE IS NO EVIDENCE TO SHOW THAT THE DEPOSIT IN THE BANK ACCOU NT WAS THE INCOME FROM OTHER SOURCES OF THE ASSESSEE FOR THE YEAR UNDER CONSIDER ATION. 37 IN THE BACKGROUND OF THE AFORESAID JUDGMENT, WE FI ND THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) MADE NO MISTAKE IN UPHOLDING THE ASSESSEES ASSERTION THAT THE TRANSACTION OF GIFT WAS GENUINE . IN FACT IN THE PRESENT CASE, IT IS NOT THE CASE OF THE REVENUE THAT THE DONOR WAS NOT FOUND AT THE GIVEN ADDRESS RATHER AS THE ASSERTION OF THE ASSESSEE B EFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) SHOWS THAT AN INDEPE NDENT VERIFICATION BY THE ASSESSING OFFICER WITH THE NOTARY ESTABLISHED THE A VAILABILITY OF THE DONOR. MERELY BECAUSE THE ASSESSEE DID NOT PRODUCE THE D ONOR IN PERSON BEFORE THE ASSESSING OFFICER THE SAME, IN OUR VIEW, IS NO T MATERIAL TO DOUBT THE GENUINENESS OF THE TRANSACTION. MOREOVER, AS THE AMENDM ENT TO SECTION 5 ( IIIE) OF THE GIFT-TAX ACT SHOWS THAT THE BONDS IN QUESTION COUL D BE GIFTED BY THE DONOR TO ANY PERSON OTHER THAN RELATIVES ALSO. CONSIDE RED IN THIS BACKGROUND, THE INSISTENCE OF THE ASSESSING OFFICER TO REJECT THE GENUI NENESS ON THE PLEA THAT THE DONOR AND DONEE BEING UNRELATED BY BLOOD, CASTE OR COMMUNITY IS, THEREFORE, NOT A GROUND ENOUGH TO DOUBT THE GENUINE NESS OF THE TRANSACTION. FURTHER-MORE, THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS RIGHTLY OBSERVED THAT IN THIS CASE A SEARCH AND SURVEY OF ALL THE PREMISES OF THE ASSESSEE GROUP WAS CARRIED OUT AND NOTHING INCRIMINATING WAS FOUND TO SUGGEST THAT ANY CONSIDERATION HAS FLOWN FROM THE ASSESSEE TO THE DONOR SU RREPTITIOUSLY IN LIEU OF THE GIFT OF BONDS. THEREFORE, CONSIDERING THE AFORE SAID, IN OUR VIEW, IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE WITH THE ASSESSING OF FICER, THE GENUINENESS OF THE TRANSACTION OF GIFT BY SHRI GURMEET AJITSINGH RAJPAL TO THE ASSESSEE CANNOT BE REJECTED ON MERE SURMISES AND DOUBTS. 38 BEFORE PARTING, WE MAY ALSO REFER TO THE PLEA OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE ASSESSING OFFICER H AS REFERRED TO CERTAIN CASE LAWS TO JUSTIFY THE STAND OF THE REVENUE. IN THIS RE GARD, WE FIND THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS APPROPRIATELY DEALT WITH SUCH APPROACH OF THE ASSESSING OFFICER IN THE FOLLOWING WOR DS: IN CASES ON WHICH THE AO PLACED HIS RELIANCE FOR C OMING TO THE CONCLUSION ON THE ISSUE OF NATURE AND SOURCE OF CREDITS, THOUGH WER E MOSTLY ELATING TO GIFTS OR FOREIGN GIFTS BUT NONE OF THEM WERE ON THE ISSUE OF GIFTS O F RIBS. THE GIFTS IN THOSE CASES WERE GENERALLY OF RECEIPT OF MONEY THROUGH BANK TRANSFER S AND THE NATURE AND THE IMMEDIATE SOURCE OF SUCH TRANSFERS REMAINED SHROUDE D IN AMBIGUITY GIVING RISE TO SUBSTANTIAL SUPPORT TO THE CONCLUSION BASED ON PREP ONDERANCE OF PROBABILITY THAT THE TRANSFERS OF MONEY HAS SOURCE TO THE UNACCOUNTED MO NEY OF RECIPIENT DONE. IN ALL THOSE CASES THE FINAL CONCLUSION HAS BEEN THAT THE CREDIT APPEARING IN THE BOOKS OF THE RECIPIENTS IS THE MONEY OF THE RECIPIENT OF GIFT OR CREDIT ENTRY. THEREFORE, THE EXERCISE ADOPTED BY THE AO FOR DETERMINING THE NATURE AND SO URCE OF HE CREDITS COULD BE SEEN TO BE SLIGHTLY OUT OF CONTEXT. 39 IN OUR VIEW, THE AFORESAID ANALYSIS BY THE COMMISSIO NER OF INCOME-TAX (APPEALS) IS QUITE APPROPRIATE AND IS BORNE OUT OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 40 IN THE FINAL ANALYSIS, WE THEREFORE, CONCLUDE BY AF FIRMING THE ACTION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IN HOLDING THA T THE ASSESSEE HAD DISCHARGED HIS ONUS SATISFACTORILY OF PROVING THE NATURE AND SOURCE OF THE IMPUGNED CREDITS APPEARING IN HIS ACCOUNT BOOKS BY WAY OF MATURITY PROCEEDS OF THE BONDS RECEIVED AS GIFT FROM SHRI GURMEET AJITSI NGH RAJPAL. THUS, ON THIS GROUND REVENUE FAILS. 41 THE LAST GROUND IN THIS APPEAL IS WITH REGARD TO A N AD HOC DISALLOWANCE OF 10% OUT OF SALARY AND ALLOWANCES WHICH HAS SINCE BEEN DELETED BY THE COMMISSIONER OF INCOME-TAX (APPEALS). BEFORE US, THE LEA RNED DEPARTMENTAL REPRESENTATIVE POINTED OUT A TYPOGRAPHICAL ERROR IN T HE GROUNDS OF APPEAL RAISED IN THE MEMO OF APPEAL AND STATED THAT THE SAME PERTAINS TO AN AMOUNT OF RS 1,02,707/- DISALLOWED OUT OF EXPENDITURE ON SALA RY AND ALLOWANCES. THE ASSESSING OFFICER MADE AD HOC DISALLOWANCE WHICH HAS BEEN DE LETED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THE GROUND THA T THERE WAS NO INSTANCE OF ANY PAYMENT HAVING BEEN MADE FOR NON-BUSI NESS PURPOSES. THE DEPARTMENTAL REPRESENTATIVE HAS NOT MADE OUT ANY COGE NT REASONING TO SUPPORT AD HOC DISALLOWANCE MADE BY THE ASSESSING OFFICER A ND, IN OUR VIEW, THE COMMISSIONER OF INCOME-TAX (APPEALS) MADE NO MISTAKE IN DELETING THE DISALLOWANCE OF RS 1,02,707/-, WHICH WE HEREBY AFFIRM. THE REVENUE FAILS ON THIS GROUND. 42 IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO 1025/PN/10 IS DISMISSED. 43. WE SHALL NOW TAKE UP REVENUES APPEAL IN THE CASE OF SHRI SAMEER B LADKAT, PUNE, VIDE ITA NO 1018/PN/10 RELATING TO ASSE SSMENT YEAR 2004-05. 44 HIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE OR DER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, PUNE DATED 22. 2.2010, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFF ICER UNDER SECTION 143(3) R.W.S. 153A(B) OF THE ACT PERTAINING TO THE ASS ESSMENT YEAR 2004-05. 45 IN THIS CASE, THE SOLITARY ISSUE IS WITH REGARD TO AN ADDITION OF RS 2,00,88,783/-. IT WAS A COMMON POINT BETWEEN THE PART IES THAT THE DISPUTE IS IDENTICAL TO THE GROUND NO. 1 CONSIDERED BY US IN REVEN UES APPEAL VIDE ITA NO 1025/PN/10, WHEREIN WE HAVE AFFIRMED THE ORDER O F THE COMMISSIONER OF INCOME-TAX (APPEALS) IN DELETING THE SAID ADDITION. F OLLOWING THE PARITY OF REASONING GIVEN THEREIN, WE AFFIRM THE DECISION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) HEREIN ALSO. THE REVENUE THUS FAI LS ON THIS GROUND. 46 IN THE RESULT, THE APPEAL OF THE REVENUE, VIDE I TA NO 1018/PN/10 IS DISMISSED. 47 WE SHALL NOW TAKE UP THE APPEAL FILED BY ASSESSEE M/ S SLK PROPERTIES, VIDE ITA NO 972/PN/10 RELATING TO ASSESSMENT YEAR 2006 -07. 48 THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, PUNE DATED 23. 2.2010, WHICH IN TURN, HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFF ICER UNDER SECTION 143(3) R.W.S. 153A(B) OF THE ACT PERTAINING TO THE ASS ESSMENT YEAR 2006-07. 49. IN THIS APPEAL, THE SOLITARY DISPUTE ARISES FROM AN ADDITION MADE BY THE ASSESSING OFFICER OF RS 70,64,000/- AS UNEXPLAINED INVESTM ENT IN THE PROJECT. IN BRIEF THE FACTS ARE THAT IN THE COURSE OF SEARCH, A P APER TITLED AS PAGE NO 8 OF BUNDLE NO 16 WAS SEIZED FROM THE PREMISES OF M/S NEW AUTO CENTRE, PLOT NO. 36, SOMWAR PETH, PUNE , A CONCERN BELONGING TO THE ASSESSEE GROUP. THE SAID DOCUMENT WAS STATED TO BELONG TO THE ASSESSEE FIRM WHO IS ENGAGED IN THE BUSINESS OF PROMOTERS AND BUILDERS. MR GAUTAM LADKAT, A PARTNER OF ASSESSEE FIRM EXPLAINED THE WRITING ON SUCH DOCUMENTS. THE NARRATION ON SUCH DOCUMENT HAS BEEN NOTED BY THE ASSESSING OFFICER IN PARA 2 OF THE ASSESSMENT ORDER AND SUCH DOCUMENT HAS ALSO BEEN REPRODUCED THEREIN. AS PER THE ASSESSING OFFICER, THE SAID DOCUMENT REFLECTED INV ESTMENT IN PROJECT BEING UNDERTAKEN BY M/S SLK PROPERTIES, (THE ASSESSEE FIRM ), WHICH WAS NOT ACCOUNTED FOR IN THE ACCOUNT BOOKS MAINTAINED BY THE FIRM . AFTER CONSIDERING THE EXPLANATIONS PUT-FORTH BY THE ASSESSEE, ASSESSING OFFICE R HAS CONCLUDED THAT THE PAYMENTS REFLECTED IN THE SAID DOCUMENT DID N OT FIND A PLACE IN THE REGULAR BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AND, THEREFORE, THE AMOUNT OF RS 70,64,000/- REPRESENTED UNEXPLAINED INVE STMENT BY THE ASSESSEE AND ACCORDINGLY, THE SAME WAS ADDED TO THE INCOME O F THE ASSESSEE. 50. IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (A PPEALS), THE ASSESSEE CONTENDED THAT THE PAYMENTS RECORDED IN THE SEIZ ED MATERIAL ARE DULY ACCOUNTED FOR IN THE ACCOUNT BOOKS AND IN SUPPORT IT WAS STATED THAT THE FIGURE OF RS 61 LAKHS AGAINST PLOT WRITTEN IN THE SAID DOCUMENT SHOWED 1/3 RD OF THE TOTAL PURCHASE CONSIDERATION OF THE PLOT AT RS 1 .83 CRORES AS MR GAUTAM LADKAT WAS HAVING ONE-THIRD SHARE IN THE ASSESSEE FIRM, I T WAS A DECLARED INVESTMENT OF MR GAUTAM LADKAT IN THE ACCOUNT BOOKS OF TH E ASSESSEE FIRM. IT WAS, THEREFORE, CONTENDED THAT THE SAID DOCUMENT WILL NOT CONSIDER AS REFLECTING ANY UNEXPLAINED INVESTMENT. THE COMMISSIONE R OF INCOME-TAX (APPEALS) HAS UPHELD THE STAND OF THE ASSESSING OFFICER BY MAKING THE FOLLOWING DISCUSSION: 4.3 IT CAN BE SEEN FROM THE ABOVE THAT THE GROUND NO. 3 OF THE APPELLANT RELATES TO ADDITION OF RS 70,64,000/- BASED ON A PIECE OF PAPE R SEIZED VIDE PAGE NO. 8 OF BUNDLE 16 AT M/S NEW AUTO CENTRE, PLOT NO. 36, SOMWAR PETH , PUNE DURING THE SEARCH OF LADKAT GROUP. MR GAUTAM LADKAT, WHO IS THE PARTNER IN THIS FIRM EXPLAINED THIS PAPER IN HIS STATEMENT RECORDED U/S 131 ON 6.11.2006. THE RE IS NO DISPUTE THAT THE PAPER SEIZED BELONGED TO SLK PROPERTIES. IT IS ALSO CLEAR FROM THE NOTING AVAILABLE IN THE SAID PAPER THAT IT CONTAINED DETAILS OF INVESTMENT MADE IN THE SAID FIRM TILL A PARTICULAR DATE. THE DETAILS AVAILABLE ARE QUITE SPECIFIC VIZ. PLOT 61,00,000/-, KHEDKAR BAI 25,000/-, ASSIGNMENT TAX 89,000/-, DEMARCATION 50,000/-, RAJU 2,00,000/-, GIRME 2,25,000/-, DEMARCATION 75,000/-, PLAN PASS 3,0 0,000/-. FROM THE DISCUSSIONS MADE BY THE AO AND THE SUBMISSIONS OF THE APPELLANT , IT IS APPARENT THAT BOTH AGREE THAT THE PAPER RELATES TO SLK PROPERTIES AND THE DE TAILS MENTIONED THEREIN ARE IN RESPECT OF INVESTMENT MADE IN THE PROJECT. HOWEVER, THE DISPUTE IS IN RESPECT OF ITS NATURE I.E. WHETHER THE ABOVE AMOUNT OF RS 70.64 LA KHS IS ACCOUNTED OR NOT. THE AO HAS HELD THE ABOVE AS UNACCOUNTED ON THE GROUND THA T THE PAPER CLEARLY SHOWS THE EXPENSES UNDER THE HEADING CASH AND NOT CHEQUE. ALL THE DETAILS MENTIONED THEREIN ARE NOT MATCHING WITH THE BOOKS MAINTAINED BY THE A PPELLANT. THE APPELLANT ON THE OTHER HAND, IS CLAIMING THAT THE ABOVE DETAILS ARE ACCOUNTED FOR IN THE BOOKS AS IT MATCHES THE TOTAL AMOUNT OF INVESTMENT MADE BY SHRI GAUTAM LADKAT OF APPROXIMATELY RS 71 LAKHS TILL THE DATE OF THE SEAR CH AND ALSO BECAUSE THE AMOUNT OF RS 61 LAKHS SHOWN AGAINST PLOT IS 1/3 RD OF THE TOTAL PURCHASE CONSIDERATION OF THE PLOT AT RS 1.83 CRORES. THEY HAVE ALSO RELIED ON DIFFERE NT ARGUMENTS WHICH ARE QUITE APPARENT FROM THE READING OF THE RELEVANT PORTIONS APPEARING IN THE ASSESSMENT ORDER AND THE SUBMISSIONS, WHICH HAVE BEEN QUOTED ABOVE F OR THE SAKE OF READY REFERENCE. ON CAREFUL CONSIDERATION OF ALL THE FACTS AVAILABLE , I FIND IT RELEVANT TO NOTE THAT THE PAPER CLEARLY SAYS THAT SLK INVESTMENT UPTILL NOW . THERE IS NO DISPUTE ON THIS NOTE. NOW, WHETHER THIS NOTING REPRESENTS THE TOTAL INVES TMENT IN THE PROJECT OR ONLY THE 1/3 RD SHARE OF MR LADKAT IS AN IMPORTANT ISSUE FOR CONSID ERATION. THE AO HAS CONSIDERED THE ENTIRE INVESTMENT AS UNACCOUNTED RELATING TO TH E APPELLANT FIRM MADE OUT OF UNDISCLOSED CASH MONEY. AS AGAINST THAT THE APPELLA NT HAS CLAIMED THAT THE ABOVE NOTING REPRESENTS 1/3 RD SHARE OF MR LADKAT AND FOR THAT THEY HAVE TRIED TO MATCH THE FIGURE OF RS 70.64 LAKHS AVAILABLE IN THIS PAPER WI TH THE TOTAL INVESTMENT OF MR LADKAT IN THE BOOKS OF THE APPELLANT, WHICH IS CLAIMED AT RS 71 LAKHS. IN ADDITION TO THIS, THEY HAVE ALSO TRIED TO CO-RELATE THAT THE AMOUNT OF RS 61 LAKHS APPEARING IN THIS DOCUMENT FOR PLOT REPRESENTS 1/3 RD OF THE TOTAL PURCHASE CONSIDERATION OF THE LAND A T RS 1.83 CRORES. IN MY CONSIDERED OPINION, THE ABOVE SIMILAR ITY OF THE TWO FIGURES IS ONLY INCIDENTAL BECAUSE THE APPELLANT HAS NOT BEEN ABLE TO CO-RELATE EACH AND EVERY FIGURE AVAILABLE IN THIS DOCUMENT