Shri RAM NATH SHARMA, Bhopal V. The ACIT 1(2), Bhopal

ITSSA 124/IND/2014

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 1321 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 07-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: N D PATWA
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure; Income from undisclosed sources; Search and seizure; Loose papers; Source of fund; Tax effect
• Section: 44AD; 143(3); 142(1); 153A; 68; 69; 132

Judgement Text

RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER IT(SS)A NO. 124/IND/2014 A.Y.2006-07 SHRI RAM NATH SHARMA BHOPAL ::: APPELLANT VS ASSTT.COMMR. OF INCOME TAX 1(2) BHOPAL ::: RESPONDENT IT(SS)A NO. 117/IND/2014 A.Y.2006-07 ASSTT.COMMR. OF INCOME TAX 1(2) BHOPAL ::: APPELLANT VS SHRI RAM NATH SHARMA BHOPAL ::: RESPONDENT ASSESSEE BY SHRI ASHISH G OYAL AND SHRI N.D. PATWA REVENUE BY SHRI R.A. VERMA DATE OF HEARING 8.12 .2015 DATE OF PRONOUNCEMENT 2 1 . 12 .2015 RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 2 O R D E R PER BENCH IT(SS) A NOS. 124/IND/2014 & 117/IND/2014 BOTH THESE CROSS-APPEALS HAVE BEEN FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF THE LEAR NED CIT(A)-I, BHOPAL DATED 3.1.2014. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. SEARCH AND SEIZURE OPERATIONS U/S 132(1) OF THE ACT WERE CARRIED OUT AT THE PREMISES OF THE ASSES SEE ON 6.9.2005. DURING THE SEARCH CERTAIN DOCUMENTS BELONG ING TO THE ASSESSEE WERE FOUND AND SEIZED. THE ASSESSEE FURNISHED HIS RETURN OF INCOME FOR THE ASSESSMENT YE AR 2006-07 ON 19.2.2007 DECLARING TOTAL INCOME OF RS.1,34,811/-. AFTER ISSUING NOTICES U/S 143(2) AND 142(1) TO THE ASSESSEE, THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED DETERMINING THE TAXABLE INCOME AT RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 3 RS.63,25,234/- ON 31.12.2007. THE LEARNED CIT(A) GAVE PART RELIEF. THE ISSUES ARE DECIDED AS UNDER. 3. GROUND NO. 1 IN THE ASSESSEES APPEAL IS AGAINST CONFIRMING THE ADDITION OF RS.40,000/- TOWARDS UNSECU RED LOAN OF RS.20,000/- (ANIL SHARMA) AND RS.20,000/- (RAJ KUMAR TIWARI). 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SHOWN TO HAVE RECEIVED UNSECURED LOAN OF RS.40,000/- DURING T HE YEAR FROM THE FOLLOWING PERSONS : SHRI ANIL SHARMA RS. 20,000/- SHRI RAJ KUMAR TIWARI RS. 20,000/- RS. 40,000/- THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE DID N OT FILE ANY DETAILS TO PROVE THE IDENTITY AND CREDIT WORTHINES S OF THE ABOVE LOAN CREDITORS AND GENUINENESS OF THE TRANSACTION. HE, THEREFORE, ADDED RS.40,000/- TO THE TOTAL RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 4 INCOME OF THE ASSESSEE AS INCOME FROM UNDISCLOSED SOURCES. 5. THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A) ON THIS ISSUE. THE LEARNED CIT(A) AFTER CONSID ERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT NO AMOUN T WAS ACTUALLY RECEIVED FROM SHRI RAJKUMAR TIWARI AND SHRI ANIL SHARMA AND AS SUCH HE CONFIRMED THE ADDITION IN QUESTION BY HOLDING AS UNDER :- 5.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. IT MAY BE NOTED TH AT UNSECURED LOAN OF RS.20,OOOI- WAS SHOWN TO BE RECEIVED FROM SHRI RAJKUMAR TIWARI AND OF RS.20,OOOI- FROM SHRI ANIL SHARMA. BUT AS ADMITTED BY THE APPELLANT HIMSE LF, THE CHEQUES ISSUED BY SHRI RAJKUMAR TIWARI AND SHRI ANIL SHARMA WERE NOT ENCASHED AND, THEREFORE, LOANS WERE NOT ACTUALLY RECEIVED BY THE APPELLANT FROM SH RI RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 5 RAJKUMAR TIWARI OF RS.20,OOOI- AND FROM SHRI ANIL SHARMA OF RS.20,OOOI-. HOWEVER, THE APPELLANT HAD SHOWN SOURCE OF RS.4O,OOO/- WHILE EXPLAINING THE INVESTMENT IN PROPERTIES AS LOAN RECEIVED FROM SHRI RAJKUMAR TIWA RI AND SHRI ANIL SHARMA OF RS.20,OOOI- EACH. THEREFORE, IF NO AMOUNT WAS ACTUALLY RECEIVED FROM SHRI RAJKUMAR TIWARI AND SHRI ANIL SHARMA, THE INVESTMENT IN PROPERTIES TO THE EXTENT OF RS.40,OOO/- REMAINED UNEXPLAINED. HENCE, ADDITION OF RS.40,OOO/-- SHOWN AS LOANS FROM SHRI RAJKUMAR TIWARI AND SHRI ANI! SHARMA IS CONFIRMED. 6. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD TO PAY DEVELOPMENT FEES FOR THE DEVELOPMENT OF THE PLOTS. THE ASSESSEE, THEREFORE, ASKED ANIL SHARM AND RAJKUMAR TIWARI TO DEPOSIT THE AMOUNT ON BEHALF OF THE ASSESSEE IN THE ACCOUNT OF NAGAR NIGAM RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 6 (GANESH NAGAR SOCIETY). THIS ACCOUNT WAS UNDER THE CONTROL OF THE COLLECTOR AS THE GANESH NAGAR COLONY WAS HELD TO BE UNAUTHORISED. THEREFORE, THE AMOUNT WAS DIRECTLY DEPOSITED IN THE ACCOUNT OF NAGAR NIGAM (GANES H NAGAR SOCIETY). HE SUBMITTED THAT INITIALLY THESE PERSO NS ISSUED CHEQUES ON 12.9.2005. THEREAFTER, THE SEARCH TOOK PLACE ON 16.9.2005. THE CHEQUES WERE NOT ENCASHED BY GANESH NAGAR SOCIETY. THUS, THERE WERE NO CREDITS. NO ADDITION IS, THEREFORE, CALLED FOR. HE SUBMITTED THAT WHILE PREPARING THE RECEIPTS AND PAYMENTS ACCOUNT, THE ASSESS EE HAS SHOWN THE SAME AS RECEIPT AND AS PAYMENT TOWARDS THE PURCHASE OF LAND AT GANESH NAGAR. THIS CAN BE VERIFIE D FROM PAGE 20 OF THE PAPER BOOK. HE SUBMITTED THAT THE SE PARTIES HAD ALSO CONFIRMED THIS FACT. HE SUBMITTED THAT THE BANK ACCOUNTS ARE ALSO GIVEN TO ESTABLISH THAT THE AMOUNT IS NOT CREDITED IN THE BANK ACCOUNTS AND AT PAGES 32 TO 41 OF THE PAPER BOOK CONFIRMATION LETTERS OF THE PARTIES ALONG RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 7 WITH BANK STATEMENTS ARE FILED. HE, THEREFORE, SUBMITT ED THAT NO ADDITION IS CALLED FOR. 8. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD BOTH THE SIDES. THE ASSESSEE HAS SUBMITTED THAT TWO CHEQUES WERE RECEIVED FROM THESE T WO PERSONS TOWARDS PAYMENT TO NAGAR NIGAM WITH REGARD TO PROPERTY AT GANESH NAGAR SOCIETY. THE ASSESSEE HAS ALSO SUBMITTED THAT THESE CHEQUES WERE NEVER ENCASHED. THE ACCOUNTS OF THESE PERSONS WERE FILED TO ESTABLISH THI S FACT. THE COPY OF NAGAR NIGAM GANESH NAGAR COLONY ACCOUNT WAS ALSO FILED. IN VIEW OF THIS FACTUAL POSITION, IT CO ULD BE SAID THAT NEITHER THESE AMOUNTS WERE RECEIVED NOR PAID. HENCE, WE DELETE THE ADDITION. RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 8 10. GROUND NOS. 2 AND 3 OF THE ASSESSEES APPEAL AND GROUND NO. 1 IN THE REVENUES APPEAL READ AS UNDER :- ASSESSEES APPEAL (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE APPELLANT CONSTRUCTED THE HOUSE PROPERTIES WITH THE TOTAL PAYMENT OF RS.16,29,788/- BY THE FOLLOWING FIVE PERSONS :- (A) MANISHA AGRAWAL RS.1,50,000 (B) MRIGENDRA SINGH RS.2,00,000 (C ) P.K. GUPTA RS.2,50,000 (D) SMT.BABAL RS.5,09,788 (E) VINOD BHARGAV RS.5,20,000 RS.16,29,780 (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN RETAINING THE RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 9 ADDITION OF RS. 14,66,809/- OUT OF RS. 16,29,788/- F OR THE SOCALLED CONSTRUCTION DONE BY THE APPELLANT ON THE PLOTS OF SHRI GUPTA AND SMT. BABAL. REVENUES APPEAL ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, TH E CIT(APPEALS) HAS ERRED IN - 1. GIVING RELIEF OF RS. 6,62,979/- OUT OF TOTAL ADDITION OF RS.21,29,788/- ON ACCOUNT OF UNEXPLAINED ADVANCES U/S 68 . 11. DURING THE YEAR THE ASSESSEE HAS SHOWN RECEIPTS F ROM FOLLOWING PERSONS :- (1) MANISHA AGRAWAL RS.1,50,000 (2) MRIGENDRA SINGH RS.2,00,000 (3) P.K. GUPTA RS.2,50,000 (4) SMT. BABAL RS.5,09,788 (5 ) VINOD BHARGAV RS.5,20,000 (6) RUPENDRA MISHRA RS.3,20,000 (7) SIDDHARTH SINGH RS.1,80,000 RS.21,29,788 RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 10 ADVANCES FROM RUPENDRA MISHRA OF RS.3,20,000/- AND SIDDHARTH SINGH RS.1,80,000/- WERE REPAID AND SQUARED UP DURING THE YEAR. HOWEVER, THE ASSESSING OFFICER D ID NOT ACCEPT THE CLAIM OF THE ASSESSEE AND MADE THE ADDITION OF ENTIRE AMOUNT OF RS. 21,29,788/-. 12. THE LEARNED CIT(A) GRANTED PART RELIEF BY HOLDING AS UNDER :- 6.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. THE APPELLANT CONT ENDED THAT HE HAD RECEIVED THE AMOUNTS FROM FOLLOWING PER SONS AGAINST WORK CONTRACT ENTERED WITH THEM FOR CONSTRU CTION OF THEIR HOUSES AS UNDER: S NAME OF PARTY ADVANCE 1 SHRI MANISH AGRAWAL 150000 2 SHRI MIRGENDRA SINGH 200000 3 SHRI P .K. GUPTA 250000 4 SMT. BABAL 509788 5 SHRI VINOD BHARGAVA 520000 TOTAL 1629788 THE APPELLANT FURTHER CONTENDED THAT HE HAD SHOWN P ROFIT RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 11 FROM THE CONSTRUCTION ACTIVITIES UNDERTAKEN BY HIM IN THE SUBSEQUENT A.Y.2007-08. BUT IT IS NOTICED THAT AS P ER THE AGREEMENTS FOR THE WORK CONTRACTS ENTERED WITH THES E PERSONS, THE APPELLANT HAD RECEIVED PAYMENTS FROM T HESE PERSONS IN ACCORDANCE WITH THE STAGE OF CONSTRUCTIO N COMPLETED BY HIM. FOR EXAMPLE, IN THE CASE OF SMT. ANITA GUPTAL O.K. GUPTA, THE TERMS AND CONDITIONS FOR PAY MENTS WERE AS UNDER: : . ,, ( ) ! : . ,, ( ) ' ' # $%' # & ' ( )* +% : . ,, ( ) ,-. : . ,, ( ) /012. )* 32 : . 4,5, () & 3 ) ' . : 6,5, . (7 & 3 .) SIMILARLY IN THE CASE OF SMT. KARUNA BABAL, SHE WAS REQUIRED TO RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 12 MAKE TOTAL PAYMENT OF RS.11 ,51,000/ - AS PER THE AGREEMENT DATED 23.12.2004 AS UNDER: 38 9 : ;*: 1< = > ' . . ,4,/- ( ) 3 8A) : % # 3+B 8 ,,/- ( 8A) : 18 ' & ,5,/- ( & 3 8A) : ! C,5,/- ( D & 3 8A) : & ' ( +% 4,5,/- ( ) & 3 8A) : ,-. )* 32 8 IT MAY BE NOTED THAT TERMS AND CONDITIONS IN OTHER AGREEMENTS WERE ALSO SIMILAR. FROM THE ABOVE, IT IS EVIDENTLY CLEAR THAT THE ABOVE PARTIES HAD GIVEN AMOUNTS TO APPELLANT FOR TH E CONSTRUCTION OF THE HOUSE DEPENDING UPON THE LEVEL O F CONSTRUCTION MADE BY THE APPELLANT. HOWEVER, IT IS NOTICED THAT APPELLAN T HAD NOT SHOWN ANY EXPENDITURE IN HIS RECEIPTS & PAYMENTS ACCOUNT DURING THE YEAR UNDER CONSIDERATION FOR THE INVESTM ENT/ RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 13 EXPENDITURE MADE IN THE CONSTRUCTION ACTIVITIES UND ERTAKEN FOR THESE PARTIES/PERSONS. THE APPELLANT STATED TO HAVE SHOWN INCOME @ 10 % IN THE A. Y .2007 -08 FROM THE CONSTRUCTION ACTIVITIES OF THESE HOUSES. THEREFORE, EVEN IF THE PROFIT ELEMENT OF 10 % IS CONSIDERED, THE APPELLANT HAD INCURRED EXPENDITU RE IN THE CONSTRUCTION OF THESE BUILDINGS AT LEAST IN THE PRO PORTION OF PAYMENT RECEIVED FROM THESE PERSONS DURING THE YEAR . BUT THE EXPENDITURE INCURRED WAS MET OUT OF UNEXPLAINED SOU RCES AS NO EXPENDITURE WAS SHOWN BY THE APPELLANT DURING THE Y EAR UNDER CONSIDERATION. IF THE EXPENDITURE INCURRED BY THE A PPELLANT IS CONSIDERED @ 90 % OF PAYMENTS RECEIVED, THE UNEXPLAINED EXPENDITURE WOULD WORK OUT AT RS.14,66,809/- (90 % OF