WITH SIMILAR FIGURES AVA ILABLE IN THE BOOKS. IN ADDITION TO THE ABOVE, IT CAN BE FURTHER SEEN THAT THE ABOVE PAPER CONTAINS DETAILS OF EXPENSES RELATING TO SLK PROPERTIES UPTILL NOW. THIS FIGURE GETS STRENGTHENED FROM THE FACT THAT IN THE BOTTOM OF THE PAPER IS A FIGURE OF RS 23,55, 000/- WHICH ACTUALLY IS 1/3 RD OF RS 70.64 LAKHS. THIS CLEARLY SHOWS THAT THE TOTAL INVE STMENT OF RS 70.64 LAKHS IS FOR THE FIRM AND THE SHARE OF EACH PARTNER IN THIS EXPENDIT URE IS COMING TO RS 23.55 LAKHS. THIS GOES TO PROVE THAT THE APPELLANTS DEFENSE FAI LS FLAT, WHEREIN THEY HAVE MADE CO- RELATION TO THE AMOUNT OF THIS PAPER WITH TOTAL INV ESTMENT OF MR LADKAT AND ALSO WITH THE 1/3 RD LAND COST. IN VIEW OF THE ABOVE AS WELL AS ON THE FINDING THAT THE APPELLANT HAS FAILED TO CO-RELATE EACH AND EVERY ITEM OF THIS PAP ER WITH THE BOOKS, IT IS NOT POSSIBLE TO INTERPRET IT IN AN OTHER MANNER THAN WHAT THE AO HAS DONE. IT IS THEREFORE UPHELD THAT THE ABOVE DOCUMENT REPRESENTS UNACCOUNTED INVE STMENT/EXPENDITURE OF THE APPELLANT RELATING TO THE PROJECT IN HAND. 51 NOT BEING SATISFIED WITH THE ORDER OF THE COMMISSIO NER OF INCOME-TAX (APPEALS), ASSESSEE IS IN FURTHER APPEAL BEFORE US. THE PR IMARY ARGUMENT OF THE ASSESSEE BEFORE US IS THAT THE SAID DOCUMENT HAS NO EVI DENTIARY VALUE, INASMUCH AS IT DOES NOT BEAR A DATE AND OTHERWISE ALSO IT CONTAINS INCOMPLETE NARRATIONS. THEREFORE, NO ADDITION CAN BE MADE ON T HE BASIS OF THE SAID DOCUMENT. APART THEREFROM, IT HAS ALSO BEEN POINTED O UT THAT THE ASSESSEE HAS RECORDED THE RELEVANT EXPENDITURE IN THE ACCOUNT BOOKS AND FOR THAT MATTER, REFERRED TO PAGE 70 OF THE PAPER BOOK WHEREIN IS PLACE D A COPY OF INVESTMENT IN THE FIRM MADE BY THE ASSESSEE UPTO THE DATE OF SEARCH WHICH STOOD AT RS 71,10,000/-. THE PLEA OF THE ASSESSEE IS THAT THE PAYMEN TS RECORDED IN THE SAID DOCUMENT AT RS 70,64,000/- IS A PART OF THE AMOUNT OF INVESTMENT OF MR GAUTAM LADKAT SO RECORDED IN THE REGULAR ACCOUNT BOOKS O F THE ASSESSEE FIRM AT RS 71,10,000/-. THE LEARNED COUNSEL FURTHER SUBMIT TED THAT IN ANY CASE, NO ADDITION CAN BE MADE FOR THE YEAR UNDER CONSIDERATION AS THE DOCUMENT DOES NOT CONTAIN ANY DATE SO AS TO CO-RELATE IT WITH THE Y EAR UNDER CONSIDERATION. 52 ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE, APPEARING FOR THE REVENUE, HAS CONTENDED THAT THE ASSESSI NG OFFICER WAS JUSTIFIED IN HOLDING THAT THE PAYMENTS REFLECTED BY TH E SEIZED DOCUMENT WAS OVER AND ABOVE THE INVESTMENT RECORDED IN THE ACCOUNT B OOKS AS THE DETAILS MENTIONED IN THE SEIZED PAPER DID NOT MATCH THE ACCOUN T BOOKS MAINTAINED BY THE ASSESSEE. 53 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. OST ENSIBLY, THE SEIZED DOCUMENT WAS PUT TO THE PARTNER OF THE ASSESSEE FI RM MR GAUTAM LADKAT WHO, IN THE COURSE OF HIS STATEMENT RECORDED UNDE R SECTION 131 ON 6.11.2006, HAS NOT DISOWNED THE SAME. IN FACT, IN THE COURSE OF SUCH STATEMENT, THE SAID PARTNER EXPLAINED THE MEANING OF THE EXPRESSION CHSAS MEANING CASH AND CQ MEANING CHEQUE. THE AMOUNTS RECORD ED AGAINST VARIOUS ITEMS VIZ. PLOT, KHEDKAR BAI, ASSIGNMENT, TAX, D EMARCATION, PLAN PASSED ETC. TOTALING TO RS 70,64,000/- ARE ALL UNDER T HE HEAD CHS MEANING THAT THE PAYMENTS ARE IN CASH. IT IS ALSO NOT DENIED BY THE ASSESSEE AT ANY STAGE THAT THE SAME REFLECTS INVESTMENTS IN ASSESSEE FIRM AS T HE HEADING OF THE DOCUMENT ITSELF SAYS SLK INVESTMENTS UPTILL NOW. CONSIDERED IN THIS BACKGROUND, WE THEREFORE FIND NO MERIT IN THE PLEA OF THE ASSESSEE THAT THE DOCUMENT HAS NO EVIDENTIARY VALUE AS THE SAME IS NOT COMP LETE IN THE ABSENCE OF PUTTING A DATE, ETC. RATHER, ON ITS COMPARISO N WITH THE INVESTMENT RECORDED IN THE ASSESSEE FIRM WHICH STANDS AT RS 71,10,000/- IT CLEARLY EMERGES THAT THE SEIZED DOCUMENTS REFLECT UNACCOUNTED PA YMENTS, INASMUCH AS THE RECORDED INVESTMENTS ARE BY WAY OF CHEQUE PAYME NTS, WHEREAS THE SEIZED DOCUMENT SHOWS EXPENDITURE BY WAY OF CASH PAYMENT S. THE COMMISSIONER OF INCOME-TAX (APPEALS), IN OUR VIEW, HAS RIGHTLY NEGATED THE PLEA OF THE ASSESSEE THAT THE SEIZED DOCUMENT DOES NOT SHO W ANY UNACCOUNTED INVESTMENT. IN FACT, THE PLEA OF THE ASSESSEE OF SIMILARITY OF FIGURE OF RS 61,00,000 APPEARING IN THE DOCUMENTS VIS-A-VIS 1/ 3RD OF THE TOTAL CONSIDERATION OF LAND AT RS 1.83 CRORES HAS ALSO BEEN APPR OPRIATELY DEALT WITH BY THE COMMISSIONER OF INCOME-TAX (APPEALS) AGAINST THE ASSESSEE, AND THE SAME DOES NOT CALL FOR ANY INTERFERENCE. UNDER THESE CIR CUMSTANCES, WE THEREFORE FIND NO REASON TO INTERFERE WITH THE FINDI NGS GIVEN BY THE COMMISSIONER OF INCOME-TAX (APPEALS) WHICH WE HAVE EXTR ACTED IN THE EARLIER PART OF THIS ORDER. ONE OF THE POINT RAISED BEFORE US IS TO THE EFFECT THAT THE DOCUMENT SEIZED IS NOT RELATABLE TO THE YEAR UNDER CONSI DERATION IN THE ABSENCE OF ANY DATE THEREIN AND, THEREFORE, THE ADDIT ION IN THIS YEAR UNDER CONSIDERATION IS NOT MERITED. ON THIS ASPECT ALSO, WE FIN D THAT THE ASSESSING OFFICER IN PARA 9 OF THE ASSESSMENT ORDER HAS APPROPRIA TELY DEALT WITH SUCH AN OBJECTION OF THE ASSESSEE. THE ASSESSING OFFICER HAS NOTED T HAT THE FIRM I.E. SLK PROPERTIES CAME INTO EXISTENCE DURING THE FINANCIAL YEAR 2005-06 AND MOST OF THE NARRATIONS IN THE SEIZED DOCUMENT RELATE T O ACQUIRING OF LAND AND INITIAL INVESTMENT RELATED TRANSACTIONS AND IN THE ABSE NCE OF ANY DATE ON SUCH DOCUMENTS, THE SAME ARE TREATED AS UNEXPLAINED INVESTMEN T OF SUCH YEAR, I.E. ASSESSMENT YEAR 2006-07. AGAINST THE AFORESAID, THERE IS N O PLAUSIBLE EXPLANATION FURNISHED BY THE ASSESSEE AND THEREFORE WE FIND NO REASONS TO INTERFERE WITH THE CONCLUSION OF THE ASSESSING OFFICER. T HEREFORE, ON THIS ASPECT ALSO ASSESSEE FAILS. 54 IN THE RESULT, THE APPEAL OF THE ASSESSEE, VIDE ITA NO 972/PN/10 IS DISMISSED. 55 WE SHALL NOW TAKE UP APPEAL OF M/S SLK PROPERTIES VI DE ITA NO 973/PN/10 RELATING TO ASSESSMENT YEAR 2007-08. 56 THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, PUNE DATED 23. 2.2010, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFF ICER UNDER SECTION 143(3) R.W.S. 153A(B) OF THE ACT PERTAINING TO THE ASS ESSMENT YEAR 2007-08. 57 IN THIS YEAR, THE ONLY PLEA RAISED BY THE ASSESSEE IS T HAT CONSEQUENT TO AN ADDITION OF RS 70,64,000/- IN THE PRECEDING ASSESSM ENT YEAR 2006-07 AS UNEXPLAINED INVESTMENT TOWARDS THE PROJECT, THE ASSESSEE BE ALLOWED THE BENEFIT OF TREATING THE SAME AS PART OF WORK-IN-PROGR ESS AND IN THIS MANNER, TO SUCH EXTENT THE OPENING WORK-IN-PROGRESS FOR THE ASSESSMENT YEAR 2007-08 SHALL STAND INCREASED. NOTABLY, IN SO FAR AS ASSESSMENT YEAR 2007-08 IS CONCERNED, THE RETURNED INCOME OF THE ASSESSEE WAS ACCEPTED. THE SAID PLEA OF THE ASSESSEE HAS BEEN NEGATED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) PRIMARILY FOR THE REASON THAT SUCH A CLAIM W AS NOT MADE BEFORE THE ASSESSING OFFICER AND, THEREFORE, THE SAME COULD NOT BE R AISED AT THE APPELLATE STAGE. AGAINST THE AFORESAID, ASSESSEE IS IN APPEAL BEFORE US. 58 ON THIS ASPECT, THE PLEA OF THE ASSESSEE, IN OUR VIEW , IS LIABLE TO BE EXAMINED ON ITS MERITS. WITH THIS OBJECTIVE, WE DEEM I T PROPER TO SET ASIDE THIS MATTER TO THE FILE OF THE ASSESSING OFFICER, WHO SHALL CON SIDER THE PLEA OF THE ASSESSEE AS PER LAW AND AFTER AFFORDING A REASONABLE OPPO RTUNITY OF BEING HEARD TO THE ASSESSEE. THUS, ASSESSEE SUCCEEDS FOR STATISTICAL PU RPOSES. 59 IN THE RESULT, THE APPEAL OF THE ASSESSEE, VIDE ITA NO 973/PN/10 IS ALLOWED FOR STATISTICAL PURPOSES. 60 WE SHALL NOW TAKE UP ASSESSEES APPEAL IN THE CASE OF SH RI BALASAHEB M LADKAT, (L/H) SAMEER B LADKAT, PUNE, VIDE ITA NO 976/PN/10 RELATING TO ASSESSMENT YEAR 2005-06. 61 THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER O F THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, PUNE DATED 19. 2.2010, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFF ICER UNDER SECTION 143(3) R.W.S. 153A(B) OF THE ACT PERTAINING TO THE ASS ESSMENT YEAR 2005-06. 62 IN THIS APPEAL, THE SOLITARY GRIEVANCE OF THE ASSESSEE IS W ITH REGARD TO AN ADDITION OF RS 31,86,000/- MADE ON ACCOUNT OF UNACCO UNTED EXTRA COLLECTIONS FROM THE CUSTOMERS ON SALE OF PETROL AND DIESE L. 63 IN BRIEF, THE FACTS ARE THAT THREE NOTE BOOKS WERE FOUND AND IMPOUNDED IN THE COURSE OF A SURVEY AT PREMISES OF M/S NEW AUTO CO RNER SOMWAR PETH, PUNE. THE SAID NOTE BOOKS CONTAINED DETAILS OF THE SALES MADE AT THE THREE PETROL PUMPS OF THE ASSESSEE GROUP. SHRI SAMEER LADKAT, SON OF THE ASSESSEE, EXPLAINED THE CONTENTS OF THE THREE NOTE BOOKS. T HE THREE NOTE BOOKS FOUND WERE FOR THE PERIOD NAMELY, 2.10.2005 TO 20.12.2005, 17.3.2006 TO 10.6.2006 AND 11.6.2006 TO 4.7.2006 RESPECTIVELY. THE NOTE BOOKS FOUND CARRIED CERTAIN CODES APART FROM COLUMNS MENTIONING (I ) NAME OF THE CASHIERS OF 3 PETROL PUMPS, (II) MS: INDICATING QUANTITY IN LI TRES OF PETROL (MOTOR SPIRIT) SOLD, (III) HSD INDICATING HIGH SPEED DIESEL. THE FOUR TH COLUMN CONTAINED THE CODE, FOR INSTANCE, AO, BO, CO, AAE, BIP, ETC. SHRI SA MEER LADKAT EXPLAINED THE CODES AS A REPRESENTING RS 10 AND O AFTER AN ALPHAB ET REPRESENTS 100, AO MEANT RS 100, BO MEANT RS 200, CO MEANT RS 300, AA E MEANT 1150, AND BID MEANT RS 294 AND SO ON. THUS, IT TRANSPIRED T HAT ADDITIONAL AMOUNT WAS BEING COLLECTED BY THE ASSESSEE AGAINST THE SALE OF PETR OL AND DIESEL WHICH WAS NOT ACCOUNTED FOR IN THE ACCOUNT BOOKS. THE AFO RESAID WAS ADMITTED BY THE ASSESSEE.THE ASSESSING OFFICER HAS REFERRED TO QUESTION NO. 13, 14, 15 & 16 OF THE STATEMENT OF SHRI SAMEER LADKA T RECORDED ON 7.7.2006 TO POINT OUT THAT SUCH ADDITIONAL COLLECTIONS OF SALE AM OUNT WERE NOT ACCOUNTED FOR IN THE ACCOUNT BOOKS. ON THE BASIS OF THE EXPLANATION FURNISHED BY SHRI SAMEER LADKAT, THE FIGURES RECORDED IN THE NOTE BOOKS I N THE CODED FORM WERE DECODED FOR THE 3 PETROL PUMPS AND ACCORDINGLY, THE ASS ESSING OFFICER REWORKED THE CONTENTS OF THE NOTE BOOKS. ON SUCH BASIS, FOR THE FINANCIAL YEAR 2005-06 THE FIGURES WERE DECODED AS 9,35,183/- AND FO R FINANCIAL YEAR 2006- 07, SAME WERE DECODED AT RS 10,39,489/-. WITH RESPECT T O BUNDLE NO 4 REPRESENTING NOTE BOOK FOR THE FINANCIAL YEAR 2005-06, THE ASSESSING OFFICER OBSERVED THAT SUCH NOTE BOOK CONTAINED PAGES 1 TO 40 FOR THE PERIOD 2.10.2005 TO 20.12.2005. ON ITS PERUSAL, THE ASSESSING OF FICER NOTICED THAT THE ASSESSEE HAD DESTROYED 5/6 TH PORTION OF THE FIRST 38 PAGES LEAVING ONLY THE NAMES OF THE SALES-MEN WHICH ACCORDING TO THE ASSESSING OFFIC ER INDICATED THAT ASSESSEE WAS PERIODICALLY DESTROYING THE RECORDS OF AD DITIONAL MONEY RECEIVED FROM THE SALESMEN WORKING ON THE PETROL PUMP. THEREFORE, FOR THE PERIODS FOR WHICH THE NOTE BOOKS WERE AVAILABLE, THE ASSE SSING OFFICER WORKED OUT THE UNACCOUNTED MONEY RECEIVED AT 9,35,138/- AND R S 10,39,489/- FOR FINANCIAL YEARS 2005-06 AND 2006-07 RESPECTIVELY. 64 IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER CONFRONTED THE ASSESSEE THE EVIDENCE IN THE FORM OF UNA CCOUNTED EXTRA MONEY RECEIVED, ALTHOUGH NOT FOR THE FULL YEAR, AND ASSESSEE W AS REQUIRED TO EXPLAIN AS TO WHY ON THE BASIS OF SUCH MATERIAL AND ADMISSION OF SHRI SAMEER LADKAT SUCH COLLECTIONS BE NOT ESTIMATED FOR THE COMPLETE YEAR. T HE ASSESSING OFFICER HAS ACCORDINGLY ESTIMATED UNACCOUNTED EXTRA MONEY RECEIVED AT RS 10,39,489/- FOR THE ASSESSMENT YEAR 2007-08, AT RS 35,4 0,000/- FOR THE ASSESSMENT YEAR 2006-07 AND AT RS 31,86,000/- FOR THE ASS ESSMENT YEAR 2005-06. SUCH ADDITIONS HAVE BEEN TAKEN UP BY ASSESSEE I N ITA 976/PN10, 977/PN/10 AND 978/P/10 PERTAINING TO ASSESSMENT EARS 2 005-06, 2006-07 AND 2007-08 RESPECTIVELY. SINCE THE SAID GROUND IS COMMON IN ALL THE THREE YEARS, THE SAME IS TAKEN UP TOGETHER. 