RS.16,29,788). THUS, THE APPELLANT HAD INCURRED UNE XPLAINED EXPENDITURE IN THE CONSTRUCTION OF HOUSES OF RS.14, 66,809/- [OR THESE PERSONS. THEREFORE. ADDITION TO THE EXTENT OF RS.14,66,809/- IS CONFIRMED. IN THE RESULT, THE APPELLANT GETS A R ELIEF OF RS.L,62,979/- (RS.16,29,788 - RS.14,66,809) IN CASE OF ADDITIONS RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 14 ON ACCOUNT OF ABOVE MENTIONED FIVE PERSONS. AS REGA RDS THE ADDITION ON ACCOUNT OF UNEXPLAINED CREDITS OF RS.3, 20,000/- IN THE NAME OF SHRI RUPENDRA MISHRA, IT MAY BE NOTED THAT THE AO NOTICED ENTRY OF RS. 3,20,000/- IN RECEIPTS & PAYMENTS ACCOUNT OF THE APPELLANT IN THE NAME OF SHRI RUPENDRA MISHR A. HOWEVER, AS EXPLAINED BY THE APPELLANT, AN AMOUNT OF RS.80,000/- WAS INITIALLY GIVEN TO SHRI RUPENDRA MISHRA BY THE APPE LLANT WHICH WAS RETURNED BY SHRI RUPENDRA MISHRA BY ISSUING TWO CHEQUES OF RS. 4O,OOO/- EACH. ON PERUSAL OF BANK STATEMENT OF THE APPELLANT WITH ORIENTAL BANK OF COMMERCE, IT IS NOT ICED THAT THESE CHEQUES WERE DISHONORED THREE TIMES AND WERE ENCASH ED ONLY WHEN PRESENTED FOUR TIMES. IN THE RECEIPTS & PAYMENTS ACCOUNT, THE TOTAL AMOUNT OF RS.3,20,000/- (4 TIMES X RS.80, 000) OF CREDITS AND DETAILS IN BANK ACCOUNT WAS APPEARING IN BOTH R ECEIPTS AS WELL AS PAYMENT SIDE. THUS, IN FACT THE AMOUNT OF RS.80,000/- WAS INITIALLY GIVEN BY THE APPELLANT TO SHRI RUPEND RA MISHRA WHICH WAS RECEIVED BACK BY TWO CHEQUES OF RS.4O,OOOI-. HENCE, RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 15 NO ADDITION OF RS.3,20,000/- WAS REQUIRED ON ACCOUNT OF UNEXPLAINED CREDITS IN THE NAME OF SHRI RUPENDRA MI SHRA. THEREFORE, THE ADDITION OF RS.3,20,000/- IS DELETED. AS REGARDS ADDITION OF RS.L, 80,000/- OF CREDIT IN THE NAME OF SHRI SIDDHARTH SINGH, THE APPELLANT FURNISHED A CAN CELLATION OF TRANSACTION DOCUMENT AT PAGE NO. 51 OF THE PAPER BO OK ENTERED ON 10.09.2005. THIS DOCUMENT CLEARLY INDICATES THAT TH E APPELLANT HAD INITIALLY PAID RS.30,000/- ON 05.05.2005 AND RS.1,50,000/- ON 20.05.2005 TOTALING TO RS.1,80,000/- TO DR. SIDDHARTH SINHA REGARDING PURCHASE OF TWO PLOT NOS.114 & 115 OF GANESH NAGAR. HOWEVER, THE DEAL DID NOT MATERIALIZE AND THE APPEL LANT HAD RECEIVED BACK THE AMOUNT OF RS.L ,80,000/- FROM DR. 'SIDDHARTH SINHA ON 10.09.2005 AND THE DEAL WAS CANCELLED. THU S, IT IS CLEAR THAT THE APPELLANT HAD NOT RECEIVED ANY CREDIT FROM SHRI SIDDHARTH BUT IN FACT THE APPELLANT HAD INITIALLY PAID RS.1,80,000/- TO HIM WHICH WAS SUBSEQUENTLY RECEIVED BACK AND, THEREFORE , THE TRANSACTION OF RECEIPT AS WELL AS PAYMENT OF RS.L ,80,000/- WERE RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 16 APPEARING IN THE RECEIPTS & PAYMENTS STATEMENT. SINCE, THERE WAS NO CASH CREDITS RECEIVED BY THE APPELLANT FROM SHRI SIDDHARTH OF RS.L ,80,000/- DURING THE RELEVANT PREVIOUS YEAR, NO ADDITION COULD BE MADE U/S 68 OF THE ACT. HENCE, ADDITION OF RS.1,80,000/- IS DELETED. 13. WE HAVE HEARD BOTH THE SIDES. THE ASSESSEE HAS SHOW N RECEIPT OF RS.21,29,788/- FROM THE SAME PERSONS. THE ASSESSEE HAS ALSO SUBMITTED CONFIRMATION IN THIS REGARD. SO THERE IS NO QUARREL REGARDING THE RECEIPT OF THE AMOUN T. THE LEARNED CIT(A) HAS PARTLY GRANTED RELIEF TO THE ASSESSEE . THE AMOUNT FROM MANISH AGRAWAL OF RS.1,50,000/- RECEIVED THROUGH CHEQUE NO. 973484 DATED 17.11.2005 B Y A JOINT CHEQUE FOR RS.3 LACS IN THE NAME OF ASHVANI NATH SHARMA AND RAM NATH SHARMA PERTAIN TO POST SEARCH PERIOD AS THE SURVEY WAS CONDUCTED ON 16.9.2005. SECONDLY, THIS AMOUNT WAS RECEIVED AS ADVANCE TOWARDS THE JOB WORK AT HER DUPLEX NO. 17 AT H.K. HOUSE BANJAR I. RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 17 THE ASSESSEE HAS CARRIED OUT THE JOB WORK IN THE SUBSEQUENT PERIOD RELEVANT TO THE ASSESSMENT YEAR 2007- 08 AND THE INCOME HAS BEEN OFFERED FOR TAXATION AS PER THE PROVISIONS OF SECTION 44AD OF THE ACT @ 8%. THE CONFIRMATION LETTER IN THIS REGARD WAS ALSO SUBMITTED F ROM SMT. MANISHA AGRAWAL. THEREFORE, IN OUR CONSIDERED VIE W THE LEARNED CIT(A) IS NOT JUSTIFIED IN SUSTAINING 90 % ADDITION FROM THIS AMOUNT. IN THE CASE OF MRIGENDRA SIN GH THE ASSESSEE RECEIVED RS.2 LACS, THE CONFIRMATION WAS FILED ALONG WITH COMPLETE ADDRESS, PAYMENT WAS RECEIVED THROUGH CHEQUE. THIS AMOUNT WAS ALSO PERTAINING TO THE POST SEARCH PERIOD. THE ASSESSEE HAS OFFERED THE INCOM E FROM BRICK WORK AND PLASTER AT PLOT AT JANKI NAGAR AND THE INCOME HAS BEEN OFFERED. SHRI MRIGENDRA SINGH HAS ALSO CONFIRMED THAT THE SOURCE OF THE SOURCE WAS FROM SUPERANNUATION FUND RECEIVED FROM HIS FATHER WHO RETIR ED DURING THE RELEVANT PERIOD. KEEPING THESE FACTS IN VI EW, WE RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 18 ARE OF THE VIEW THAT THE LEARNED CIT(A) WAS NOT JUSTIFI ED IN SUSTAINING THIS ADDITION. 14. WITH REGARD TO THE RECEIPT FROM RUPENDRA MISHRA, W E HAVE GONE THROUGH THE FACTS OF THE ISSUE AND FIND THAT THE LEARNED CIT(A) HAS RIGHTLY DELETED THIS ADDITION AS TH E AMOUNT OF RS. 80 LACS WAS INITIALLY GIVEN BY THE ASSESSE E TO SHRI MISHRA WHICH WAS RECEIVED BACK BY TWO CHEQUES OF RS.40,000/-. THESE CHEQUES WERE ENCASHED ONLY WHEN PRESENTED ON 4 TH TIME . THUS THESE ENTRIES IN BANK ACCOUNT WERE FOR THE RETURN OF CHEQUES. T HEREFORE, THE LEARNED CIT(A) HAS RIGHTLY DELETED THIS ADDITION. 