65 BEFORE THE ASSESSING OFFICER, ASSESSEE POINTED OUT THAT THOUGH SHRI SAMEER LADKAT, SON OF THE ASSESSEE IN HIS STATEMENT EXPLA INED THE CODES A, B, C TO MEAN RS 10, 20, AND 30 RESPECTIVELY, HOWEVER, ONE MR AMIT WHO WAS MAINTAINING SUCH NOTE BOOKS HAD ALSO GIVEN AN EXPLANATI ON GIVING THE MEANING OF SUCH CODES. AS PER THE STATEMENT OF MR AMIT, AN EMPLOYEE OF THE ASSESSEE, A MEANT RS 1, B MEANT RS 2, AND C MEANT RS 3 AN D SO ON. IT WAS CANVASSED THAT SINCE THE NOTE BOOKS WERE IN THE HANDWRITIN G OF MR AMIT, HIS STATEMENT SHOULD BE CONSIDERED IN ORDER TO DECODING THE FIGURES STATED BY A, B C AND NOT AS PER THE EXPLANATION OF MR SAMEER LADKAT . THE ASSESSEE ALSO SUBMITTED THAT STATEMENT OF MR AMIT WAS MORE ACCEPTABLE, INASMUCH AS THE UNACCOUNTED COLLECTIONS WAS ON ACCOUNT OF ROUNDING UP OF SA LES. FOR EXAMPLE IN CASE OF A SCOOTER OWNER IF ONE LITRE OF PETROL AND 30 ML OIL IS TO COST RS 39.70, ACTUAL COLLECTION MADE IS OF RS 40 THEREBY RESULTI NG IN EXTRA COLLECTION OF RS 0.30. IT WAS POINTED OUT THAT IF THE DECODING AS DO NE BY THE ASSESSING OFFICER IS ACCEPTED, THEN IT WOULD REPRESENT A LARGE AM OUNT OF PER LITRE COLLECTION WHICH WOULD BE UNTENABLE AND IMPRACTICAL. THE ASSESSEE ALSO SUBMITTED THAT IT IS IN THIS BACKGROUND MR SAMEER LADKAT ALSO SUO MOTU OFFERED AN ADDITIONAL INCOME OF RS 8,00,000/- FOR ASSE SSMENT YEARS 2005-06, 2006-07 & 2007-08 ON ACCOUNT OF EXTRA COLLECTIONS IN HIS STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. THE ASSESSING OFFICER, H OWEVER, DID NOT ACCEPT THE EXPLANATION PUT-FORTH BY THE ASSESSEE. ACCORDIN G TO THE ASSESSING OFFICER, THE UNACCOUNTED INCOME ON ACCOUNT OF EXTRA COLL ECTIONS WAS TO BE ESTIMATED ON THE BASIS OF THE DECODING EXPLAINED BY MR SAMEER LADKAT. ACCORDING TO THE ASSESSING OFFICER, THE FIGURES ARE WRITTE N IN CODES AS IT WAS TO BE KEPT HIDDEN FROM THE EYES OF THE GOVERNMENT DEPART MENT OR EVEN THE EMPLOYEES OF THE ASSESSEE AND THE SAME WAS UNACCOUNTED. THE REFORE, IT WAS SOMETHING WHICH WAS IN THE SPECIAL KNOWLEDGE OF THE PERSON WHO OWNED AND CONTROLLED THE BUSINESS. SINCE MR. SAMEER LADKAT, SON OF THE ASSESSEE, WAS EFFECTIVELY CONTROLLING THE PETROL PUMP BUSINESS OF THE ASSESSEE, HIS INTERPRETATION OF CODE WAS TO BE ACCEPTED AND CANNOT BE DISBELIEVED IN PREFERENCE TO THAT GIVEN BY AN EMPLOYEE. IN THIS MANN ER EXPLANATION OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER. 66 IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (A PPEALS), APPELLANT MADE MORE OR LESS SIMILAR ARGUMENTS WHICH WERE TO THE FO LLOWING EFFECT THAT THE ASSESSING OFFICER WAS WRONG IN IGNORING THAT THE STATE MENT OF MR AMIT, WHO IS THE PERSON WHO HAS MAINTAINED THE IMPOUNDED NOT E BOOKS; THAT THE FIGURES CALCULATED ON THE BASIS OF EXPLANATION RENDERED BY MR AMIT MATCHED THE EXPLANATION RENDERED BY SHRI SAMEER LADKAT OFFER ING ADDITIONAL INCOME IN THE COURSE OF HIS STATEMENT UNDER SECTION 132(4) OF THE A CT. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS, HOWEVER, UPH ELD THE STAND OF THE ASSESSING OFFICER FOR ALL THE THREE ASSESSMENT YEARS BY WAY OF A COMMON REASONING WHICH IS DETAILED AS UNDER: 7.4 ON CAREFUL CONSIDERATION OF THE GROUNDS RAISED BY THE APPELLANT ON THE ABOVE ISSUE ALONG WITH THE ARGUMENTS MADE BY THE AO IN TH E ASSESSMENT ORDER AND THE APPELLANT MADE DURING APPEAL AND BEFORE THE AO, I F IND THAT THE BASIC FACT OF SUPPRESSION OF INCOME OUT OF SALES MADE IS NOT IN D ISPUTE. THE NOTE BOOKS SEIZED IS ONLY IN RESPECT OF QUANTUM. MR SAMIR LADKAT AND MR AMIT HAVE EXPLAINED THE SYSTEM OF CODE DIFFERENTLY. THE AO HAS FOLLOWED THE SYSTEM WHICH HAS BEEN STATED BY MR SAMIR LADKAT ON THE GROUND THAT HE IS THE OWNER AND IN CONTROL OF THE AFFAIRS AT THESE PETROL PUMPS AND THEREFORE THE EXPLANATION GIVEN BY HIM HAS TO BE ACCEPTED TO BE MORE TRUE THAN THE ONE GIVEN BY MR AMIT. ON CAREFUL CONSIDERATION I FIND THAT THE STAND TAKEN BY THE AO IS CORRECT. THE STAND TAKEN BY THE APPELLANT TO JUSTIFY THE SYSTEM STATED BY MR AMIT TO BE MORE CORRECT ON THE BASIS O F PER LITRE CALCULATION, IS NOT FOUND TO BE CORRECT IN THE LIGHT OF THE ACTUAL AFFAIRS. THE EXTRA COLLECTION AS EXPLAINED BY THE APPELLANT HAS TO BE ON THE BASIS OF NUMBER OF CUSTO MERS AND NOT ON THE BASIS OF QUANTITY SOLD. FOR EXAMPLE, IF RS 0.5 IS PRESUMED T O BE EARNED UNACCOUNTED IN ONE SALE, THE AMOUNT OF SUCH EARNING WOULD BE SAME WHET HER A CUSTOMER BUYS ONE LITRE PETROL OR 40 LITRES OF PETROL. THEREFORE, THE LOGIC OF PER LITRE EARNING GIVEN BY THE APPELLANT TO SUPPORT THAT THE STATEMENT OF MR AMIT IS MORE ACCEPTABLE IS NOT ACCEPTABLE..IN THE COPY OF THE STATEMENT OF MR SAMI R LADKAT GIVEN DURING APPEAL, IT IS SEEN THAT HE HAS CLEARLY ADMITTED THE ABOVE FACT AN D IS NOW TRYING TO ESCAPE FROM THE LEGAL IMPLICATIONS OF THE STATEMENT AND THE DOCUMEN TS FOUND. MR AMIT BEING AN EMPLOYEE CANNOT BE ACCEPTED TO BE KNOWING MORE THAN MR SAMIR LADKAT, WHO ON THE DATE OF THE SURVEY WAS FOUND TO BE MANAGING THE AFF AIRS OF THE BUSINESS ON BEHALF OF HIS FATHER. THE AO HAS ALSO CORRECTLY TAKEN THE IMP LICATION OF THE ABOVE AFFAIRS TO AY 2005-06 AS M SAMIR LADKAT HAS IN HIS STATEMENT STAT ED TO EXTEND TO. THEREFORE, EVEN IF NO DOCUMENTS RELATING TO AY 2005-06 WAS FOUND, T HE ADMISSION OF THE APPELLANT THAT SUCH AN AFFAIR WAS GOING ON IN AY 2005-06 HAS TO BE TAKEN AS EVIDENCE FOR THE SAME. IT WAS ALSO FOUND THAT THE APPELLANT WAS DESTROYING THE OLD DOCUMENTS RELATING TO THIS AFFAIR AND THEREFORE IT IS QUITE LOGICAL TO CONTEND THAT THE AFFAIRS CONTINUED IN AY 2005- 06 ON THE BASIS OF THE STATEMENT OF MR SAMIR LADKAT . THE CALCULATION MADE BY THE AO FOR THE FULL YEAR BASED ON THE DOCUMENTS AND ON THE STRENGTH OF JUDGMENTS RELIED UPON BY HIM ARE ALSO FOUND TO BE CORRECT. CONSIDERING AL L THESE FACTS THE GROUNDS REFERRED ABOVE RELATING TO THIS ISSUE ARE TREATED AS DISMIS SED. INCOME UNDER THIS HEAD IS TO BE TAKEN FOR AYRS 2005-06, 2006-07 AND 2007-08 AT FIGU RES DESCRIBED AT PARA 7.2.3 OF THIS ORDER AND THE AO IN THE ASSESSMENT ORDER. 67 BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE HAS ASSAILE D THE RESPECTIVE ORDERS OF THE AUTHORITIES BELOW. ACCORDING TO THE ASSESSEE, THE LOWER AUTHORITIES HAVE WRONGLY RELIED ON THE STATEMEN T OF SHRI SAMEER LADKAT FOR DECIPHERING THE NOTINGS IN THE NOTE BOOKS FOUND DU RING THE SURVEY WITHOUT CONSIDERING THE STATEMENT OF SHRI AMIT WAVHAL, ACCOUNTAN T OF THE ASSESSEE IN WHOSE HANDWRITING SUCH NOTE BOOKS WERE WRITTEN. ACCORDING TO THE LEARNED COUNSEL, THE NOTE BOOKS WERE FOUND WRITTEN IN THE HAND WRITING OF SHRI AMIT WAVHAL AND THEREFORE, HE WAS THE BEST PERSON TO EXPL AIN THE CONTENTS OF SUCH DOCUMENTS AND, IT WAS ON THE BASIS OF SUCH EXPLANATION TH E ASSESSEE HAD OFFERED A SUM OF RS 8,00,000/- IN A STATEMENT RECORDED UNDER SECTION 131(1)(B) OF THE ACT ON 22.8.2006. APART FROM THE AF ORESAID, IT IS ALSO POINTED OUT THAT AS PER THE EXPLANATION FURNISHED BEFORE THE LOWER AUTHORITIES THE DECIPHERING OF THE CODES AS PER THE STATEMENT OF SHRI SA MEER LADKAT WOULD RESULT IN AMOUNT OF EXCESS COLLECTIONS EVEN HIGHER THAN TH E DEALER MARGIN EARNED BY THE ASSESSEE ON THE SALE OF ITS PRODUCTS. IT WA S EXPLAINED THAT IT IS QUITE ILLOGICAL THAT EXCESS COLLECTIONS MADE FROM THE CUSTO MERS ON ACCOUNT OF ROUNDING UP OF THE SALE AMOUNT IS SIGNIFICANT AS COMPARE D TO THE ELIGIBLE COMMISSION FROM THE PETROLEUM COMPANIES. WITH REGARD TO THE ASSESSMENT YEAR 2005-06 A FURTHER PLEA HAS BEEN RAISED TO THE EF FECT THAT THERE WAS NO DOCUMENTS SEIZED OR FOUND DURING SEARCH WHICH WOULD SHOW E XCESS COLLECTIONS AS WAS THE CASE IN THE OTHER TWO ASSESSMENT YEARS OF 2006-07 AND 2007-08. IT WAS THEREFORE CONTENDED THAT THOUGH THE ASSESSEE ADMITTED UNACCOUNTED INCOME ON ACCOUNT OF EXCESS COLLECTIONS FOR THE T HREE ASSESSMENT YEARS OF 2005-06, 2006-07 AND 2007-08 AT RS 8, 00,000/-, BUT IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE FOUND RELATA BLE TO THE ASSESSMENT YEAR 2005-06, NO ADDITION IS MAINTAINABLE FOR SUCH ASSE SSMENT YEAR. 68 ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE, APPEARING FOR THE REVENUE VEHEMENTLY DEFENDED THE OR DERS OF THE AUTHORITIES BELOW BY POINTING OUT THAT THE FACTUM OF ASSESSEE COLLECTI NG AMOUNTS OVER AND ABOVE THE STATED SALES WAS ADMITTED BY THE ASSESSEE AND TH E SAME IS ALSO SUPPORTED BY THE NOTE BOOKS IMPOUNDED IN THE COURSE OF SU RVEY ACTION. EVEN WITH REGARD TO THE ASSESSMENT YEAR 2005-06, THE ESTIMAT ION OF UNACCOUNTED INCOME IS SOUGHT TO BE JUSTIFIED ON THE GROUND THAT THE ASSESSEE HIMSELF HAS ADMITTEDLY SURRENDERED INCOME IN THE STATEMENT RECORDED UNDER SECTION 131(1)(B) OF THE ACT DATED 22.8.2006. IN SUM AND SUBSTA NCE, THE ORDERS OF THE AUTHORITIES BELOW ON THE STATED ADDITION IS SOUGHT TO BE DEFENDED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. 69 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IT IS QUITE EVIDENT THAT THE ASSESSEE AS WELL AS AN EMPLOYEE SHRI AMIT WAVHAL ADMITTED WITH RESPECT TO THE THREE NOTE BOOKS IMPOUNDED, THAT THE SAME CONTAINED AMOUNTS COLLECTED FROM THE CUSTOMERS WHICH WERE NOT RECORDED IN THE ACCOUNT BOOKS. THE ONLY DIFFERENCE IN THE STATEMENT OF SHRI SAMIR LA DKAT AND THAT OF THE EMPLOYEE SHRI AMIT WAVHAL WAS WITH REGARD TO THE DECI PHERING OF CODES A, B, C, ETC., USED IN SUCH SEIZED MATERIAL. OSTENSIBLY, IF TH E DECIPHERING OF THE CODES AS PER THE STATEMENT OF SHRI SAMEER LADKAT IS ACCEP TED, THE SAME RESULTS IN A HIGHER AMOUNT OF UNRECORDED INCOME AS AGA INST THE STATEMENT OF SHRI AMIT. THE ASSESSEE HAS CANVASSED THAT THE STATEMENT O F SHRI AMIT, THE EMPLOYEE BE RELIED UPON IN PREFERENCE TO THAT OF SH RI SAMEER LADKAT PRIMARILY FOR THE REASON THAT SUCH NOTE BOOKS ARE IN THE HANDWRIT ING OF SHRI AMIT WAVHAL. WHILE THE PLEA SET-UP BY THE ASSESSEE APPEARS RE ASONABLE IN THE FIRST INSTANCE, SO HOWEVER, THE SAME HAS TO BE TESTED AS TO WHE THER SUCH A PLEA IS PLAUSIBLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CA SE. ADMITTEDLY, SHRI AMIT WAVHAL IS AN EMPLOYEE OF THE ASSESSEE LOOKING AFTER ACCOUNTS. NOW, ON THE OTHER HAND, SHRI SAMEER LADKAT, IS ADMITTEDLY CONT ROLLING THE AFFAIRS OF PETROL PUMP BUSINESS. IT IS SHRI SAMEER LADKAT WHO WOULD BE THE EVENTUAL BENEFICIARY OF THE AMOUNTS SO FOUND UNRECORDED IN THE REGULAR BOOKS OF ACCOUNTS. PERTINENTLY, IT IS SHRI SAMEER LADKAT WHO OFF ERED ADDITIONAL INCOME ON ACCOUNT OF SUCH UNRECORDED INCOME IN HIS STATEMENT RECOR DED ON 22.8.2006, WHICH HAS NOT BEEN RETRACTED AT ANY STAGE. I N THIS VIEW OF THE MATTER, HAVING REGARD TO THE PLAUSIBILITY OF THE EXP LANATIONS, IN OUR VIEW, IT WOULD BE THE STATEMENT OF SHRI SAMEER LADKAT WHICH WO ULD CARRY MORE AUTHENTICITY AND PERSUASIVE VALUE. IT IS ALSO NOTABLE TH AT SUCH STATEMENT OF MR SAMEER LADKAT IS SPONTANEOUS AND IS DEPOSED IN THE FI RST BLUSH, AND THERE IS NO RETRACTION OF THE SAME. IN THIS CASE, THE VALUES ASCRIBE D TO THE CODES BY THE OWNER AND CONTROLLER OF BUSINESS IS HIGHER THAN THOSE STA TED BY THE EMPLOYEE AND EVEN ON THE TEST OF HUMAN PROBABILITIES, WE FIND THAT THE LOWER AUTHORITIES MADE NO MISTAKE IN RELYING ON THE STATEMENT OF SHRI SA MEER LADKAT IN ORDER TO DECIPHER THE CODES WRITTEN IN THE THREE NOTE BOOKS. TH EREFORE, IN PRINCIPLE, THE ACTION OF THE LOWER AUTHORITIES ON THIS ASPECT IS UPHELD. 70 NOW WE MAY TAKE UP FOR CONSIDERATION THE PLEA OF T HE ASSESSEE REGARDING THE QUANTUM OF ADDITION MADE BY THE ASSESSIN G OFFICER FOR THE THREE ASSESSMENT YEARS IN QUESTION. CLEARLY, THE ASSESSEE SUO MOTO OFFERED ADDITIONAL INCOME ON ACCOUNT OF EXCESS COLLECTION FROM CUSTO MERS FOR THE THREE ASSESSMENT YEARS 2005-06, 2006-07 AND 2007-08 (UPTO THE DATE OF SEARCH) AT RS 8,00,000/-. AGAINST THIS, THE ESTIMATION OF ADDITIO NAL INCOME HAS BEEN MADE BY THE ASSESSING OFFICER AT RS31,86,000/-, RS 35,40, 000/- AND RS 10,39,489/- FOR ASSESSMENT YEARS 2005-06, 2006-07 AND 2 007-08 RESPECTIVELY. BEFORE US, THE PLEA RAISED BY THE ASSESSEE IS THAT THERE WAS NO EVIDENCE AVAILABLE FOR THE ASSESSMENT YEAR 2005-06 INASMUCH AS N ONE OF THE THREE NOTE BOOKS IMPOUNDED DURING THE SURVEY ACTION PERTAINED TO T HE SUCH PERIOD. SIMILARLY, WITH REGARD TO ASSESSMENT YEAR 2006-07, IT IS POINTED OUT THAT THE NOTE BOOKS IMPOUNDED CONTAINED DATA FOR 95 DAYS ONLY AN D FOR THE BALANCE OF THE PERIOD COMPRISED IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2006-07, IT IS COMPUTED BY EXTRAPOLATION. IN SO FAR AS THE ASSESSMENT YEAR 2007-08 IS CONCERNED, THE AMOUNT OF UNACCOUNTED EXTRA MONEY HAS BEEN WORKED UPTO THE DATE OF SEARCH ON THE BASIS OF THE NOTE BOOKS IMPOUNDED. IN OUR CONSIDERED OPINION, THE PLEA OF THE ASSESSEE THAT T HERE WAS NO JUSTIFICATION OF ADDITION FOR ASSESSMENT YEAR 2005-06, IS QUITE UNTE NABLE. NO DOUBT, THE THREE NOTE BOOKS IMPOUNDED DO NOT RELATE TO THE PERI OD RELATING TO ASSESSMENT YEAR 2005-06, SO HOWEVER, THE ASSESSEE SUO MOTU OFFERED ADDITIONAL INCOME ON ACCOUNT OF SUCH UNRECORDED INCOME EVEN FOR THE ASSESSME NT YEAR 2005- 06, THOUGH IN A CONSOLIDATED FASHION FOR THE 2005-06, 2006-07 AND 2007-08 (UPTO THE DATE OF SEARCH). WE ALSO FIND THAT AT NO ST AGE HAS SUCH SURRENDER OF ADDITIONS OF INCOME HAS BEEN RETRACTED BY THE ASSESSEE. THE ADMISSION BY THE ASSESSEE AND SURRENDER OF ADDITIONAL INCOME FOR ASSESSMENT YE AR 2005-06 CLEARLY SPEAKS OF THE INCOME HAVING BEEN EARNED BY THE A SSESSEE. THUS, WE FIND NO JUSTIFICATION FOR THE ASSESSEE TO ESCAPE FROM THE ADDITION ON THIS POINT FOR THE ASSESSMENT YEAR 2005-06. COMING TO THE QUANTI FICATION OF SUCH ADDITION, WE FIND THAT THE ASSESSING OFFICER AFTER WORKI NG OUT THE ADDITION OF RS 35,40,000/- FOR ASSESSMENT YEAR 2006-07 ESTIMATED THE ADDITION FOR 2005-06 BY REDUCING IT BY 10% AND ACCORDINGLY, ESTIMATED THE SAM E AT RS 31,86,000/- (I.E 35,40,000 10%). IN OUR CONSIDERED OPINION, THE ESTIMATION FOR THE ASSESSMENT YEAR 2005-06 DOES APPEAR TO BE ON A EXCESSIVE SID E CONSIDERING THAT THE ASSESSING OFFICER HAS NOT RELATED IT EITHER TO THE QUANTITIES OF PETROL/DIESEL SOLD AND NOR TO THE DIFFERENCE IN RATES O F SUCH PRODUCTS IN THE LATER TWO ASSESSMENT YEARS. BE THAT AS IT MAY, IF SUCH INCOME FOR ASSESSMENT YEAR 2005-06 IS ESTIMATED AT RS 25,00,000/-, THE SAME IN OUR VIEW, WOULD BE JUSTIFIED TO PLUG THE LEAKAGE OF REVENUE, IF ANY. INSO FAR AS THE QUANTIFICATION OF SUCH INCOME FOR ASSESSMENT YEARS 2006-07 AND 2007-08 IS CON CERNED, WE FIND NO REASON TO INTERFERE WITH THE SAME, AS THE SAM E IS BASED ON THE SEIZED MATERIAL. 71 RESULTANTLY, WHEREAS FOR ASSESSMENT YEAR 2005-06 VIDE ITA 976/PN/10, ASSESSEE PARTLY SUCCEEDS ON THIS ASPECT, AND FOR THE ASSESSMENT YEAR 2006- 07, I.E. ITA 977/PN/10 AND FOR ASSESSMENT YEAR 2007-08 IN ITA NO 978/PN/10 IN RESPECT OF GROUNDS OF NO 1 THEREOF, ASSESSEE FAILS. 72 SINCE THERE IS NO OTHER GROUND RAISED FOR ASSESSMEN T YEAR 2005- 06, THE APPEAL OF THE ASSESSEE IN ITA 976/PN/10 IS PARTLY ALLOWED . 73 WE SHALL NOW TAKE UP ASSESSEES APPEAL IN THE CASE OF SH RI BALASAHEB M LADKAT, (L/H) SAMEER B LADKAT, PUNE, VIDE ITA NO 97 7/PN/10 RELATING TO ASSESSMENT YEAR 2006-07. 74 THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER O F THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, PUNE DATED 18. 2.2010, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFF ICER UNDER SECTION 143(3) R.W.S. 153A(B) OF THE ACT PERTAINING TO THE ASS ESSMENT YEAR 2006-07. 75. GROUND NO. 1 RELATING TO ADDITION OF RS 35,40,00 0/- ON ACCOUNT OF UNDISCLOSED INCOME EARNED BY THE ASSESSEE FROM PETROL PUMP BUSINESS HAS BEEN DEALT WITH BY US IN ASSESSEES APPEAL FOR ASSESSMENT YE AR 2005-06, VIDE ITA N0 976/PN/10. FOR THE DETAILED REASONS GIVEN THER EIN, THE ASSESSEE FAILS ON THIS GROUND. 76. THE ONLY OTHER GROUND IN THIS APPEAL RELATES TO D ENIAL OF ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 54 OF THE ACT AMOUNTIN G TO RS 69,20,000/. THE RELEVANT FACTS, IN THIS REGARD, ARE THAT THE ASSESSIN G OFFICER COMPUTED CAPITAL GAIN ON SALE OF BUND GARDEN PROPERTY AT RS 69 ,75,322/- BY ADOPTING THE FULL VALUE OF CONSIDERATION AT RS 80 LAKHS. THE AFOR ESAID COMPUTATION WAS MADE BY THE ASSESSING OFFICER WITHOUT PREJUDICE TO HIS CONCL USION THAT THE CAPITAL GAIN WAS TO BE COMPUTED WITH REFERENCE TO CONSIDE RATION OF RS 2,90,00,000/-, WHICH IS THE SUBJECT-MATTER OF CONSIDERA TION BY US IN REVENUES APPEAL, VIDE ITA NO..1026/PN/10 HOWEVER, SINCE THE SU BSTANTIVE ADDITION WAS MADE BY THE ASSESSING OFFICER BY ASSESSING THE CAPITAL G AIN AT RS 2,79,73,322/-, THE CAPITAL GAIN OF RS 69,75,322/- WAS NOT SEPARATELY ADDED TO THE RETURNED INCOME. WITH RESPECT TO THE CAPITAL GAI N EARNED OF RS 69,75322/-, THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT HE HA D INVESTED THE CAPITAL GAIN ON PURCHASE OF PLOT TO CONSTRUCT A RESIDEN TIAL HOUSE THEREON AND THEREFORE SUCH CAPITAL GAIN WAS EXEMPT IN TERMS OF SECTI ON 54 OF THE ACT. HOWEVER, THE ASSESSING OFFICER NOTICED THAT THE CONSTRUCTION OF THE HOUSE COULD NOT BE CARRIED OUT AND, THEREFORE, THE ASSESSEE WAS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 54 OF THE ACT. THE ASSESSING OFFICE R FURTHER NOTED THAT THE ASSESSEE HAD ALSO NOT DEPOSITED THE MONEY IN TH E PRESCRIBED ACCOUNT AS REQUIRED BY SECTION 54(2) OF THE ACT. PERTINENTLY TH E ASSESSING OFFICER ALSO NOTICED THAT SUCH CAPITAL GAIN WAS NOT DECLARED IN THE RETURN OF INCOME AND IT WAS A CASE WHERE THE ASSESSEE HAD NO INTENTION TO DECLARE S UCH CAPITAL GAIN. THE PLEA OF THE ASSESSEE BEFORE THE COMMISSIONER OF INCOM E-TAX (APPEALS) WAS THAT SECTION 54 OF THE ACT DOES NOT REQUIRE THAT THE CONSTRUCTION OF THE NEW RESIDENTIAL HOUSE BE COMPLETED WITHIN 3 YEARS AND THAT IT MERELY REQUIRES THE ASSESSEE UNDERTAKES CONSTRUCTION OF A NEW RESIDENTIAL HOUSE A ND IN THIS CASE, THE ASSESSEE HAD PURCHASED A PLOT OF LAND WITH CONSTRUCTED PORTION TILL PLINTH LEVEL. THE ENTIRE INVESTMENT IN THE PURCHASE OF PLOT FOR CONSTRUCTION OF HOUSE WAS ELIGIBLE FOR EXEMPTION UNDER SECTION 54F OF THE ACT . THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS DISAGREED WITH THE ASSESSEE, AS ACC ORDING TO HIM, NO CONSTRUCTION HAS BEEN CARRIED OUT BY THE ASSESSEE ON THE PURCHASED LAND AND THEREFORE THE CLAIM OF EXEMPTION UNDER SECTION 54 HAS BEEN DENIED. 77 BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMI TTED THAT IT IS NOT ESSENTIAL TO COMPLETE CONSTRUCTION OF NEW HOUSE AS STIPULATE D UNDER SECTION 54(1) AS LONG AS THE ASSESSEE HAD INVESTED CAPITAL GAINS TOW ARDS ACQUISITION OF PLOT AND CONSTRUCTION THEREON. IN THIS REGARD, RELIA NCE HAS BEEN PLACED ON THE DECISION OF THE CHANDIGARH BENCH OF THE TRIBUNAL I N THE CASE OF SMT RAJNEET SANDHU V. DCIT 133 TTJ 64 (CHD). 78 ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE HAS DEFENDED THE ORDERS OF THE LOWER AUTHORITIES IN SUPPOR T OF THE REVENUES STAND. 79 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN THIS CASE, THE CLAIM OF ASSESSEE FOR EXEMPTION UNDER SECTION 54 OF THE A CT HAS BEEN DENIED BY THE LOWER AUTHORITIES ON THE PLEA THAT THE CAPITAL GAIN ON SALE OF PROPERTY HAS NOT BEEN FOUND INVESTED IN THE CONSTRUCTION OF A NE W RESIDENTIAL HOUSE. THE PLEA OF THE ASSESSEE IS THAT HE HAS INVESTED THE CONSID ERATION IN PLOT AND THAT THE PURCHASED PLOT ITSELF WAS CONSTRUCTED UPTO PLINTH LEVEL AS PER THE SALE DEED AND THEREFORE, IT IS TO BE TAKEN AS A CASE WHERE THE ASSESSEE IS IN THE PROCESS OF UNDERTAKING CONSTRUCTION OF A RESIDENTIAL HOUSE, ALBEIT INCOMPLETE WITHIN THE PRESCRIBED PERIOD OF 3 YEARS. IN OUR CONSIDER ED OPINION, THE CASE MADE OUT BY THE ASSESSEE IS DEVOID OF MERITS. THE CHANDI GARH BENCH OF THE TRIBUNAL IN THE CASE OF SMT RAJNEET SANDHU (SUPRA) OB SERVED THAT EXEMPTION UNDER SECTION 54F CANNOT BE DENIED MERELY BECAUSE THE CON STRUCTION OF THE NEW HOUSE WAS NOT COMPLETED WITHIN 3 YEARS. THE ASSESSEE BEFORE US HAS SOUGHT TO EQUATE HIS CASE WITH THAT BEFORE THE CHANDIG ARH BENCH OF THE TRIBUNAL IN THE CASE OF SMT RAJNEET SANDHU (SUPRA). IN OUR CONSIDERED OPINION, THE TWO CASES STAND ON A DIFFERENT FOOTING. IN THE CASE BEFORE THE CHANDIGARH BENCH OF THE TRIBUNAL, ASSESSEE WAS FOUND TO HAVE INVESTED THE FULL SALE CONSIDERATION RECEIVED ON THE SALE OF ORIGINA L ASSET TOWARDS THE PURCHASE OF PLOT AND THEREAFTER THE CONSTRUCTION OF THE BUILDING WAS ALSO CARRIED OUT, ALBEIT PARTLY . THE TRIBUNAL HAD NOTED THAT THE CONSTRUCTION WAS IN PROGRESS AND UPTO THE PERIOD OF 3 YEARS THE CONSTRUCTION WAS COMPLETE UPTO THE GROUND FLOOR ROOF LEVEL. NOTING THAT THE HOUSE C ONSTRUCTION WAS IN PROGRESS AND THE ASSESSEE HAD NOT ONLY INVESTED WHOLE OF SALE CONSID ERATION OF THE LAND IN THE PURCHASE OF THE PLOT ITSELF AND IN FACT STAR TED CONSTRUCTION THOUGH NOT COMPLETED, IT WAS DEEMED FIT TO ALLOW EXEMPTION UN DER SECTION 54F OF THE ACT. IN THE PRESENT CASE, FROM THE ORDERS OF THE AUTHO RITIES BELOW THERE IS NO FINDING THAT ANY CONSTRUCTION HAS BEEN UNDERTAKEN BY THE ASSESSEE WITHIN THE STIPULATED PERIOD ON THE PLOT PURCHASED. THEREFORE, TH E CASE OF THE ASSESSEE IS DISTINGUISHABLE FROM THE CASE BEFORE THE CHANDIGARH BEN CH OF THE TRIBUNAL AND, THEREFORE, SAID DECISION DOES NOT HELP THE CASE OF T HE ASSESSEE. THE INVESTMENT OF PROCEEDS IN THE PLOT OF LAND, WITHOUT U NDERTAKING ANY ACTIVITY OF CONSTRUCTION CANNOT MAKE THE ASSESSEE ELIGIBLE FOR DEDUCTION UNDER SECTION 54 OF THE ACT, AND ACCORDINGLY, ON THIS GROUND, ASSESSEE FAIL S. 80 IN THE RESULT, ASSESSEES APPEAL VIDE ITA NO 977 /PN/10 IS DISMISSED . 81 WE SHALL NOW TAKE UP ASSESSEES APPEAL IN THE CASE OF SH RI BALASAHEB M LADKAT, (L/H SAMEER B LADKAT), PUNE, VIDE ITA NO 97 8/PN/10 RELATING TO ASSESSMENT YEAR 2007-08. 82 THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER O F THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, PUNE DATED 18. 2.2010, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFF ICER UNDER SECTION 143(3) R.W.S. 153A(B) OF THE ACT PERTAINING TO THE ASS ESSMENT YEAR 2007-08. 83 GROUND NO. 1 RELATING TO ADDITION OF RS 10,39,489 /- ON ACCOUNT OF UNDISCLOSED INCOME EARNED BY THE ASSESSEE FROM PETROL PUMP BUSINESS HAS BEEN DEALT WITH BY US IN ASSESSEES APPEAL FOR ASSESSMENT YE AR 2005-06, VIDE ITA N0 976/PN/10. FOR THE DETAILED REASONS GIVEN THER EIN, THE ASSESSEE FAILS ON THIS GROUND. 84 THE ONLY OTHER GROUND REMAINING IN THIS APPEAL IS WITH REGARD TO THE ADDITION OF RS 12,01,190/- ON ACCOUNT OF UNEXPLAINED CASH BALANCES. 85 IN THIS REGARD, THE BRIEF FACTS ARE THAT AT THE TIM E OF SURVEY, THE TOTAL CASH PHYSICALLY FOUND WAS RS 46,84,373/-. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CONSIDERED THE CASH BALAN CE AS PER THE UPDATED BOOKS OF 7 ENTITIES OF ASSESSEE GROUP AS ON THE DA TE OF SURVEY, I.E. 6.7.2006 WHICH CAME TO RS 34,80,183/-. ACCORDINGLY, THE DIFFERENCE OF RS 12,04,190/- WAS ADDED TO THE TOTAL INCOME FOR THE ASSESS MENT YEAR 2007-08 AS UNEXPLAINED CASH. THE COMMISSIONER OF INCOME-TAX (APPE ALS) HAS ALSO UPHELD THE ADDITION AGAINST WHICH THE ASSESSEE IS IN APPE AL BEFORE US. 86 BEFORE US, THE ASSESSEE HAS RAISED A LIMITED PLEA TO THE EFFECT THAT THE RECONCILIATION OF THE CASH BALANCE MADE OUT BY THE ASSESSEE HAS BEEN WRONGLY NEGATED BY THE LOWER AUTHORITIES. REFERENCE HAS BEEN MADE TO PAGE 70 OF THE PAPER BOOK TO POINT OUT THAT AS ON THE DAT E OF SURVEY CASH BALANCES AS PER THE BOOKS OF ACCOUNT OF CERTAIN GROUP ENTITIES IN CLUDING INDIVIDUALS AND HUFS WAS NOT CONSIDERED. THE LEARNED COUNSEL SUBMITTED TH AT ONCE SUCH RECONCILIATION IS EXAMINED, IT WOULD SHOW THAT THERE DO ES NOT REMAIN ANY SIGNIFICANT DIFFERENCE BETWEEN THE CASH AVAILABLE AS PER ACCOUNT BOOKS AND WHAT WAS PHYSICALLY FOUND. APART THEREFROM, THE LEARNE D COUNSEL POINTED OUT THAT IN THE COURSE OF STATEMENT UNDER SECTION 131(1)(B ) DATED 22.8.2006, ASSESSEE HAD SURRENDERED INCOME ON ACCOUNT OF CASH WHICH HAS ALSO NOT BEEN SET-OFF AGAINST THE IMPUGNED DISCREPANCY, IF ANY, A ND THEREFORE, THE SAME WOULD AMOUNT TO A DOUBLE ADDITION. ON BOTH THESE ASPECTS, THE LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE WOULD BE SATISFIED IF THE MATTER IS REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER FOR EXA MINATION OF THE AFORESAID PLEAS ON MERIT. 