15. WITH REGARD TO DELETION OF RS. 1,80,000/- FROM S HRI SIDDHARTH SINGH, WE UPHOLD THE ORDER OF THE LEARNED C IT(A) AS THE ASSESSEE RECEIVED AMOUNT FROM SIDDHARTH SINGH WHICH WAS SUBSEQUENTLY RETURNED BACK AND BOTH THE ENTRIES ARE APPEARING IN RECEIPT AND PAYMENT STATEMENT FOR RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 19 THE RELEVANT PERIOD. AS THE AMOUNT WAS RECEIVED BACK WHICH WAS PAID TOWARDS THE PURCHASE OF TWO PLOTS 114 AND 115, GANESH NAGAR, ON CANCELLATION OF DEAL. THEREFORE, TH E LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. 16. IN THE CASE OF .K. GUPTA THE AMOUNT OF RS. 9,50,00 0/- WAS RECEIVED OUT OF WHICH RS. 7 LACS WAS RECEIVED DURI NG THE RELEVANT PERIOD RELEVANT TO THE ASSESSMENT YEAR 200 5- 06 AND BALANCE DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2006-07. ALL THESE PAYMENTS WERE RECEIVED THROUGH CHEQUE. THE ASSESSEE HAS SHOWN INCOME FROM THIS WORK IN THE ASSESSMENT YEAR 2007-08. AS WE HAVE ALREADY HELD IN THE ASSESSMENT YEAR 2005-06 THAT THESE ADDITIONS HAVE BEEN MADE WITHOUT ASCERTAINING THE RELEVANT FACTS, THEREFORE, WE DIRECT TO DELETE THE SAM E. 17. SIMILARLY IN THE CASE OF SMT. BABAL WE HAVE DELETED THE ADDITION IN THE ASSESSMENT YEAR 2005-06. THE ASSESSEE HAS RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 20 SHOWN INCOME FROM CONSTRUCTION OF DUPLEX IN THE ASSESSMENT YEAR 2007-08. THE REVENUE HAS MADE THE ADDITION ONLY ON THE BASIS OF AGREEMENT BUT NO FACTUAL INFORMATION WAS COLLECTED WITH REGARD TO STAGE OF CONSTRUCTION. THEREFORE, FOR THE SAME REASONS, WE DIRECT TO DELETE THE ADDITION. 18. WITH REGARD TO ADVANCE OF RS. 5,20,000/- FROM VINO D BHATNAGAR WHICH WAS RECEIVED FOR CONSTRUCTION OF HOUSE AT A PLOT IN NAVIN DUR SANCHAR COLONY AS PER THE AGREEMENT DATED 30.11.2004. SHRI VINOD BHATNAGAR HAS CONFIRMED THAT HE HAS GIVEN THIS ADVANCE TO THE ASSESSEE FOR CONSTRUCTION OF HOUSE WHICH WAS OUT OF THE LOAN OBTAIN ED FROM ORIENTAL BANK, M.P. NAGAR, BHOPAL OF RS. 5 LACS AND RS. 20,000/- WAS PAID FOR ADDITIONAL CONSTRUCTION WORK AND THE ASSESSEE HAS DECLARED INCOME FROM THIS HOUSE PROPE RTY IN THE ASSESSMENT YEAR 2007-08 AS PER THE PROVISIONS O F SECTION 44AD. THE ASSESSEE FILED THE AFFIDAVIT, COPY O F RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 21 AGREEMENT AND COPY OF RETURN OF INCOME FOR THE ASSESSM ENT YEAR 2007-08. THE REVENUE AUTHORITIES HAVE FAILED TO CONTROVERT THESE EVIDENCES. WE, THEREFORE, FIND NO MERIT IN SUSTAINING THE SAME. 19. GROUND NO. 4 IN IT(SS) A NO. 124/IND/2014 OF TH E ASSESSEE AND GROUND NO. 2 IN THE REVENUES APPEAL READ AS UNDER :- ASSESSEE APPEAL 4 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.19,55,832/- TOWARDS THE SHARE OF THE APPELLANT IN THE SOCALLED UNDECLARED INCOME ACCEPTED BY THE APPELLANT DURING THE COURSE OF SEARCH. REVENUES APPEAL 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 22 2. GIVING RELIEF OF RS.19,85,298/- OUT OF TOTAL ADDITION OF RS.39,41,130/- ON ACCOUNT OF UNEXPLAINED ADVANCES U/S 68. 20. AN IDENTICAL ISSUE WAS INVOLVED IN THE CASE OF SHR I SHAMBHU NATH SHARMA IN IT(SS)A NOS. 644 & 627/IND/2014 WHEREIN AFTER DISCUSSING THE ISSUE AT LE NGTH IN PARAS 34 TO 54 OF OUR ORDER DATED 9 TH DECEMBER, 2015, WE HAVE DECIDED THE SAME IN FAVOUR OF THE ASSESSEE. WE, THEREFORE, FOLLOWING THE REASONINGS GIVEN THEREIN, D ECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. 21. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. 22. IN THE DEPARTMENTAL APPEAL THE FOLLOWING GROUNDS HAV E BEEN TAKEN BY THE REVENUE :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(APPEAL) HAS ERRED IN - RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 23 (I) GIVING RELIEF OF RS.6,62,979/- OUT OF TOTAL ADDITION OF RS.21,29,788/- ON ACCOUNT OF UNEXPLAINED ADVANCES U/S 68. (II) GIVING RELIEF OF RS.19,85,298/- OUT OF TOTAL ADDITION OF RS.39,41,130/- ON ACCOUNT OF UNEXPLAINED ADVANCES U/S 68. 23. SO FAR AS GROUND NO. 1 IS CONCERNED, THE ASSESSI NG OFFICER OBSERVED THAT DURING THE YEAR UNDER CONSIDER ATION THE ASSESSEE HAD SHOWN ADVANCES RECEIVED TOTALING TO RS.21,29,788/- FROM FOLLOWING PERSONS -: S.NO. NAME OF PARTY ADVANCE (RS.) 1 SHRI MANISH AGR AWAL 1,50,000 2 SHRI MIRGENDRA SINGH 2,00,000 3 SHRI P.K. GUPTA 2,50,000 4 SMT. BABAL 5,09,788 5 SHRI RUPENDRA MISHRA 3,20,000 6 SHRI SIDHART SINGH 1,80,000 7 SHRI VINOD BHARGAVA 5,20,000 RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 24 TOTAL 21,29,788 THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PROVE THE GENUINENESS OF THE ADVANCES AND THE LAND/ PROPERTIES FO R WHICH THESE ADVANCES HAD BEEN TAKEN. IN RESPONSE THE APPELLANT FURNISHED CONFIRMATION OF SHRI MIRGENDRA SING H BEFORE THE AO. NO CONFIRMATION AND THE PURPOSE OF ADV ANCE GIVEN WERE FURNISHED FOR OTHER PERSONS. IT WAS ALSO N OT FURNISHED BY THE ASSESSEE AS TO WHETHER THE ABOVE ADVANCES WERE GIVEN IN CASH OR THROUGH CHEQUES. IN REGAR D TO ADVANCES FROM SHRI RUPENDRA MISHRA OF RS.3,20,000/- AND FROM SIDDHARTH SINGH OF RS.1,80,000/- IT WAS NOTIC ED THAT THESE WERE REPAID AND SQUARED UP DURING THE YEAR. IN VIEW OF THE ABOVE, THE AO NOTED THAT THESE ADVANCES HAV E BEEN OBTAINED JUST TO FULFILL THE SOURCES OF REQUIREM ENT AS TO THE PAYMENT REQUIRED TO BE MADE TO M/S HARE KRISHNA COLONIZERS PVT. LTD. THEREFORE, IN THE ABSENCE OF TH E RELEVANT DETAILS AS TO FOR WHICH PROPERTIES THESE ADVANC ES RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 25 HAD BEEN RECEIVED AND THE CREDIBILITY AND GENUINENESS OF THESE PERSONS ALSO REMAINED UNVERIFIABLE, THE ASSESSIN G OFFICER TREATED THESE ADVANCES RECEIVED TOTALING TO RS.21,29,788/- AS UNEXPLAINED ADVANCES U/S 68 OF THE A CT AND ADDED THE SAME TO THE RETURNED INCOME OF THE ASSESSEE. 