87 TO THE AFORESAID PLEA OF THE ASSESSEE FOR REMANDING T HE MATTER FOR RE- EXAMINATION BY THE ASSESSING OFFICER, THE LEARNED DEPAR TMENTAL REPRESENTATIVE HAD NO SERIOUS OBJECTION. 88 HAVING HEARD THE PARTIES, IN OUR VIEW, THE AFORESA ID TWO PLEAS ARE LIABLE TO BE CONSIDERED BY THE ASSESSING OFFICER ON MERITS BEFOR E COMPUTING ANY ADDITION ON ACCOUNT OF UNEXPLAINED CASH FOUND DURING T HE COURSE OF SURVEY. THEREFORE, WE REMAND THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WHO SHALL CONSIDER THE AFORESAID PLEAS RAISED BY THE ASSESSEE AN D THEREAFTER PASS AN ORDER AFRESH ON THIS LIMITED ASPECT AS PER LAW. NEE DLESS TO SAY, THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPOR TUNITY OF BEING HEARD BEFORE PASSING A ORDER AFRESH. THUS ON THIS GROUND ASSESSEE SUCCEEDS FOR STATISTICAL PURPOSES. 89 IN THE RESULT, APPEAL OF THE ASSESSEE, VIDE ITA NO 978/PN/10 IS PARTLY ALLOWED. 90. WE SHALL NOW TAKE UP REVENUES APPEAL IN THE CASE OF SHRI BALASAHEB M LADKAT, PUNE, VIDE ITA NO 1026/PN/10 FOR THE ASSESSME NT YEAR 2006-07. 91. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, PUNE DATED 18. 2.2010, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFF ICER UNDER SECTION 143(3) R.W.S. 153A(B) OF THE ACT PERTAINING TO THE ASS ESSMENT YEAR 2006-07. 92 IN THIS APPEAL, THE FIRST ISSUE IS WITH REGARD TO THE ACTION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IN HOLDING THAT O NLY A SUM OF RS 80,00,000/- IS TO BE TAKEN AS THE FULL VALUE OF THE CON SIDERATION FOR THE PURPOSES OF COMPUTING INCOME FROM CAPITAL GAINS UNDER SECT ION 48 OF THE ACT FROM THE SALE OF PROPERTY BY THE ASSESSEE AS AGAINST RS 2,90,00,000/- CONSIDERED BY THE ASSESSING OFFICER. ON THIS ASPECT, REVE NUE HAS RAISED FOUR GROUNDS OF APPEAL IN THE MEMO OF APPEAL, WHICH READ AS UNDER; 1. THE LD CIT(A) HAS ERRED IN CONSIDERING THE SALE VALUE OF RS 80 LAKHS IN THE HANDS OF THE ASSESSEE INSTEAD OF RS 2.90 CRORES FOR THE PURPOSE OF SECTION 48, WHICH IS BASED ON THE FACT THAT THE SAID PROPER TY WAS SOLD BY PANNAMA INFRASTRUCTURE PARK PVT. LTD., IN WHICH FAMILY MEMB ERS OF THE ASSESSEE WERE SUBSTANTIALLY INTERESTED, TO SURANA BHANSALI DEVELO PERS FOR THE SALE CONSIDERATION OF RS 2.90 CRORES WITHIN A SPAN OF 16 DAYS ONLY. 2. THE LD CIT(A) HAS ERRED IN FACTS AND CIRCUMSTANC ES OF THE CASE AND IN LAW IN NOT APPRECIATING THE FACTS THAT THE SALE OF THE LAN D BY THE ASSESSEE TO PIPL FOR RS 80 LAKHS AND ITS SUBSEQUENT SALE BY PIPL IN 16 D AYS FOR RS 2.90 CRORES WAS ONLY A COLORABLE DEVICE TO DEFRAUD REVENUE SO T HAT THE INCOME FROM SALE COULD BE ADJUSTED AGAINST THE LOSSES OF PIPL. THE C IT(A) SHOULD HAVE APPRECIATED THE EFFORTS OF THE AO IN SUCCESSFULLY P IERCING THE CORPORATE VEIL AND SHOULD HAVE UPHELD THE ADDITION MADE BY THE AO. 3. THE LD CIT(A) HAS ERRED IN FACTS AND CIRCUMSTANC ES OF THE CASE AND IN LAW IN NOT APPRECIATING THAT THE ONLY PURPOSE OF THE TRANS ACTION WAS TO REDUCE THE TAX LIABILITY THROUGH COLORABLE DEVICE RESULTING IN TAX EVASION. 4. THE LD CIT(A) HAS ERRED IN FACTS AND CIRCUMSTANC ES OF THE CASE AND IN LAW IN NOT LOOKING THROUGH THE GAME PLAN OF THE ASSESSEE W HERE THE ONLY INTENTION WAS TO REDUCE THE TAX LIABILITY. THE LD CIT(A) SHOU LD NOT HAVE INSISTED ON TAKING THE DOCUMENT VALUE BUT SHOULD HAVE ADOPTED T HE VALUE AS TAKEN BY THE AO. 93 BRIEFLY THE FACTS ARE THAT THE SURVEY ACTION UNDER SE CTION 133A OF THE ACT CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE REVEALED THAT ASSESSEE HAD SOLD A PROPERTY AT SURVEY NO 362/6, BUND GARDEN R OAD, PUNE ON 20.7.2005 FOR A TOTAL CONSIDERATION OF RS 80,00,000/- TO A CONCERN M/S PANAMA INFRASTRUCTURE PARK P LTD (IN SHORT PIPPL). THE PROPE RTY COMPRISED OF LAND ADMEASURING 800 SQ.MTS OUT OF WHICH 150 SQ.MTS WAS OCCUPIED BY A BUNGALOW. THE ASSESSING OFFICER FIRSTLY NOTICED THAT THE ASSESSEE HAD NOT DISCLOSED CAPITAL GAIN ON SALE OF SUCH PROPERTY IN HIS RE TURN OF INCOME RELATING TO THE ASSESSMENT YEAR 2006-07. IT WAS ALSO NOTICED BY TH E ASSESSING OFFICER THAT SUBSEQUENT TO THE SALE OF PROPERTY TO PIPPL ON 20 .7.2005, THE LATTER PIPPL SOLD THE DEVELOPMENT RIGHTS IN THE SAID PROPERT Y TO M/S SURANA BHANSALI DEVELOPERS, VIDE AGREEMENT DATED 6.8.2005 FOR A TOTA L CONSIDERATION OF RS 2,90,00,000/-. THE ASSESSING OFFICER ALSO NOTICED THAT PI PPL WAS A COMPANY IN WHICH FAMILY MEMBERS OF ASSESSEE HAD INTEREST. AS THE P ROPERTY WAS SOLD BY THE ASSESSEE TO PIPPL AT RS 80,00,000/- ON 20.7.2005 AND WHICH WAS FURTHER SOLD BY PIPPL TO M/S SURANA BHANSALI DEVELOPE RS ON 6.8.2005 I.E. WITHIN A PERIOD OF 16 DAYS AT AN ENHANCED CONSIDERATI ON OF RS 2,90,00,000/-, THE ASSESSEE WAS SHOW-CAUSED TO EXPLAIN THE CIRCUMSTANCES UNDER WHICH THE PROPERTY WAS SOLD TO PIPPL AT RS 80,00,00/-. AS PER THE ASSESSING OFFICER, IT WAS UNBELIEVABLE THAT THE ASSESSEE WAS UNAWARE OF THE PRO PERTY HAVING A HIGHER VALUE THAN RS 80,00,000/-. THE ASSESSING OFFICER W AS OF THE VIEW THAT THE ASSESSEE WAS IN KNOWLEDGE OF THE REAL MARKET VALUE OF THE PROPERTY WHICH WAS AT RS 2,90,00,000/- AND THAT THE ASSESSEE HAD ADOPTED A COLOURABLE DEVICE TO AVOID TAXES BY SELLING THE PROPERTY TO PIPPL AT A CONSIDERATION BELOW THE MARKET VALUE AS THEREAFTER, PIPPL SOLD THE SAME TO ANOTHER PARTY FOR AN ENHANCED CONSIDERATION OF RS 2,90,00,000/- WITHIN A SHOR T SPAN OF TIME. THE ASSESSING OFFICER AFTER CONSIDERING THE SUBMISSIONS PUT-FORTH BY THE ASSESSEE CONCLUDED THAT THE FULL VALUE OF CONSIDERATION IN THE H ANDS OF THE ASSESSEE WAS LIABLE TO BE TAKEN AT RS 2,90,00,000/- FOR THE PUR POSES OF COMPUTING CAPITAL GAINS AND ACCORDINGLY, HE COMPUTED LONG TERM CA PITAL GAINS AT RS 2,79,75,322/- AS PER PARA 9.15 OF THE ASSESSMENT ORDER. THE EXPLANATIONS PUT- FORTH BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) WERE VIDE WRITTEN SUBMISSIONS DATED 11.11.2008, WHICH HAVE BEEN SUMMARIZED BY THE ASSESSING OFFICER AS PER PARA 9.10 OF THE ASSESSMENT ORDER AS FOLLOWS: (A) MY FAMILY MEMBERS HAD DECIDED TO FORM A PRIVAT E LIMITED COMPANY TO ENTER INTO THE BUSINESS OF INFRASTRUCTURE DEVELOPMENT INC LUDING BUSINESS OF BUILDERS AND DEVELOPERS. THE NAME OF THE COMPANY IS PANAMA I NFRASTRUCTURE PARK PVT. LTD. (PANAMA). (B) THE SAID COMPANY IS CONTINUING DEVELOPMENT PROJ ECTS. IT HAS ALSO GONE INTO THE INFRASTRUCTURE PROJECTS LIKE WIND POWER ENERGY PROJECTS. (C) THE FIRST PROJECT THOUGHT OVER BY THE COMPANY W AS TO DEVELOP THE BUND GARDEN PROPERTY OWNED BY ME AT THAT TIME. (D) AS THE BEST METHOD FOR DECIDING PRICE IS THE MA RKET VALUE DECLARED IN THE MAHARASHTRA GOVERNMENT RECKNOR FOR THE PURPOSES OF LEVY OF STAMP DUTY, WE INQUIRED ABOUT THE SAME. I AM ALSO ADVISED THAT EVE N INCOME TAX ACT, 1961 ALSO RELIES ON SUCH VALUATION FOR DECIDING MARKET VALUE FOR THE PURPOSES OF THE CAPITAL GAIN COMPUTATION (REFER S.50C). (E) THE RATE UNDER THE SAID RECKNOR WAS RS 78,21,70 0/- ON THE BASIS OF OUR ENQUIRY. (F) I THEREFORE DECIDED TO ROUND UP THE FIGURE TO R S 80 LAKHS AND ACCORDINGLY THE CONSIDERATION WAS DECIDED WHILE SELLING THE SAID PR OPERTY TO PANAMA. (G) TILL THAT TIME, THERE WAS NO QUESTION OF ANY OT HER BASIS OF VALUATION AND AS PRUDENT TAX PAYER, IF I WOULD HAVE CHARGED MORE AMO UNT, IT COULD HAVE BEEN AN ISSUE IN THE HANDS OF PANAMA AS TO WHETHER THE P RICE PAID FOR STOCK IN TRADE PURCHASE IS REASONABLE OR NOT. (H) MY FAMILY MEMBERS BEING NOVICE TO THE ACTIVITIE S OF DEVELOPMENT, THOUGHT IT FIT TO HAVE SOME EXPERIENCED BUILDER DEVELOPERS TO HELP IMPLEMENTING THE DEVELOPMENT. (I) THEY FOUND M/S SURANA BHANSHALI TO BE SUCH PART Y AND STARTED NEGOTIATING FOR JOINT VENTURE PROJECT WITH THEM. AT PRESENT ALSO SU CH ARRANGEMENTS ARE BEING PREFERRED BY PANAMA. (J) DURING THE COURSE OF DISCUSSION WITH SURANA BHA NSHALI, SUDDENLY, THEY CHANGED THE STAND AND SAID THAT THEY WOULD PREFER T O GO ALONE. (K) THIS WOULD RESULT IN LOSS OF PROBABLE PROFIT ON THE PROJECT. PANAMA WAS NOT READY FOR THE SAME. HOWEVER, STRANGE BUT TTUE, SURA NA BHANSHALI DECIDED TO COMPENSATE SUCH LOSS OF PROFIT AN THEY ESTIMATED TH E VALUE OF PLOT PLUS SHARE OF LIKELY PROFIT TO BE RS 2.90 CRORES. THEY DECIDED TO PAY THE SAME. (L) HAVING FOUND THE PROPOSAL BENEFICIAL, PANAMA AC CEPTED THE SAME INSTANTLY AND DEAL WAS DONE. (M) EVEN FROM THE VALUATION ADOPTED WHILE REGISTERI NG THE SAID DOCUMENT, THE VALUE IS LESS THAN RS 80 LAKHS. THUS, THERE IS NO R EASON TO CONSIDER THAT ANY LESS AMOUNT WAS CHARGED BY ME AS COMPARED TO MARKET PRICE WHILE SELLING THE PROPERTY TO PANAMA. (N) THIS PROFIT IS PROPERLY REFLECTED IN THE BOOKS OF PANAMA. (O) IN SUPPORT OF THE FACT A REGARD CHANGED MOOD OF SURANA BHANSHALI, I AM ENCLOSING THE CONFIRMATION OF SURANA BHANSHALI IN T HIS REGARD. 94 BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) ALSO , THE ASSESSEE REITERATED SIMILAR ARGUMENTS. IT WAS FURTHER POINTED O UT BY THE ASSESSEE THAT THERE WAS NO UNDERSTATEMENT OF CONSIDERATION, INASMUCH AS THE CONSIDERATION OF RS 80,00,000/- WAS HIGHER THAN THE MARKET PRICE DET ERMINED BY THE STAMP VALUATION AUTHORITIES FOR THE PURPOSES OF PAYMENT OF STAMP DUTY. BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS), IT WAS ALSO POINTE D OUT THAT THE ASSESSING OFFICER DID NOT HAVE THE POWER TO MAKE ANY ADJ USTMENT/ INCREASE THE AMOUNT OF CONSIDERATION FOR COMPUTING CAPITAL GAINS AS PER SECTION 48 OF THE ACT AS SECTION 52(2) OF THE ACT WHICH PROVIDED FOR SUCH ADJUSTMENT WAS OMITTED W.E.F. 1.4.1988. AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE, THE COMMISSIONER OF INCOME-TAX (APPEALS) HELD THAT THE ASSESSING OFFICER WAS WRONG IN ADOPTING FULL VALUE OF CONSIDERATION AT R S 2,90,00,000/- FOR THE PURPOSES OF COMPUTING CAPITAL GAIN ON THE SALE OF IMPUG NED PROPERTY IN THE ABSENCE OF ANY STATUTORY PROVISIONS; THE COMMISSIONER OF I NCOME-TAX (APPEALS) FURTHER HELD THAT THE APPLICATION THE PRINCI PLE LAID DOWN IN THE CASE OF MCDOWELL & CO. LTD. V. COMMERCIAL TAX OFFICER 154 ITR 148 (SC) BY THE ASSESSING OFFICER TO SUPPORT ADOPTION OF SALE CONSIDERATIO N AT RS 2,90,00,000- WAS ALSO UNTENABLE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. IN THIS CONTEXT, FOLLOWING DISCUSSION BY THE COMMISSIONER OF INC OME-TAX (APPEALS) IS RELEVANT: IT IS A FACT THAT THE SALE MADE BY THE APPELLANT A S PER THE AGREEMENT ENTERED INTO WITH PIPL AT RS 80 LAKHS WAS T MUCH LOWER FIGURE THAN TH E CONSIDERATION RECEIVED FOR THE SALE OF THE SAME PROPERTY AT RS 2.9 CRORES, WITHIN 16 DAYS, BY PIPL AND PIPL BEING A COMPANY IN WHICH FAMILY MEMBERS WERE HAVING SUBSTAN TIAL INTEREST AND HAD UNABSORBED LOSSES, AND ALL OF THESE FACTS CREATE TH E IMPRESSION THAT THE CONCERNED PARTIES HAVE ACTED IN CONCERT TO LOWER THE TAXATION INCIDENCE IN THE HANDS OF THE APPELLANT. THE EXPLANATION OF THE APPELLANT ON THE OTHER HAND THAT THEY WERE INITIALLY INTERESTED ONLY TO DEVELOP THE SAID PROPERTY IN JOI NT VENTURE WITH M/S SURANA BHANSALI DEVELOPERS AND THE SAID PROPERTY WAS SOLD ONLY BECA USE M/S SURANA BHANSALI DEVELOPERS MADE AN OFFER AT A MUCH HIGHER FIGURE TO COMPENSATE THE PIPL FOR THE FUTURE PROFIT ALSO, CANNOT BE IGNORED WITHOUT GIVIN G IT A SERIOUS CONSIDERATION. IT IS A GENERAL PERCEPTION THAT LANDS AND SUCH OTHER CAPITA L ASSETS ARE TRANSACTED AT LOWER THAN THE MARKET