24. FELT AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A). BEFORE THE LEARNED CIT(A) IT WAS SUBMITTED BY THE ASSESSEE IN RESPECT OF EACH PARTY AS UNDER : 1.SMT. MANISHA AGRAWAL RS.1,50,000/- IN THIS CASE, THE ASSESSEE RECEIVED THE AMOUNT OF RS. 1,50,000/- THROUGH CHEQUE NO. 973484 DTD. 17/11/ 2005 (JOINT CHEQUE FOR RS. 3,00,000/- IN THE NAME OF ASWANI NATH & RAM NATH SHARMA ) FROM HER BANK A/C TOWARDS ADVANCE OF JOB WORK IN HER DUPLEX NO. 17 AT RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 26 H.K. HOMES, BANJARI, WHICH IS REFLECTED IN THE RECEI PTS AND PAYMENT A/C OF THE APPELLANT FOR THE PERIOD 01-04- 2005 TO 31-03-2006. THE SAID CHEQUE HAS BEEN ENCASHED IN THE JOINT BANK A/C OF RAM NATH & ASHWINI NATH NO. 3342 IN SHAHPURA BRANCH OF PUNJAB & SINDH BANK . THE ASSESSEE CARRIED ON THE JOB WORK IN THE SUBSEQUENT ASSESSMENT YEAR 2007-08 AND REFLECTED THE INCOME FROM THIS JOB WORK AT 8% OF THE RECEIPTS U/ S. 44AD OF THE INCOME TAX ACT. THE CONFIRMATION LETT ER FROM MANISHA AGRAWAL, THE COPY OF BANK A/C OF THE APPELLANT WITH NO. 2936 & 3342 WITH THE SHAHPURA BRANCH OF PUNJAB & SINDH BANK SHOWING THE CREDIT IN THE NAME OF MANISHA AGARWAL , COPY OF SALE A/C IN THE BOOKS OF HARE KRISHNA COLONIZERS, COPY OF RETURN OF THE F.YR. 2007-08 OF THE APPELLANT SHOWING PROFIT AT 8% AND REVISED COPY OF RECEIPTS & PAYMENT ACCOUNTS FOR THE CURRENT ASSESSMENT YEAR WERE FILED BEFORE THE LEARNED RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 27 CIT(A). THE ASSESSEE SUBMITTED THAT ON IDENTICAL FACT S THE CREDITS IN THE NAME OF ASHWINI NATH HAVING THE SAME JOINT BANK A/C HAS BEEN ACCEPTED BY LEARNED CIT(A. THE ASSESSE, THEREFORE, SUBMITTED THAT THE CR EDIT OF RS. 1,50,000/- BE KINDLY ACCEPTED AND THE ADDIT ION MADE BY THE ASSESSING OFFICER BE DELETED. 2. SHRI MRIGENDRA SINGH ( RS. 2,00,000/- ) IN THIS CASE, THE ASSESSING OFFICER OBSERVED FROM T HE TENTATIVE BALANCE SHEET THAT THE APPELLANT OBTAINED TH E ADVANCE OF RS. 2,00,000/- FROM MRIGENDRA SINGH. THE ASSESSEE FILED THE CONFIRMATION LETTER WITH HIS CO MPLETE ADDRESS SHOWING THE FACT THAT SHRI MRIGENDRA SINGH WAS CARRYING ON THE BUSINESS AND THAT THE PAYMENT WAS MADE THROUGH CHEQUE. THE ASSESSING OFFICER DID NOT RAISE ANY QUERY BUT ULTIMATELY, MADE THE ADDITION OF RS. 2,00,000/- IN THE HANDS OF THE ASSESSEE. THE APPELLANT HAS FILED THE AFFIDAVIT OF SHRI MRIGENDRA SINGH, WHO HAS RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 28 STATED THAT HE HAD GIVEN THE CHEQUE OF RS. 2,00,000/- FOR BRICK WORK AND PLASTER ON HIS PLOTS AT JANKI NAGAR TO THE APPELLANT , WHICH WAS CARRIED ON BY HIM AND WA S COMPLETED IN THE ASSESSMENT YEAR 2007-08.HE HAS ALSO AFFIRMED THE SOURCE OF RS. 2,00,000/ , WHICH WAS TH E SUPERANNUATION FUNDS RECEIVED BY HIS FATHER ON HIS RETIREMENT AS DY. S.P. FROM POLICE DEPTT. THE CO PY OF THE RETURN OF THE APPELLANT FOR A .YR. 2007-08 AND THE AFFIDAVIT OF SHRI MRIGENDRA SINGH AND THE COPY OF BANK A/C SHOWING THE ABOVE SAID RECEIPT ARE SIMPLY IN SUPPORT OF THE CONTENTION ALREADY MADE BEFORE THE ASSESSING OFFICER THE ASSESSEE SUBMITTED THAT IN VIEW OF THE ABOVE, THE ADDITION MADE AT RS. 2,00,000/- BE DELETED. 3.SHRI D.K. GUPTA AND NOT P.K. GUPTA OF RS.2,50,000 /- THE ASSESSING OFFICER FOUND THAT THERE IS THE CREDIT OF RS. 2,50,000/- IN THE NAME OF SHRI D.K. GUPTA DURING T HE RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 29 A/C YEAR 2005-06 RELEVANT TO ASSMT. YEAR 2006-07 AND THAT THE ASSESSEE DID NOT FILE ANY EVIDENCE IN SUPPO RT OF THE SAME AND THEREFORE, HAS MADE THE ADDITION OF RS. 2,50,000/- IN THE HANDS OF THE ASSESSEE. THE ASSESSEE SUBMITTED THAT THE OBSERVATION OF THE ASSESSING OFFICE R ARE NOT CORRECT. THE FACT OF THE MATTER IS COPY OF AGREEMENT DTD. 03-11-2004 WAS FILED IN THE ASSMT. PROCEEDINGS FOR ASSMT. YEAR 2005-06 AND THE SAME HAS BEEN DISCUSSED IN THE ASSMT. ORDER FOR ASSMT. YEAR 2005-06 . THE AGREEMENT FOR CONSTRUCTION OF COMPLET E DUPLEX ON THE PLOT NO. 31/7 OF THE SAID SHRI GUPT A DTD. 30-11-2004 BETWEEN THE APPELLANT AND WIFE SMT. ANITA GUPTA AND THE APPELLANT FOR THE CONSIDERATION OF RS. 9,50,000/-. THE PAYMENT OF RS. 7,00,000/ WAS MADE IN THE ASSESSMENT YEAR 2005-06 AND THE BALANCE PAYMENT HAS BEEN MADE IN THE ASSMT. YEAR 2006-07. ALL THE PAYMENTS ARE MADE THROUGH CHEQUES AS EVIDENT RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 30 FROM COPY OF BANK A/C OF THE APPELLANT WHEN THEY GO ENCASHED . THE ASSESSEE HAS SHOWN THE INCOME FROM THE ABOVE SAID WORK OF RS. 9,50,000/- IN THE ASSESSMENT YEAR 2007-08. THE COPY OF THE SAID AGREEMENT WITH SMT. GUPTA AND RETURN FOR ASSESSMENT YEAR 2007-08 OF THE APPELLANT ARE ENCLOSED HEREWITH. IT WAS SUBMITTED THAT FROM THE ABOVE FACTS, IT IS EVIDENT THAT THE RECEIPT OF RS. 2,50,000/- FROM SHRI ANITA GUPTA/D.K. GUPTA IS EXPLAINABLE. 4. SMT. BABAL (5,09,788/-) THE LD. ASSESSING OFFICER FOUND THE CREDIT OF RS. 5,09,788/- DURING THE A/C YEAR RELEVANT TO THE ASSMT. YEAR 2006-07. HE OBSERVED THAT THE ASSESSEE DID NOT FI LE ANY EVIDENCE AND THEREFORE, HE TREATED THE SAME AS UNEXPLAINED AND MADE THE ADDITION OF RS.5,09,788/-. THE ASSESSEE ALSO SUBMITTED THAT SMT. BABAL HAD ENTERED INTO AN AGREEMENT WITH THE APPELLANT ON 23-12 - RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 31 2004 TO SELL THE CONSTRUCTED DUPLEX ON PLOT NO. 165 IN CHANAKYAPURI FOR THE CONSIDERATION OF RS. 11,51,000 /- . OUT OF THE SAME, THE PLOT WAS GOT REGISTERED FROM CHANAKYAPURI GRIH NIRMAN SAMITI FOR THE AMOUNT OF RS. 1,71,211(RS. 1151000- RS. 979789) AND THEN THE ASSESSEE CONSTRUCTED THE DUPLEX FOR THE CONSIDERATI ON OF RS. 9,79,789/- ON THE SAID BUILDING . OUT OF THE SAID TOTAL AMOUNT OF RS. 978789/-, THE ASSESSEE RECEIVED TH E AMOUNT OF RS. 470001/- IN THE ASSMT. YEAR 2005-06 AND THE BALANCE OF RS. 5,09,788/- , WERE RECEIVED I N THE ASSMT. YEAR 2006-07. THE ASSESSEE HAS SHOWN THE INCOME FROM CONSTRUCTION OF DUPLEX FOR RS. 9,79,7 89/- IN THE ASSESSMENT YEAR 2007-08 AS EVIDENT FROM THE COPY OF THE RETURN OF THE APPELLANT FOR THE ASSESSMENT YEAR 2007-08. THE COPY OF THE AGREEMENT WITH SMT. BABAL AND COPY OF THE ABOVE SAID RETURN IS FILED AS FURTHER EVIDENCE IN SUPPORT OF THE CONTENTION RAISED RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 32 BEFORE THE A.O. IT WAS SUBMITTED THAT FROM THE ABOVE SAID FACTS, IT WILL BE EVIDENT THAT THE RECEIPT OF RS . 5,09,788/- RECEIVED DURING THE A/C YEAR ARE EXPLAINABL E 5. RUPENDRA MISHRA - RS.3,20,000/- THE ASSESSING OFFICER FOUND THE DEBIT AND CREDIT ENT RIES OF RS.3,20,000/- IN THE RECEIPTS AND PAYMENTS A/C OF THE ASSESSEE. SINCE, THERE WAS NO CONFIRMATION FROM THE CREDITOR, THE LD. ASSESSING OFFICER TREATED THE S AME AS THE CREDIT SQUARED UP DURING THE A/C YEAR AND MADE THE ADDITION OF RS. 3,20,000/- IN THE HANDS OF THE APPELLANT. IN THIS CONNECTION, IT IS SUBMITTED THAT THE COPY O F THE BANK STATEMENT OF THE APPELLANT WAS ALREADY ON RECORD AND THE APPELLANT HAD EXPLAINED THAT THE APPELLANT HAD ADVANCED THE CASH OF RS. 80,000/- ON 20-06-2005 TO SHRI RUPENDRA MISHRA, WHICH WERE RETURNED TO THE RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 33 APPELLANT THROUGH CHEQUE . THESE CHEQUES ISSUED FOR RS. 40,000/- EACH BOUNCED THREE TIMES AND THE REPAYMENT WAS ULTIMATELY RECEIVED BACK ON 03-10- 2005 , WHICH WERE WITHDRAWN BY THE APPELLANT ON 05 - 10-2005 . ALTHOUGH, THE BANK A/C AND EXPLANATION OF THE APPELLANT WAS ON RECORD, THE LD. ASSESSING OFFICE R DID NOT ACCEPT THE VERSION OF APPELLANT ONLY FOR THE R EASON THAT THERE WAS NO CONFIRMATION LETTER FROM SHRI RUPEND RA MISHRA. IN SUPPORT OF THE EXPLANATION GIVEN BEFORE ASSESSING OFFICER, THE AFFIDAVIT AND DETAILS OF BOUNCE D CHEQUES ARE ENCLOSED HEREWITH ALONG WITH THE BANK A/C OF THE APPELLANT AS THE EVIDENCE . ON PERUSAL OF T HE SAME, IT MAY BE SEEN THAT ALL THE AMOUNT OF RS.3,20,000/- IS EXPLAINABLE. ON THE ABOVE FACTS, IT MAY BE SEEN THAT THERE IS NO QUESTION OF SQUARED UP CREDIT BUT OF SQUARED UP DEBIT. 6. SIDDHARTH SINGH ( RS. 1,80,000/-) RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 34 THERE WAS THE CREDIT AND DEBIT OF RS. 1,80,000/- IN THE RECEIPTS/PAYMENTS A/C IN THE NAME OF SHRI SIDDHARTH . THE LD. ASSESSING OFFICER DID NOT ACCEPT THE SUBMISS ION OF THE APPELLANT, THAT IT WAS THE AMOUNT RECEIVED AS ADVANCE FOR SALE OF PLOTS AND THAT IT WAS RETURNED. HE OBSERVED THAT THE AMOUNT HAS BEEN SHOWN AS SQUARED UP CREDIT AS THE APPELLANT HAD TO DEPOSIT THE AMOUNT WITH M/S. HARE KRISHNA COLONISERS. IN THIS CONNECTION, IT WAS SUBMITTED THAT THE DOUB T RAISED BY THE ASSESSING OFFICER IS PATENTLY WRONG AS THE APPELLANT HAS NOT MAINTAINED ANY REGULAR CASH BOOK AND IT WAS NOT NECESSARY FOR HIM TO CREATE AVAILABILITY O F CASH TO MAKE THE PAYMENT TO ANY PERSON AND THEN TO RETURN HIM BACK . THE FACT OF THE MATTER IS THAT SINCE THE CREDIT AND DEBIT OF RS.1,80,000/- BOTH WERE IN CASH AN D NO PAPER RELATING THE ABOVE SAID TRANSACTION WAS FOUND /SEIZED DURING THE COURSE OF SEARCH. IT WAS NOT AT ALL RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 35 NECESSARY FOR THE APPELLANT TO MANIPULATE THE TRANSACTION OR TO REFLECT THE TRANSACTION AT ALL. THE APPELLANT HIMSELF HAS SHOWN THE TRANSACTION AS IT HAD ACTUALLY TAKEN PLACE. IN SUPPORT OF THE CLAIM OF THE APPELLANT, THE COPY OF RECEIPT/ CANCELLATION FROM SIDDHARTH SINHA DTD. 10-09-2005 IS ENCLOSED HEREWITH , WHICH WILL INDICATE THAT SHRI SINHA HAD PAID RS. 1,80,000/- AS ADVANCE FOR PURCHASE OF PLOT NO. 114 & 115 IN GANESH NAGAR COLONY TO THE APPELLANT BUT WHEN HE FOUND THAT THE REGISTRATION OF SALE DEED CAN NOT BE MADE, HE TOOK HIS MONEY BACK AND THE APPELLANT REFLECTED THE SAID TRANSACTION IN THE RECEIPTS/PAYMENT S ACCOUNT . IN VIEW OF THE ABOVE, IT MAY BE SEEN THAT THE AMOUNT OF RS. 1,80,000/- IS EXPLAINABLE. 