VALUE AND THEREFORE, INITIALLY S. 5 2 WAS THERE IN THE STATUTE TO TACKLE THAT SITUATION. THE PARLIAMENT IN THEIR OWN WISDOM HAVE DELETED THE SAID PROVISION. S. 48 ALSO CAN BE SEEN TO BE HAVING REFERENCE TO FULL VALUE OF CONSIDERATION AND NOT MARKET VALUE. IN SUCH A SITUATION, EVEN IF THE AO HAS SERIOUS DOUBTS ABOUT THE VALUE OF TRANSACTION, HIS JOB IS MUCH DIFFICULT TO ESTABL ISH THE SAME. EVEN IF IT IS ACCEPTED IN THE FACTS OF THE CASE THAT THE EXPLANATION GIVEN BY THE APPELLANT ARE NOT CORRECT AND THEREFORE THE MARKET VALUE OF CONSIDERATION IS AT R S 2.9 CRORES, I AM AFRAID THE AO HAS NO AUTHORITY TO REPLACE THE FULL VALUE OF CONSIDERA TION WITH THE MARKET VALUE OF CONSIDERATION IN THE LEGAL POSITION AVAILABLE IN TH E STATUTE. HE WILL HAVE TO PROVE THAT THE FULL VALUE OF CONSIDERATION RECEIVED BY THE APP ELLANT FOR THE SALE OF THE LAND IS RS 2.9 CRORES AND NOT RS 80 LAKHS ONLY. HE HAS NOT BRO UGHT ANY EVIDENCE ON RECORD TO SHOW THAT THE ACTUAL CONSIDERATION RECEIVED BY THE APPELLANT BEING THE FULL VALUE OF CONSIDERATION IS AT RS 2.9 CRORES. AS THE FACTS EXI ST, THE CONSIDERATION OF RS 2.9 CRORES WAS RECEIVED BY PIPL AND NOT THE APPELLANT. THERE I S NOTHING ON RECORD TO SEE THAT PIPL HAS PASSED ON THE REMAINING CONSIDERATIONS TO THE APPELLANT. EVEN IF PIPL IS SEEN TO BE A COMPANY IN WHICH FAMILY MEMBERS ARE IN TERESTED AND THEREFORE, IN THAT CONTEXT THEY CAN INFLUENCE THE DECISION MAKING BUT THE FACT REMAINS THAT THE CONSIDERATION RECEIVED REMAINED WITH PIPL AND WAS N OT PASSED ON TO THE APPELLANT. ON THE ISSUE OF TAX PLANNING, IT WAS FOUND FROM THE DISCUSSIONS MADE BY THE AO IN THE ASSESSMENT ORDER THAT THE APPELLANT HAS NOT SHOWN T HE ABOVE TRANSACTION IN HIS REGULAR RETURN AND HAS ONLY SHOWN IT IN THE RETURN FILED AFTER THE SEARCH, THIS CLEARLY SHOWS THAT THERE WAS NO CONSCIOUS PLANNING BECAUSE IN THAT CASE HE WOULD HAVE SHOWN IT IN THE REGULAR RETURN. CONSIDERING ALL THE FACTS AVAILABLE AND THE LAW ON THE ISSUE UNDER CONSIDERATION, THE FULL VALUE OF CONSID ERATION CANNOT BE TAKEN AT RS 2.9 CRORES. IT HAS TO REMAIN AT RS 80 LAKHS. AGAINST THE AFORESAID, THE REVENUE IS IN APPEAL BEFORE US. 95 BEFORE US, THE LEARNED CIT-DEPARTMENTAL REPRESENTA TIVE HAS REFERRED TO THE ASSESSMENT ORDER TO POINT OUT THAT THE ASSESSING OF FICER WAS JUSTIFIED IN HOLDING THAT ASSESSEE HAD NOT DECLARED APPROPRIATE AMOU NT OF CAPITAL GAIN ON SALE OF THE PROPERTY BY TRANSFERRING THE PROPERTY TO PIPPL IN WHICH FAMILY MEMBERS OF THE ASSESSEE WERE HAVING INTEREST, FOR A LOWE R CONSIDERATION THAN THE ACTUAL MARKET VALUE OF THE PROPERTY ON THAT DATE. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUBMITTED THAT EVIDENTLY WI THIN A SHORT SPAN OF 16 DAYS, THE PROPERTY WHICH WAS SOLD FOR RS 80,00,000/- TO PIPPL WAS IN TURN SOLD TO A BUILDER/DEVELOPER FOR AN INCREASED CONSIDERATION O F RS 2,90,00,000/-. AS PER THE LEARNED DEPARTMENTAL REPRESENTATIVE, THIS SHO WED THAT THE SALE OF PROPERTY TO PIPPL WAS NOT AT MARKET VALUE AND THEREFO RE, THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE IMPUGNED ADDITION. IN THIS CONNECTION, THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO POINTED OUT THAT THE BUYER PIPPL WAS A COMPANY IN WHICH THE FAMILY MEMBERS OF THE ASSESSEE WERE HAVING INTEREST AND THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN CONCLUDING THAT THE ASSESSEE HAD ADOPTED A COLOURABLE DEVICE TO AVOID PA YMENT OF DUE TAXES BY TRANSFERRING A PROPERTY AT LOWER THAN THE MARKET V ALUE. THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN INVOKING THE PRINCIPLES LA ID DOWN IN THE CASE OF MCDOWELL & CO. LTD (SUPRA) IN DISREGARDING THE STATE D CONSIDERATION IN THE AGREEMENT AND ADOPTING THE CONSIDERATION OF RS 2,90,00 ,000/- AS THE FULL VALUE OF CONSIDERATION FOR THE PURPOSES OF COMPUTING CA PITAL GAINS AS PER SECTION 48 OF THE ACT. 96 ON THE OTHER HAND, THE LEARNED REPRESENTATIVE, AP PEARING FOR THE RESPONDENT-ASSESSEE VEHEMENTLY JUSTIFIED THE CONCLUSION DRA WN BY THE COMMISSIONER OF INCOME-TAX (APPEALS). ACCORDING TO THE LE ARNED REPRESENTATIVE, THERE WAS NO JUSTIFICATION FOR DISREGARD ING THE CONSIDERATION STATED IN THE AGREEMENT DATED 20.7.2005, INASMUCH AS T HERE WAS NO MATERIAL TO SHOW THAT THE ASSESSEE HAD RECEIVED ANY CONSIDERATION OVER AND ABOVE THE STATED CONSIDERATION. IN SUPPORT OF SUCH PROPOSITION RELIA NCE HAS BEEN PLACED ON THE FOLLOWING DECISIONS; (I) CIT V. SMT NILOFER I SINGH 221 CTR 277 (DEL); (II) CIT V. GEORGE HENDERSON & CO. LTD 66 ITR 622 ( SC) IT IS FURTHER POINTED OUT THAT IN THE ABSENCE OF SECTION 52(2) OF THE ACT, THE ASSESSING OFFICER IS NOT PERMITTED TO SUBSTITUTE THE MARKET VALUE OF THE PROPERTY AS THE FULL VALUE OF CONSIDERATION FOR THE P URPOSES OF COMPUTING CAPITAL GAINS AND IN THAT LIGHT, HE HAS RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF K.P. VARGHESE V. ITO 131 ITR 597 (SC). EVEN WITH REGARD TO THE INVOKING OF THE PRINCIPLES LAID DOW N IN THE CASE OF MC DOWELL & CO. (SUPRA), THE LEARNED COUNSEL SUBMITTED THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS JUSTIFIED IN HIS CONCLUSION, INASM UCH AS THE SALE OF PROPERTY BY THE ASSESSEE TO PIPPL WAS AT A CONSIDERATION MORE THAN THE MARKET VALUE ASSESSED BY THE STAMP VALUATION AUTHORITIE S FOR THE PURPOSES OF PAYMENT OF STAMP DUTY. IT WAS FURTHER POINTED OUT THA T THE ASSESSEE DID NOT OWN ANY SHARES IN PIPPL IN HIS OWN NAME, THOUGH HIS FAM ILY MEMBERS HAD AN INTEREST IN THE SAID CONCERN. IN THIS CONNECTION, THE LE ARNED COUNSEL ALSO REFERRED TO AN OBSERVATION OF THE COMMISSIONER OF INCOM E-TAX (APPEALS) THAT THERE WAS NOTHING TO SUGGEST THAT ANY CONSIDERATION RECEI VED BY PIPPL FROM M/S SURANA BHANSALI DEVELOPERS WAS PASSED ON TO THE ASSESSE E AT ANY STAGE. THE LEARNED COUNSEL REITERATED THE SUBMISSIONS PUT-FORT H BEFORE THE LOWER AUTHORITIES AND EXPLAINED THE CIRCUMSTANCE IN WHICH LA ND WAS SUBSEQUENTLY SOLD BY PIPPL TO M/S SURANA BHANSALI DEVELOPERS FOR HIG HER CONSIDERATION. IT WAS POINTED OUT THAT THERE WAS A BONA FIDE TRANSACTION WHEREBY THE PROPERTY WAS SOLD TO PIPPL FOR RS 80,00,000/-. THE LEARNED COUN SEL REFERRED TO PAGE 84 OF THE PAPER BOOK WHEREIN IS PLACED A COMMUNICATION D ATED 6.11.2008 OF M/S SURANA BHANSALI DEVELOPERS, WHEREIN S THE REASONS FOR PAYING THE CONSIDERATION OF RS 2,90,00,000/- TO PIPPL HAS BEEN EXP LAINED.. IN SUM AND SUBSTANCE, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE SALE CONSIDERATION AS REFLECTED IN THE AGREEMENT DATED 20.7 .2005 AT RS 80,00,000/- ON ACCOUNT OF SALE OF THE PROPERTY TO PIPPL WAS BONA F IDE AND THERE WAS NO JUSTIFICATION FOR THE ASSESSING OFFICER TO REPUDIATE THE ADOPTION OF SUCH AMOUNT OF CONSIDERATION FOR THE PURPOSES OF SECTION 48 OF THE A CT. 97 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. TH E ASSESSEE EXECUTED A CONVEYANCE DEED ON 20.7.2005 IN FAVOUR OF P IPPL FOR A STATED CONSIDERATION OF RS 80,00,000/- WHEREBY LAND ADMEASURI NG 800 SQ.MTS WITH AN OLD BUNGALOW COVERING 150 SQ.MTS OF SUCH AREA AT BUND G ARDEN, PUNE WAS SOLD. SECTION 45(1) OF THE ACT PROVIDES THAT PROFITS OR GAINS ARISING FROM THE TRANSFER OF A CAPITAL ASSET EFFECTED IN THE PREVIOUS Y EAR SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD CAPITAL GAINS AND SHALL BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. IN TERMS OF SECTION 45(1), THEREFORE, THE PROFIT ARISING ON EXECUTI ON OF CONVEYANCE DEED DATED 20.7.2005 IS ASSESSABLE IN THE HANDS OF THE ASSESSEE D URING THE ASSESSMENT YEAR UNDER CONSIDERATION. FURTHER SECTION 48 OF THE ACT PROVIDES THAT INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SH ALL BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECE IVED OR ACCRUING AS A RESULT OF TRANSFER OF A CAPITAL ASSET THE (I) EXPENDITU RE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER, AND (II) TH E COST OF ACQUISITION OF THE TRANSFER AND COST OF IMPROVEMENT, IF ANY THERETO. THE DISPUTE IN THE PRESENT CASE RELATES TO THE COMPUTATION OF CAPITAL GAINS. THE ASSE SSEE CONTENDED BEFORE THE ASSESSING OFFICER THAT THE CAPITAL GAIN BE COM PUTED BY CONSIDERING THE FULL VALUE OF THE CONSIDERATION AT RS 80,00,000/-. THE ASSESSING OFFICER, HOWEVER, HAS CONSIDERED A SUM OF RS 2,90,00,000/- AS THE FULL VALUE OF CONSIDERATION FOR THE PURPOSES OF COMPUTING CAPITAL GAIN S. THE PRIMARY REASON WEIGHING WITH THE ASSESSING OFFICER WAS TO THE EFFECT T HAT THE ASSESSEE HAD SOLD THE PROPERTY TO PIPPL BELOW THE MARKET VALUE BECA USE SUBSEQUENTLY PIPPL SOLD THE DEVELOPMENT RIGHTS OF THE LAND IN QUE STION TO A CONCERN M/S SURANA BHANSALI DEVELOPERS FOR A HUGE CONSIDERATION OF RS 2,90,00,000/-. .ON THIS ASPECT, THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS OPINED THAT THE ASSESSING OFFICER IS NOT EMPOWERED TO COMPUTE CAPITAL GAINS UNDER SECTION 48 OF THE ACT WITH REFERENCE TO THE MARKET VALU E OF THE PROPERTY INASMUCH AS IT IS ONLY THE FULL VALUE OF CONSIDERATION RE CEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET, WHICH IS RE LEVANT FOR COMPUTING CAPITAL GAINS. IN THIS CONTEXT, WE FIND THAT SECTION 50C OF THE ACT IS A SPECIAL PROVISION WHICH PROVIDES FOR CASES WHERE THE VALUE ADOPTE D OR ASSESSED BY AN AUTHORITY OF THE STATE GOVERNMENT FOR THE PURPOSE S OF PAYMENT OF STAMP DUTY, CAN BE SUBSTITUTED AND DEEMED TO BE THE FULL VA LUE OF CONSIDERATION RECEIVED OR ACCRUING FOR THE PURPOSES OF SECTION 48 OF THE ACT. NOTABLY, SUCH A DEEMING PROVISION COMES INTO OPERATION WHERE THE CONSIDE RATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET BEING LAND OR BUILDING IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF STATE GOVERNMENT FOR THE PURPOSES OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS APPRECIATED THE AFORESAID PROVISION AND HAS FOUND THAT THE STATED CONSIDERATION OF RS 80,00,000/- IN THE CONVEYANCE DEED DATED 20.7.2005 WAS NOT LESS THAN THE VA LUE ADOPTED OR ASSESSED BY THE AUTHORITY OF THE STATE GOVERNMENT FOR T HE PURPOSES OF PAYMENT OF STAMP DUTY ON SUCH CONVEYANCE. THEREFORE, ACCOR DING TO THE COMMISSIONER OF INCOME-TAX (APPEALS), THE FULL VALUE O F CONSIDERATION AS REFLECTED IN THE CONVEYANCE DEED DATED 20.7.2005 CANNO T BE DISREGARDED BY THE ASSESSING OFFICER FOR THE PURPOSES OF COMPUTING CAPITAL GAIN UNDER SECTION 48 OF THE ACT. ON THE AFORESAID ASPECTS, THERE IS NO DI SPUTE AND TO THAT EXTENT, WE HEREBY AFFIRM THE ACTION OF THE COMMISSIONER OF INCO ME-TAX (APPEALS). FURTHERMORE, IT IS ALSO BROUGHT OUT BY THE COMMISSIONER OF INCOME-TAX (APPEALS) THAT THE ERSTWHILE SECTION 52 (2) OF THE ACT WAS NO LONGER ON THE STATUTE AND, THEREFORE, THE COMPUTATION OF CAPITAL GA IN UNDER SECTION 48 OF THE ACT COULD NOT BE MADE WITH REFERENCE TO THE FAIR MARKET VALUE OF THE CAPITAL ASSET AFTER DISREGARDING THE STATED CONSIDERATION RECEIVED BY THE ASSESSEE. IN FACT, IT IS WELL SETTLED THAT THE EXPRESSION FULL VALUE OF THE CONSIDERATION CONTAINED IN SECTION 48 OF THE ACT CANNOT BE CONSIDERED A S SYNONYMOUS WITH THE MARKET VALUE OF THE PROPERTY UNDER TRANSFER AND, THEREFORE, HAVING REGARD TO THE PHRASEOLOGY OF SECTION 48 OF THE ACT, THE ASSESSING OFFICER IS NOT EMPOWERED TO SUBSTITUTE THE MARKET VALUE OF THE PROPE RTY IN PLACE OF THE FULL VALUE OF THE CONSIDERATION FOR COMPUTING CAPITAL GAIN. THE DISTINCTION BETWEEN THE FULL VALUE OF THE CONSIDERATION RECEIVED AS A RESUL T OF TRANSFER OF A PROPERTY VIS--VIS MARKET VALUE OF THE PROPERTY HAS BEE N APPRECIATED IN THE CONTEXT OF SECTION 48 OF THE ACT BY THE HONBLE DELHI H IGH COURT IN THE CASE OF SMT NILFER I. SINGH (SUPRA). CONSIDERED IN THIS LIGHT, WE AFFIRM THE CONCLUSION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IN DIRECTING TH E ASSESSING OFFICER TO ADOPT THE FULL VALUE OF THE CONSIDERATION OF THE P ROPERTY AT RS 80,00,000/- FOR THE PURPOSES OF COMPUTING CAPITAL GAINS IN PREFERENCE T O THE VALUE ADOPTED BY ASSESSING OFFICER AT 2.90,00,000/-. 98 SO, HOWEVER, THE CASE SET-UP BY THE ASSESSING OFFICER IS ON A DIFFERENT PRINCIPLE, WHICH WE MAY NOW CONSIDER HEREINAFTER. ACCORDI NG TO THE ASSESSING OFFICER THE TRANSFEREE COMPANY, NAMELY, PIPPL WAS A CO NCERN IN WHICH THE FAMILY MEMBERS OF THE ASSESSEE HAD AN INTEREST. THE ASSESSEE TRANSFERRED THE PROPERTY BY WAY OF SALE ON 20.7.2005 TO PIPPL AT RS 8 0 LAKHS, WHEREAS WITHIN A SPAN OF 16 DAYS, I.E. ON 6.8.2005 PIPPL, IN TURN, SO LD THE DEVELOPMENT RIGHTS FOR A CONSIDERATION OF RS 2.90,00,000 WHICH WAS SUBSTANTIA LLY HIGHER IN COMPARISON TO THE CONSIDERATION RECEIVED BY THE ASSESSEE. AS PER THE ASSESSING OFFICER, THE AFORESAID SITUATION REFLECTED A COLOU RABLE DEVICE ADOPTED BY THE ASSESSEE TO LOWER HIS TAX LIABILITY AND SAME AMOUNTED TO AVOIDANCE OF PAYMENT OF LEGITIMATE TAXES. AS PER THE ASSESSING OFFICER, BY THIS ARRANGEMENT, THE ASSESSEE LOWERED HIS LIABILITY TO PA Y TAX ON THE CAPITAL GAINS, WHICH WAS OTHERWISE PAYABLE WITH REFERENCE TO TH E CONSIDERATION OF RS 2,90,00,000/-. IN COMING TO SUCH CONCLUSION, AS PER THE ASSE SSING OFFICER, THE PRINCIPLES LAID DOWN IN THE CASE OF MC DOWELL & CO (SUPR A) WERE APPLICABLE AND, THEREFORE, PROCEEDED TO COMPUTE THE CAPITAL GAIN S IN THE HANDS OF THE ASSESSEE BY ADOPTING THE VALUE OF RS 2,90,00,000/- AS TH E CONSIDERATION FOR THE PURPOSES OF SECTION 48 OF THE ACT. ON THIS ASPECT, WE FIND THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS MADE THE FOLLOW ING DISCUSSION: IT IS A FACT THAT THE SALE MADE BY THE APPELLANT A S PER THE AGREEMENT ENTERED INTO WITH PIPL AT RS 80 LAKHS WAS T MUCH LOWER FIGURE THAN TH E CONSIDERATION RECEIVED FOR THE SALE OF THE SAME PROPERTY AT RS 2.9 CRORES, WITHIN 16 DAYS, BY PIPL AND PIPL BEING A COMPANY IN WHICH FAMILY MEMBERS WERE HAVING SUBSTAN TIAL INTEREST AND HAD UNABSORBED LOSSES, AND ALL OF THESE FACTS CREATE TH E IMPRESSION THAT THE CONCERNED PARTIES HAVE ACTED IN CONCERT TO LOWER THE TAXATION INCIDENCE IN THE HANDS OF THE APPELLANT. THE EXPLANATION OF THE APPELLANT ON THE OTHER HAND THAT THEY WERE INITIALLY INTERESTED ONLY TO DEVELOP THE SAID PROPERTY IN JOI NT VENTURE WITH M/S SURANA BHANSALI DEVELOPERS AND THE SAID PROPERTY WAS SOLD ONLY BECA USE M/S SURANA BHANSALI DEVELOPERS MADE AN OFFER AT A MUCH HIGHER FIGURE TO COMPENSATE THE PIPL FOR THE FUTURE PROFIT ALSO, CANNOT BE IGNORED WITHOUT GIVIN G IT A SERIOUS CONSIDERATION. IT IS A GENERAL PERCEPTION THAT LANDS AND SUCH OTHER CAPITA L ASSETS ARE TRANSACTED AT LOWER THAN THE MARKET VALUE AND THEREFORE, INITIALLY S. 5 2 WAS THERE IN THE STATUTE TO TACKLE THAT SITUATION. THE PARLIAMENT IN THEIR OWN WISDOM HAVE DELETED THE SAID PROVISION. S. 48 ALSO CAN BE SEEN TO BE HAVING REFERENCE TO FULL VALUE OF CONSIDERATION AND NOT MARKET VALUE. IN SUCH A SITUATION, EVEN IF THE AO HAS SERIOUS DOUBTS ABOUT THE VALUE OF TRANSACTION, HIS JOB IS MUCH DIFFICULT TO ESTABL ISH THE SAME. EVEN IF IT IS ACCEPTED IN THE FACTS OF THE CASE THAT THE EXPLANATION GIVEN BY THE APPELLANT ARE NOT CORRECT AND THEREFORE THE MARKET VALUE OF CONSIDERATION IS AT R S 2.9 CRORES, I AM AFRAID THE AO HAS NO AUTHORITY TO REPLACE THE FULL VALUE OF CONSIDERA TION WITH THE MARKET VALUE OF CONSIDERATION IN THE LEGAL POSITION AVAILABLE IN TH E STATUTE. HE WILL HAVE TO PROVE THAT THE FULL VALUE OF CONSIDERATION RECEIVED BY THE APP ELLANT FOR THE SALE OF THE LAND IS RS 2.9 CRORES AND NOT RS 80 LAKHS ONLY. HE HAS NOT BRO UGHT ANY EVIDENCE ON RECORD TO SHOW THAT THE ACTUAL CONSIDERATION RECEIVED BY THE APPELLANT BEING THE FULL VALUE OF CONSIDERATION IS AT RS 2.9 CRORES. AS THE FACTS EXI ST, THE CONSIDERATION OF RS 2.9 CRORES WAS RECEIVED BY PIPL AND NOT THE APPELLANT. THERE I S NOTHING ON RECORD TO SEE THAT PIPL HAS PASSED ON THE REMAINING CONSIDERATIONS TO THE APPELLANT. EVEN IF PIPL IS SEEN TO BE A COMPANY IN WHICH FAMILY MEMBERS ARE IN TERESTED AND THEREFORE, IN THAT CONTEXT THEY CAN INFLUENCE THE DECISION MAKING BUT THE FACT REMAINS THAT THE CONSIDERATION RECEIVED REMAINED WITH PIPL AND WAS N OT PASSED ON TO THE APPELLANT. ON THE ISSUE OF TAX PLANNING, IT WAS FOUND FROM THE DISCUSSIONS MADE BY THE AO IN THE ASSESSMENT ORDER THAT THE APPELLANT HAS NOT SHOWN T HE ABOVE TRANSACTION IN HIS REGULAR RETURN AND HAS ONLY SHOWN IT IN THE RETURN FILED AFTER THE SEARCH, THIS CLEARLY SHOWS THAT THERE WAS NO CONSCIOUS PLANNING BECAUSE IN THAT CASE HE WOULD HAVE SHOWN IT IN THE REGULAR RETURN. CONSIDERING ALL THE FACTS AVAILABLE AND THE LAW ON THE ISSUE UNDER CONSIDERATION, THE FULL VALUE OF CONSID ERATION CANNOT BE TAKEN AT RS 2.9 CRORES. IT HAS TO REMAIN AT RS 80 LAKHS. 99 IN THIS CONTEXT, WE FIND IT PROPER TO REFER TO THE EXPLANATION FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER CONTAINED IN PAR A 9.10 OF HIS ORDER WHICH WE HAVE ALREADY EXTRACTED IN THE EARLIER PART O F THIS ORDER. IN TERMS OF THAT EXPLANATION, IT EMERGES THAT THE FAMILY MEMBERS OF THE ASSESSEE DECIDED TO ENTER INTO THE BUSINESS OF INFRASTRUCTURE DEVELOPMEN T, INCLUDING THE BUSINESS OF BUILDERS AND DEVELOPERS AND IT WAS WITH SUCH OBJECTIV E THE COMPANY M/S PIPPL WAS FORMED. AT THE RELEVANT POINT OF TIME, THE ASSESSEE TRANSFERRED HIS BUND GARDEN PROPERTY INTO THE COMPANY AND THE ASSESSEE E XPLAINED THAT SUCH TRANSFER WAS MADE FOR A CONSIDERATION WHICH WAS IN L INE WITH SECTION 50C OF THE ACT. SECTION 50C OF THE ACT, AS NOTED EARLIER, R EFERS TO THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITIES FOR THE PURPOSES OF PAYMENT OF STAMP DUTY. AS PER THE ASSESSEE, IN THE ABSENCE OF ANY OTH ER BENCHMARK TO ASCERTAIN MARKET VALUE, THE RATE FOR PAYMENT OF STAMP D UTY WAS CONSIDERED AND UPON COMPARISON WITH THE AGREED CONSIDERATION OF RS 80 LAKHS, THE CONSIDERATION WAS FOUND JUSTIFIED. THE ASSESSEE EXPLAINED THAT NEITHER HE NOR HIS OTHER FAMILY MEMBERS WHO HAD INTEREST IN PIPPL WER E HITHERTO EXPERIENCED IN THE BUSINESS OF BUILDERS AND DEVELOPERS AND, THEREFOR E, IT WAS UNDER THESE CIRCUMSTANCES PIPPL PURSUED THE NEGOTIATIONS FOR JOINT VEN TURE WITH M/S SURANA BHANSALI DEVELOPERS. THE ASSESSEE FURTHER EXPLAI NED THAT IN THE COURSE OF DISCUSSION WITH M/S SURANA BHANSALI DEVELOPERS, TH E CO-DEVELOPER CHANGED ITS STAND AND PREFERRED TO GO ALONE. CONSIDERI NG SUCH SITUATION, PIPPL WAS COMPENSATED BY M/S SURANA BHANSALI DEVELOPERS F OR THE LOSS OF FUTURE PROFIT ACCRUING AS A JOINT DEVELOPER AND, THERE FORE, THE PIPPL SOLD THE DEVELOPMENT RIGHTS OF THE PROPERTY FOR A CONSIDERATIO N OF RS 2.90,00,000/- WHICH WAS WAY ABOVE THE MARKET VALUE OF THE PLOT AS TH E SAME INCLUDED THE PROBABLE FUTURE PROFITS ON SUCH PROJECT ALSO. IT WAS IN THIS BACKGROUND, THE ASSESSEE EXPLAINED THAT PIPPL GAVE UP THE DEVELOPMENT R IGHTS ON THE LAND ON 6.8.205 FOR A CONSIDERATION OF RS 2,90,00,000/-. THE A SSESSEE FURTHER HAS REFERRED TO A COMMUNICATION FROM M/S SURANA BHANSALI DE VELOPERS PLACED AT PAGE 84 OF THE PAPER BOOK WHEREIN IT IS STATED THAT IN ITIALLY THE PROPERTY WAS TO BE DEVELOPED JOINTLY WITH PIPPL, AND DUE TO CERTAIN DEVELOPMENTS DURING NEGOTIATIONS, M/S SURANA BHANSALI DEVELOPERS PROPOSED TO CARRY OUT THE DEVELOPMENT SINGLY AND IN TURN PROPOSED THE ASSESSEE TO GIVE UP THEIR FUTURE PROPOSED INCOME FROM DEVELOPMENT AND OFFERED A CONSIDE RATION OF RS 2,90,00,000/- TO PIPPL. ACCORDINGLY, IT IS STATED BY M/ S SURANA BHANSALI DEVELOPERS THAT THE PROPERTY WAS BOUGHT FOR A CONSIDERA TION OF RS 2,90,00,000 VIDE SALE DEED DATED 6.8.2005. 100 THE AFORESAID EXPLANATION HAS BEEN APPRECIATED BY THE COMMISSIONER OF INCOME-TAX (APPEALS). ON THE BASIS OF THE CIRCUMSTANCES EXPLAINED BY THE ASSESSEE FOR PIPPL TO HAVE RECEIVED THE CONSIDERATION OF RS 2,90,00,000/- AND COUPLED WITH THE FACT THAT THE ASSESSING OFFICER DID NOT HAVE THE POWER TO SUBSTITUTE THE MARKET VALUE OF THE PROPERTY IN PLACE OF THE FULL VALUE OF CONSIDERATION IN SECTION 48 IN ORDER TO COMPUTE CAPITAL GAINS, THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS INFERRED THAT T HERE WAS NO MOTIVE OF TAX AVOIDANCE BY CARRYING OUT A COLOURABLE DEVICE I N THE PRESENT CASE. THE INFERENCE DRAWN BY THE COMMISSIONER OF INCOME-TAX (APP EALS), IN OUR CONSIDERED OPINION, IS PLAUSIBLE AND IS ALSO RATIONALE HA VING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THERE IS NO DENYING TO THE ASSERTION OF THE ASSESSEE THAT NEITHER HE NOR HIS FAMILY MEMBERS WERE HITH ERTO NOT EXPERIENCED IN THE PROPERTY DEVELOPMENT AND THAT TH E COMPANY PIPPL INTENDED TO DEVELOP THE PROPERTY IN QUESTION JOINT LY WITH AN EXPERIENCED PERSON, NAMELY, M/S SURANA BHANSALI DEVELOPERS. THE TR ANSFER OF THE PROPERLY TO PIPPL AT RS 80 LAKHS BY WAY OF CONVEYANCE DEE D DATED 20.7.2005 IS SHOWN TO BE BONA FIDE, INASMUCH AS THE SAME COMPARED FAVOURABLY WITH THE VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY O F THE STATE GOVERNMENT FOR THE PURPOSES OF PAYMENT OF STAMP DUTY. PRIMA FACIE , THE AFORESAID REASONING ESTABLISHES THE BONA FIDES OF CONSIDERATION OF RS 80 LAKHS ON 20.7.2005. IN FACT, EVEN THE CIRCUMSTANCES IN WHICH THE CONSIDERATION OF RS 2.90,00,000/- WAS RECEIVED BY THE PIPIL ON 6.8.2005 F ROM M/S SURANA BHANSALI DEVELOPERS ARE QUITE REASONABLE. THIS IS FOR T HE REASON THAT THE ASSESSEE HAS BEEN ABLE TO EXPLAIN THE REASONS WHY PIPPL RE CEIVED A CONSIDERATION AT AN ENHANCED AMOUNT. EARLIER, THE INT ENTION OF THE ASSESSEES FAMILY, THROUGH PIPPL, WAS TO JOINTLY DEVELOP THE PR OPERTY, WHEREAS DURING NEGOTIATIONS WITH M/S SURANA BHANSALI DEVELOPERS, PIPPL WAS FACED WITH THE PROPOSAL OF DEVELOPMENT OF PROPERTY BY M/S SURANA B HANSALI DEVELOPERS, TO THE EXCLUSION OF THE PIPPL. M/S SURANA BHANSALI DEVELO PERS COMPENSATED PIPPL FOR THE LOSS OF FUTURE INCOME BY PAYING CONSIDER ATION OF RS 2,90,00,000/- UPFRONT TO PIPPL. THE AFORESAID FACTOR S HAVE BEEN AFFIRMED BY M/S SURANA BHANSALI DEVELOPERS AS IS EVIDENCED ON PAGE 84 OF THE PAPER BOOK. QUITE CLEARLY, THE CIRCUMSTANCES IN WHICH M/S SURANA BHANSALI DEVELOPERS PAID AN ENHANCED CONSIDERATION OF RS 2,90,00 ,000/- WAS BEFORE THE ASSESSING OFFICER AND THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT THE SAME HAS BEEN FOUND TO BE FALSE OR OTHERWISE CONTRARY TO THE PURPORTED SITUATION. THE AFORESAID CIRCUMSTANCE HAS BEEN MERELY DI SBELIEVED AND REJECTED BY THE ASSESSING OFFICER WITHOUT ESTABLISHING ANY FALSITY OR INCONSISTENCY IN SAME, AS IT WAS SECONDED BY THE OTHER CONCER N, NAMELY, M/S SURAN BHANSALI DEVELOPERS. THEREFORE, IN OUR VIEW, T HE COMMISSIONER OF INCOME-TAX (APPEALS) HAS RIGHTLY CONSIDERED SUCH FACTORS AND HAS TAKEN A REASONABLE VIEW IN HOLDING THAT THERE WAS NO CONSCIOUS PLANNING BY THE ASSESSEE, AND ACCORDINGLY WE AFFIRM HIS CONCLUSION THAT THE PRINCIPLES LAID DOWN IN THE CASE OF MCDOWELL & CO. (SUPRA) ARE NOT APP LICABLE IN THE PRESENT CASE. 101 IN VIEW OF THE AFORESAID DISCUSSION, WE AFFIRM THE U LTIMATE CONCLUSION DRAWN BY THE COMMISSIONER OF INCOME-TAX (APPEALS) TO THE EFFECT THAT THE FULL VALUE OF THE CONSIDERATION BE ADOPTED AT RS 80 LAKHS AS AGAINST RS 2,90,00,000/- CONSIDERED BY THE ASSESSING OFFICER IN ORD ER TO COMPUTE CAPITAL GAINS ON SALE OF THE BUND GARDEN PROPERTY BY THE ASSESS EE TO M/S PIPPL. THUS, ON THIS ASPECT, REVENUE FAILS. 