7. VINOD BHATNAGAR - RS.5,20,000/- THE ASSESSING OFFICER OBSERVED THAT THERE IS THE C REDIT OF RS. 5,20,000/- IN THE NAME OF SHRI VINOD BHATNAGAR , RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 36 WHO HAD PAID THE ADVANCE FOR CONSTRUCTION OF HOUSE O N THE PLOT IN NAVEEN DOOR SANCHAR COLONY, AS PER AGREEMENT DTD. 30-11-2004 DURING THE A/C YEAR. THE COPY OF AGREEMENT WAS FILED BEFORE THE ASSESSING OFF ICER BUT HE DID NOT ANY COGNIZANCE OF THE SAME AND DID NO T ACCEPT THE CREDIT OF RS. 5,20,000/- AS EXPLAINED AND MADE THE ADDITION OF RS. 5,20,000/- IN THE HANDS OF THE APPELLANT. THE ASSESSEE ALSO FILED THE AFFIDAVIT OF SHRI VINOD BHANTNAGAR WHO HAS CONFIRMED THAT THERE WAS AN AGREEMENT DATED 30-11-2004 FOR THE CONSTRUCTION O F HOUSE PROPERTY FOR CONSIDERATION OF RS. 5.00 LAKHS , WHICH WERE PAID DURING THE F.YR. 2005-06 AFTER OBTAINING THE LOAN FROM ORIENTAL BANK OF M.P. NAGAR BRANCH, BHOPAL AND THAT RS. 20,000/- WERE FURTHER PAID FOR THE ADDITIONAL CONSTRUCTION DURING THE SAID PERIOD. THE HANDING OVER OF CONSTRUCTED HOUSE PROP ERTY RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 37 IS IN THE ASSMT. YEAR 2007-08 , WHEN THE INCOME IS ALSO SHOWN U/S. 44AD. THE COPY OF THE AFFIDAVIT , COPY OF AGREEMENT AND COPY OF RETURN FOR ASSMT. YEAR 2007-0 8 WERE ALSO FILED BEFORE THE LEARNED CIT(A). ON THE BASIS OF THE ABOVE SUBMISSIONS, THE ASSESSEE SUBMITTED THAT THE ADDITION OF RS.21,29,786/- MAY PLEASE BE DELETED. 25. THE LEARNED LEARNED CIT(A) AFTER CONSIDERING THE OBSERVATIONS OF THE ASSESSING OFFICER OBSERVED AS UND ER :- 6.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. THE APPELLANT CONTENDED THAT HE HAD RECEIVED THE AMOUNTS FROM FOLLOWING PERSONS AGAINST WORK CONTRACT ENTERED WITH THEM FOR CONSTRUCTION OF THEIR HOUSES AS UNDER : S.NO. NAME OF PARTY ADVANCE (RS.) 1 SHRI MANISH AGRAWAL 150000 2 SHRI MIRGENDRA SINGH 200000 3 SHRI P.K. GUPTA 250000 RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 38 4 SMT. BABAL 509788 5 SHRI VINOD BHARGAVA 520000 TOTAL 1629788 THE APPELLANT FURTHER CONTENDED THAT HE HAD SHOWN PROFIT FROM THE CONSTRUCTION ACTIVITIES UNDERTAKEN B Y HIM IN THE SUBSEQUENT A.Y.2007-08. BUT IT IS NOTICED THAT AS PER THE AGREEMENTS FOR THE WORK CONTRACTS ENTERED WITH THESE PERSONS, THE APPELLANT HAD RECEIVED PAYMENTS FROM THESE PERSONS IN ACCORDANCE WITH THE STAGE OF CONSTRUCTION COMPLETED BY HIM. FOR EXAMPLE, IN THE CASE OF SMT. ANITA GUPTA/ D.K. GUPTA, THE TERMS AND CONDITIONS FOR PAYMENTS WERE AS UNDER : 1- FIYUFK DK DK;Z IW.KZ GKSUS IJ % :- 2]00]000@& (NKS YK[K :I;S) 2- NWLJH NR MKYUS IJ % :- 2]00]000@& (NKS YK[K :I;S) 3- NKSUKSA RYKSA DH BZVKSA DH PQUKBZ ,OA IYKLVJ GKSUS IJ % :- 2]00]000@& (NKS YK[K :I;S) 4- YKSFJAX GKSUS IJ % :- 2 ]00]000@& (NKS YK[K :I;S) 5- FIQFUFLAAX ,OA ITS'KU IJ % :- 1 ]50]000@& (,D YK[K IPKL GTKJ DQY ;KSX :I;S % :- 9]50]000@ & (UKS YK[K IPKL GTKJ :I;S)** RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 39 SIMILARLY IN THE CASE OF SMT. KARUNA BABAL, SHE WAS REQUIRED TO MAKE TOTAL PAYMENT OF RS.11,51,000/- AS PER THE AGREEMENT DATED 23.12.2004 AS UNDER : FTLESA DZSRK FODZSRK DKS FUEU IZDKJ LS HKQXRKU DJS XK %& 1- 2]01]000@& ( :IK;S NKS YK[K ,D GTKJ EK=K) % IYKV DH JFTLVH DS LE; 2- 2]00]000@& ( :IK;S NKS YK[K :I;S EK=K) % FIYUFK RD FUEKZ.K DK;Z IGQPUS IJ 3- 2]50]000@& ( :IK;S NKS YK[K IPKL GTKJ :I;S EK=K) % NWLJH NR MYUS IJ 4- 3]50]000@& ( :IK;S RHU YK[K IPKL GTKJ :I;S EK=K) % PQUKBZ IYKLVJ DK DK;Z IW.KZ GKSUS IJ 5- 1]50]000@& ( :IK;S ,D YK[K IPKL GTKJ :I;S EK=K) % YKSFJAX ,OA ITS'KU DS LE; IJ IT MAY BE NOTED THAT TERMS AND CONDITIONS IN OTHER AGREEMENTS WERE ALSO SIMILAR. FROM THE ABOVE, IT IS EVIDENTLY CLEAR THAT THE ABOVE PARTIES HAD GIVEN AMOUNTS TO THE APPELLANT FOR THE CONSTRUCTION OF THE HOUSE DEPENDING UPON THE LEVEL OF CONSTRUCTION MADE BY THE APPELLANT. HOWEVER, IT IS NOTICED THAT APPELLANT HAD NOT SHOWN ANY EXPENDITURE IN HIS RECEIPTS & PAYMENTS ACCOUNT DURING THE YEAR UNDER CONSIDERATION FOR THE INVESTMENT/ EXPENDITURE MADE IN THE CONSTRUCTION RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 40 ACTIVITIES UNDERTAKEN FOR THESE PARTIES/PERSONS. THE APPELLANT STATED TO HAVE SHOWN INCOME @ 10 % IN THE A.Y.2007-08 FROM THE CONSTRUCTION ACTIVITIES OF THES E HOUSES. THEREFORE, EVEN IF THE PROFIT ELEMENT OF 10 % IS CONSIDERED, THE APPELLANT HAD INCURRED EXPENDITURE IN THE CONSTRUCTION OF THESE BUILDINGS AT LEAST IN THE PROPORTION OF PAYMENT RECEIVED FROM THESE PERSONS DURING THE YEAR. BUT THE EXPENDITURE INCURRED WAS MET OUT OF UNEXPLAINED SOURCES AS NO EXPENDITURE WAS SHOWN BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION. IF THE EXPENDITURE INCURRED BY THE APPELLANT IS CONSIDERED @ 90 % OF PAYMENTS RECEIVED, THE UNEXPLAINED EXPENDITURE WOULD WORK OUT AT RS.14,66,809/- (90 % OF RS.16,29,788). THUS, THE APPELLANT HAD INCURRED UNEXPLAINED EXPENDITURE IN THE CONSTRUCTION OF HOUSES OF RS.14,66,809/- FOR THESE PERSONS. THEREFORE, ADDITION TO THE EXTENT OF RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 41 RS.14,66,809/- IS CONFIRMED. IN THE RESULT, THE APPELLANT GETS A RELIEF OF RS.1,62,979/- (RS.16,29,788 RS.14,66,809) IN CASE OF ADDITIONS ON ACCOUNT OF ABOVE MENTIONED FIVE PERSONS. AS REGARDS THE ADDITION ON ACCOUNT OF UNEXPLAINED CREDITS OF RS.3,20,000/- IN THE NAME OF SHRI RUPENDRA MISHRA, IT MAY BE NOTED THAT THE AO NOTICED ENTRY OF RS.3,20,000/- IN RECEIPTS & PAYMENTS