102 THE NEXT GROUND IN THIS APPEAL IS WITH REGARD TO AN AD HOC DISALLOWANCE OF 10% OUT OF SALARY AND ALLOWANCES WHICH HAS SINCE BEEN DELETED BY THE COMMISSIONER OF INCOME-TAX (APPEALS). THE ASSESSING OFFICER MADE AD HOC DISALLOWANCE WHICH HAS BEEN DELETED BY THE COMMISSIONER O F INCOME-TAX (APPEALS) ON THE GROUND THAT THERE WAS NO INSTANCE OF ANY PAYMENT HAVING BEEN MADE FOR NON-BUSINESS PURPOSES. THE DEPARTMENTAL R EPRESENTATIVE HAS NOT MADE OUT ANY COGENT REASONING TO SUPPORT AD HOC DI SALLOWANCE MADE BY THE ASSESSING OFFICER AND, IN OUR VIEW, THE COMMISSIONER OF INCOME-TAX (APPEALS) MADE NO MISTAKE IN DELETING THE DISALLOWANCE O F RS 1,27,732/-, WHICH WE HEREBY AFFIRM. THE REVENUE FAILS ON THIS GROU ND. 103 THE LAST GROUND, RAISED BY REVENUE READS AS FOLLOW S: ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN TREATING LOSS OF RS 1,63,598/- AS SHORT TERM CAPITAL LOSS IN STEAD OF LOSS FROM BUSINESS AS HELD BY THE AO. 104 ON THIS GROUND, THE ENTIRE DISCUSSION BY THE COMMISSIO NER OF INCOME- TAX (APPEALS) IS CONTAINED IN PARA 5 OF HIS ORDER, WHICH READS AS UNDER: GROUND NO.6: THE APPELLANT THROUGH THE ABOVE GROUN D NO. 6 ALREADY QUOTED ABOVE HAS RAISED ISSUE RELATING TO CAPITAL GAINS (LOSS OF RS 1,63,598/-) ON THE GROUND THAT THE AO HAS NOT DISCUSSED THE ABOVE ISSUE. SUBMISSIONS I N THIS RESPECT HAS BEEN MADE THROUGH ANNEXURE-4 OF LETTER DT. 17.2.2010. IN THE SAID ANNEXURE, THE APPELLANT HAS SHOWN CERTAIN FIGURES RELATING TO AY 2006-07. THE I SSUES RAISED ARE NOT CLEAR AS THERE IS NEITHER MUCH OF DISCUSSION IN THE ASSESSMENT ORD ER OR IN THEIR SUBMISSIONS. THE APPELLANT DURING THE APPEAL ALSO COULD NOT EXPLAIN THEM CLEARLY WITH DOCUMENTS AND THEREFORE, THE SAME IS DISMISSED. 105 AT THE TIME OF HEARING, THE LEARNED DEPARTMENTA L REPRESENTATIVE HAS NOT DEMONSTRATED AS TO THE GRIEVANCE OF THE REVENUE IN ORDER TO RAISE THE AFORESAID GROUND BEFORE US. THE DISCUSSION IN THE ORDER O F THE COMMISSIONER OF INCOME-TAX (APPEALS) ALSO SHOWS THAT THE GROUND RAISED BEFORE US IS MISCONCEIVED. ACCORDINGLY, THE AFORESAID GROUND IS DISMISSE D AS MISCONCEIVED. 106 IN THE RESULT, REVENUES APPEAL VIDE ITA NO 102 6/PN/10 IS DISMISSED. 107 NEXT WE TAKE UP REVENUES APPEAL VIDE ITA NO 1019 /PN/10 FILED IN THE CASE OF SHRI SAMEER B LADKAT, PUNE. 108 THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, PUNE DATED 22. 2.2010, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFF ICER UNDER SECTION 143(3) R.W.S. 153A(B) OF THE ACT PERTAINING TO THE ASS ESSMENT YEAR 2006-07. 108 IN THIS APPEAL BY THE REVENUE, THE FIRST ISSUE RELA TES TO AN ADDITION OF RS 1.14 CRORES MADE BY THE ASSESSING OFFICER ON THE BASIS O F DOCUMENT FOUND DURING THE SURVEY UNDER SECTION 133A OF THE BUSINESS PREM ISES OF M/S NEW AUTO CORNER, PLOT NO. 36, SOMWAR PETH, PUNE, WHICH I S A PROPRIETARY CONCERN OF THE ASSESSEE. THE ASSESSING OFFICER NOTED THAT AS PER DO CUMENT NO. 72/16 FOUND DURING SURVEY, IT CONTAINED NOTINGS OF COSTING OF A PROPERTY AT BANER (22 ACRES). THE DETAILS OF SUCH NOTINGS ALONG WITH A COPY OF T HE IMPOUNDED DOCUMENT HAS BEEN REPRODUCED IN PARA 8 OF THE ASSESSMENT ORDER. THE SAID DOCUMENT CONTAINED A NARRATION TOWARDS 1.14 PAID TO F ARMERS. THE ASSESSING OFFICER, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, PROCEEDED TO HOLD THAT IT REFLECTED PAYMENT OF RS 1.14 CRORES TO THE FAR MERS IN RELATION TO A PROPERTY, AND SUCH PAYMENT WAS MADE BY THE ASSESSEE FROM UNDISCLOSED SOURCES AND ACCORDINGLY THE SAME WAS ADDED TO THE TOTAL IN COME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07. 109 IN APPEAL, THE ASSESSEE POINTED OUT THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INFERRING THAT ANY SUCH PAYMENT WAS MADE B Y THE ASSESSEE. THE PLEA OF THE ASSESSEE WAS THAT THE DOCUMENT CONTAINED A M ERE PROPOSAL AND NO ACTUAL TRANSACTION HAD BEEN GONE THROUGH. THE DET AILED SUBMISSIONS OF THE ASSESSEE IN THIS REGARD HAVE BEEN REPRODUCED BY THE COMMI SSIONER OF INCOME-TAX (APPEALS) IN PARA 5.2 OF HIS ORDER. IN SUM AND SUBSTANCE, THE CLAIM OF THE ASSESSEE WAS THAT THE IMPOUNDED DOCUMENT ONLY SHOW ED ROUGH NOTINGS OF A PROPOSAL FOR PROPERTY WHICH NEVER WENT THROUGH. THE ASSESSEE ALSO POINTED OUT THAT EVEN AT THE TIME OF STATEMENT RECOR DED UNDER SECTION 133(A)(III) OF THE ACT ON 6/7.7.2006, IT WAS POINTED OUT THAT SUCH DOCUMENT ONLY CONTAINED PROPOSAL OF LAND WHICH NEVER MATERIALIZED. T HE ASSESSEE ALSO POINTED OUT THAT THE AFFIDAVIT FURNISHED BY MR I T KHAN WHOSE NAME ALSO APPEARED ON SUCH DOCUMENT, WAS ALSO BEING WRONGLY DISREGAR DED BY THE ASSESSING OFFICER IN MAKING THE IMPUGNED ADDITION. THE C OMMISSIONER OF INCOME-TAX (APPEALS) HAS DELETED THE ADDITION BY HOLDI NG AS UNDER:: 5.3 ON CAREFUL CONSIDERATION, I FIND THAT THE INFE RENCE MADE BY TH AO IS NOT CORRECT. THE DOCUMENTS ITSELF REVEAL THAT SAME RELA TE TO A PROPOSAL OF LAND FOR PURCHASE. IT DID SHOW THAT PAYMENT OF RS 1.14 CRORE S HAS BEEN MADE TO THE FARMERS BUT IT DID NOT SHOW THAT THE SAID PAYMENTS HAVE BEE N MADE BY THE APPLICANT. FROM THE PERUSAL OF ALL THE ENTRIES AVAILABLE IN THE DOCUMEN TS, IT CAN EASILY BE SEEN THAT THERE WERE VARIOUS OPTIONS GIVEN TO THE APPELLANT AND ONE OF THE OPTIONS WAS TO SHARE PROFIT IN THE RATIO OF 35%.THE SAME WAS ALSO SUPPORTED BY THE STATEMENTS GIVEN BY THE APPELLANT DURING THE SURVEY AND ALSO ASSESSMENT IN THE FORM OF AFFIDAVITS OF MR I T KHAN AND MR LADKAT. IF FOR ANY REASON, THE APPELLAN T HAD DOUBT ABOUT THIS TRANSACTION, HE COULD HAVE MADE FURTHER INQUIRY IN RESPECT OF TH E SAID LAND BY VERIFYING THE FACTS FROM THE GROUND ITSELF. 22 ACRES AT BANER WAS NOT A SMALL ICE OF LAND IT COULD HAVE BEEN EASILY IDENTIFIED AND FOUND OUT WHO HAS MADE T HE PAYMENTS TO THE FARMERS. IN MY OPINION, THE A HAS ERRED IN NOT TAKING AL THE EN TRIES AVAILABLE IN THE DOCUMENT TOGETHER FOR FORMING HIS VIEW AND IN NOT CARRYING T HE INVESTIGATION TO THE LOGICAL END, IF HE HAD ANY DOUBT. THE APPELLANT IN MY OPINION HAS P RIMA FACIE DISCHARGED HIS OBLIGATION IN RESPECT OF THE DOCUMENTS FOUND AND IT WAS THE TURN OF THE AO TO FURTHER MAKE INQUIRIES FOR FORMING THE OPINION THAT RS 1.14 CRORES WAS PAID. THE FULL TRANSACTION WAS OF A MUCH HIGHER FIGURE AND THEREFO RE, TO ISOLATE AN ENTRY FOR BASING THE ADDITION WAS NOT CORRECT AND IS NOT ALLOWABLE I N LAW. IN VIEW OF THE DISCUSSIONS MADE ABOVE, THE FINDING OF THE AO IS HELD TO BE INC ORRECT AND APPEAL IS ALLOWED. 110 BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATI VE, APPEARING FOR THE REVENUE, HAS RELIED ON THE ORDER OF THE ASSESSING OFFIC ER BY POINTING OUT THAT THE DOCUMENTS FOUND AT THE TIME OF SURVEY SHOWED THAT AN AMOUNT OF RS 1.14 CRORES WAS PAID BY THE ASSESSEE AND THEREFORE THE SAME WAS ASSESSABLE AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. 111 ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE VEHEMENTLY POINTED OUT THAT THERE WAS NO EVIDENCE OR MATERIAL TO SUGGEST THAT ANY SUCH TRANSACTION HAD INDEED TAKEN PLACE SO AS TO JUSTIFY THE I MPUGNED ADDITION. 112 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN OUR CONSIDERED OPINION, THE ANALYSIS OF THE IMPOUNDED DOCUMENT AND TH E EXPLANATIONS RENDERED BY THE ASSESSEE, AS MADE BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IS QUITE FAIR AND PROPER. IN FACT IT IS EVIDE NT THAT THE ASSESSEE EVEN AT THE TIME OF SURVEY DEPOSED IN HIS STATEMENT THAT THE IM POUNDED DOCUMENT DID NOT REFLECT ANY ACTUAL TRANSACTION, BUT WAS A MERE PROP OSAL WHICH NEVER MATERIALIZED. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS RIGHTLY APPRECIATED THAT IN CASE THE ASSESSING OFFICER ENTERTAINED ANY DOUBT WITH REGARD TO ASSESSEES EXPLANATION, IT WAS OPEN FOR HIM TO MAKE FURTHER LOCAL ENQUIRIES IN AS MUCH AS 22 ACRES OF LAND AT BANER, WHICH WAS THE SUBJECT- MATTER OF PROPOSAL CONTAINED IN IMPOUNDED DOCUMENT, WA S NOT A SMALL PIECE OF LAND AND IT COULD HAVE BEEN EASILY VERIFIED BY THE ASSESSING OFFICER BY CONDUCTING LOCAL ENQUIRIES. EVEN OTHERWISE, IT IS QUITE E VIDENT THAT THERE IS NO MATERIAL OR CORROBORATIVE EVIDENCE TO SHOW THAT ANY P AYMENT TO THE TUNE OF RS 1.14 CRORES WAS MADE TO THE FARMERS AND THAT TOO, BY TH E ASSESSEE. IN FACT, IT IS CONSPICUOUS THAT NO EFFORT HAS BEEN MADE BY THE ASSESSIN G OFFICER TO EITHER IDENTIFY THE RECEIPIENTS (REFERRED TO AS FARMERS IN THE DOCUMENT) OR THE SPECIFIC PROPERTY CONNECTED TO THE IMPUGNED DOCUMENT. RATHER, T HE DOCUMENT ALSO BY ITSELF DOES NOT SUGGEST EXECUTION OF ANY PARTICULAR TRANSA CTION. THE PLEA OF THE ASSESSING OFFICER THAT PAYMENT WOULD HAVE BEEN MAD E IN CASH IS ALSO NOT PLAUSIBLE, INASMUCH AS THE SURVEY AND SEARCH ACTION HAVE NOT RESULTED IN UNEARTHING OF ANY CORROBORATIVE EVIDENCE IN THIS REGAR D. CONSIDERING THE ENTIRETY OF THE CIRCUMSTANCES, IN OUR CONSIDERED OPINION , THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS RIGHTLY DELETED THE ADDITION FOR THE REASONS CONTAINED IN HIS ORDER. THE ORDER OF THE COMMISSIONER O F INCOME-TAX (APPEALS) IS HEREBY AFFIRMED AND ACCORDINGLY, REVENUE FAILS. 113 IN THE RESULT, REVENUES APPEAL, VIDE ITA NO 1019/P N/10 IS DISMISSED. 114 NEXT WE TAKE UP REVENUES APPEAL VIDE ITA NO 1015 /PN/10 FILED IN THE CASE OF SMT ASHA BALASAHEB LADKAT, PUNE, FOR ASSESSMENT YE AR 2004-05. 115 THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, PUNE DATED 26. 2.2010, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFF ICER UNDER SECTION 143(3) R.W.S. 153A(B) OF THE ACT PERTAINING TO THE ASS ESSMENT YEAR 2004-05. 116. IN THIS CASE, THE SOLITARY ISSUE IS WITH REGARD TO A N ADDITION OF RS 33,48,130/-. IT WAS A COMMON POINT BETWEEN THE PARTIE S THAT THE DISPUTE IS IDENTICAL TO THE GROUND NO. 1 CONSIDERED BY US IN REVEN UES APPEAL VIDE ITA NO 1025/PN/10, WHEREIN WE HAVE AFFIRMED THE ORDER O F THE COMMISSIONER OF INCOME-TAX (APPEALS) IN DELETING THE SAID ADDITION. F OLLOWING THE PARITY OF REASONING GIVEN THEREIN, WE AFFIRM THE DECISION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) HEREIN ALSO. THE REVENUE THUS FAI LS ON THIS GROUND. 117 IN THE RESULT, THE APPEAL OF THE REVENUE, VIDE ITA NO 1015/PN/10 IS DISMISSED. 118 NEXT WE TAKE UP REVENUES APPEAL VIDE ITA NO 1017 /PN/10 FILED IN THE CASE OF SHRI GAUTAM BALASAHEB LADKAT, PUNE, FOR ASSESSMEN T YEAR 2004-05. 119 THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, PUNE DATED 24. 2.2010, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFF ICER UNDER SECTION 143(3) R.W.S. 153A(B) OF THE ACT PERTAINING TO THE ASS ESSMENT YEAR 2004-05. 120. IN THIS CASE, THE SOLITARY ISSUE IS WITH REGARD TO A N ADDITION OF RS 2,00,88,783/-. IT WAS A COMMON POINT BETWEEN THE PART IES THAT THE DISPUTE IS IDENTICAL TO THE GROUND NO. 1 CONSIDERED BY US IN REVEN UES APPEAL VIDE ITA NO 1025/PN/10, WHEREIN WE HAVE AFFIRMED THE ORDER O F THE COMMISSIONER OF INCOME-TAX (APPEALS) IN DELETING THE SAID ADDITION. F OLLOWING THE PARITY OF REASONING GIVEN THEREIN, WE AFFIRM THE DECISION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) HEREIN ALSO. THE REVENUE THUS FAI LS ON THIS GROUND. 121 IN THE RESULT, THE APPEAL OF THE REVENUE, VIDE ITA NO 1017/PN/10 IS DISMISSED. 122. IN SO FAR AS THE CROSS OBJECTIONS OF THE DIFFERENT ASSESSEES A RE CONCERNED, THEY STAND ON A COMMON FOOTING. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE GROUNDS RAISED ARE GENERAL I N NATURE AND NO SPECIFIC ARGUMENT HAS BEEN RAISED IN SUPPORT AND THEREFOR E, THE CROSS- OBJECTIONS ARE ACCORDINGLY DISMISSED AS INFRUCTUOUS. 123. RESULTANTLY, C.O NOS 42/PN/11, 43/PN/11, 44/PN/1 1, 45/PN/11, 46/PN/11 AND 47/PN/11 IN THE CASE OF SMT ASHA BALASAHE B LADKAT, SHRI GAUTAM BALASAHEB LADKAT, LATE SHRI BALASAHEB LADKAT (TH ROUGH L/H SAMEER B LADKAT, SHRI BALASAHEB M LADKAT, SHRI SAMEER BALASA HEB LADKAT AND SHRI SAMEER B LADKAT RESPECTIVELY ARE DISMISSED AS INFRUCTUOUS. DECISION PRONOUNCED IN THE OPEN COURT ON 31 ST DAY OF JULY 2012. . SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEM BER PUNE, DATED: 31 ST JULY, 2012 B COPY TO:- 1) ASSESSEES 2) ACIT CEN. CIR. 1(2)PUNE 3) THE CIT (A)-IV PUNE 4) THE CIT(CEN) PUNE 5) THE D R, B BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER TRUE COPY SR.PS I.T.A.T., PUNE