ACCOUNT OF THE APPELLANT IN THE NAME OF SHRI RUPENDRA MISHRA. HOWEVER, AS EXPLAINED BY THE APPELLANT, AN AMOUNT OF RS.80,000/- WAS INITIALLY GIVEN TO SHRI RUPENDRA MISHRA BY THE APPELLANT WHICH WAS RETURNED BY SHRI RUPENDRA MISHRA BY ISSUING TWO CHEQUES OF RS.40,000/- EACH. ON PERUSAL OF BANK STATEMENT OF THE APPELLANT WITH ORIENTAL BANK OF COMMERCE, IT IS NOTICED THAT THESE CHEQUES WERE DISHONORED THREE TIMES AND WERE ENCASHED ONLY RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 42 WHEN PRESENTED FOUR TIMES. IN THE RECEIPTS & PAYMENTS ACCOUNT, THE TOTAL AMOUNT OF RS.3,20,000/- (4 TIMES X RS.80,000) OF CREDITS AND DETAILS IN BANK ACCOUNT WAS APPEARING IN BOTH RECEIPTS AS WELL AS PAYMENT SIDE. THUS, IN FACT THE AMOUNT OF RS.80,000/- WAS INITIALLY GIVEN BY THE APPELLANT TO SHRI RUPENDRA MISHRA WHICH WAS RECEIVED BACK BY TWO CHEQUES OF RS.40,000/-. HENCE, NO ADDITION OF RS.3,20,000/- WAS REQUIRED ON ACCOUNT OF UNEXPLAINED CREDITS IN THE NAME OF SHRI RUPENDRA MISHRA. THEREFORE, THE ADDITION OF RS.3,20,000/- IS DELETED. AS REGARDS ADDITION OF RS.1,80,000/- OF CREDIT IN THE NAME OF SHRI SIDDHARTH SINGH, THE APPELLANT FURNISHED A CANCELLATION OF TRANSACTION DOCUMENT AT PAGE NO. 51 OF THE PAPER BOOK ENTERED ON 10.09.2005. THIS DOCUMENT CLEARLY INDICATES THAT THE RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 43 APPELLANT HAD INITIALLY PAID RS.30,000/- ON 05.05.2005 AND RS.1,50,000/- ON 20.05.2005 TOTALING TO RS.1,80,000/- TO DR. SIDDHARTH SINHA REGARDING PURCHASE OF TWO PLOT NOS.114 & 115 OF GANESH NAGAR. HOWEVER, THE DEAL DID NOT MATERIALIZE AND THE APPELLANT HAD RECEIVED BACK THE AMOUNT OF RS.1,80,000/- FROM DR. SIDDHARTH SINHA ON 10.09.2005 AND THE DEAL WAS CANCELLED. THUS, IT IS CLEAR THAT THE APPELLANT HAD NOT RECEIVED ANY CREDIT FROM SHRI SIDDHARTH BUT IN FACT THE APPELLANT HAD INITIALLY PAID RS.1,80,000/- TO HIM WHICH WAS SUBSEQUENTLY RECEIVED BACK AND, THEREFORE, THE TRANSACTION OF RECEIPT AS WELL AS PAYMENT OF RS.1,80,000/- WERE APPEARING IN THE RECEIPTS & PAYMENTS STATEMENT. SINCE, THERE WAS NO CASH CREDITS RECEIVED BY THE APPELLANT FROM SHRI SIDDHARTH OF RS.1,80,000/- DURING THE RELEVANT PREVIOUS YEAR, RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 44 NO ADDITION COULD BE MADE U/S 68 OF THE ACT. HENCE, ADDITION OF RS.1,80,000/- IS DELETED. IN THE RESULT, IN THIS GROUND, THE APPELLANT GETS A RELIEF OF RS.6,62,979/- (RS.1,62,979 + RS.3,20,000 + RS.1,80,000). 26. AGAINST THE ABOVE ORDER OF THE LEARNED CIT(A), TH E REVENUE IS IN APPEAL BEFORE US. 27. THE LEARNED DR SUBMITTED THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN GRANTING RELIEF. HE FURTHER SUBM ITTED THAT THE ORDER OF THE LEARNED CIT(A) IS NOT IN CONSO NANCE WITH SECTION 68 OF THE ACT. 28. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE STRONGLY OPPOSED THE FINDINGS OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE ASSESSEE HAS PRODUCE D SUFFICIENT MATERIAL ON RECORD TO JUSTIFY THAT THE FIND INGS RECORDED BY THE LOWER AUTHORITIES ARE NOT IN ACCORDANCE WITH PROVISIONS OF SECTION 68 OF THE ACT. RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 45 29. WE HAVE HEARD BOTH THE SIDES. AFTER CONSIDERING THE FACTS OF THE CASE KEEPING IN VIEW THE ARGUMENTS ADVANCES BY THE PARTIES BEFORE US, WE ARE OF THE VIEW THAT THE ASSESSEE HAS PRODUCED AMPLE EVIDENCE BEFORE THE AUTHORITIES BELOW TO JUSTIFY ITS CLAIM BUT THE AUTHORI TIES BELOW DID NOT APPRECIATE THE SAME AND MADE THE ADDITION. WE, THEREFORE, DISMISS THIS GROUND OF APPEAL. 30. COMING TO GROUND NO. 2, THE BRIEF FACTS OF THE C ASE ARE THAT THE AO MADE ADDITION OF RS.39,41,130/- IN THE HAND S OF THE ASSESSEE BY OBSERVING AS UNDER :- FURTHER DURING THE COURSE OF SEARCH SHRI RAMNATH SHARMA THE SON OF ASSESSEE WAS EXAMINED ON OATH ON 16.09.2005 AND ALSO ON 17.09.2005 AND WAS CONFRONTED WITH THE INCRIMINATING DOCUMENTS FOUND A ND SEIZED. IN STATEMENT ON OATH SHRI RAMNATH SHARMA OFFERED FOR TAXATION TOTAL INCOME OF RS.1.83 CRORE ON ACCOUNT OF UNEXPLAINED INVESTMENT ON VARIOUS PLOTS RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 46 ACQUIRED BY THE FAMILY MEMBERS DISCLOSING THE LASER VALUE AND ALSO ON ACCOUNT OF UNRECORDED PAYMENT AND INVESTMENTS AS DETAIL BELOW : 1. INCOME OF RS.7500000/- WERE OFFERED AS UNACCOUNTED INCOME ON ACCOUNT OF UNEXPLAINED INVESTMENT IN 72 PLOTS ACQUIRED BY THE FAMILY IN GANESH NAGAR, OUT OF THEIR UNDISCLOSED SOURCES OF INCOME. 2. INCOME OF RS.2000000/- WAS OFFERED ON ACCOUNT OF UNEXPLAINED PAYMENT MADE TO SHRI KANHIYA LAL GANCHANDAI, SHRI ASHOK NANDA AND M/S THADA RAM GRAH SHAKRI SANSTHA. 3. INCOME OF RS.58.08 LAC WAS OFFERED ON ACCOUNT OF UNEXPLAINED CASH PAYMENTS AS EVIDENT BY THE VARIOUS LOSES PAPER SEIZED AS LPS-2. RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 47 4. INCOME OF RS.3000000/- WAS OFFERED ON ACCOUNT OF UNEXPLAINED /UNACCOUNTED RECEIPTS FROM SALE OF PLOT AT CHUNNA BHATI TO SHRI PRAMJEET SINGH CHANDOK. TH E AO REPRODUCED THE RELEVANT EXTRACT OF STATEMENT O F SHRI RAM NATH SHARMA RECORDED ON 16.09.2005 AND 17.09.2005 AND TH EREAFTER OBSERVED AS UNDER: AS AGAINST THE ABOVE MENTIONED UNDISCLOSED INCOME OFFERED BY THE ASSESSEE AT RS.1.83 CRORE THE VARIOUS MEMBER OF FAMILY HAVE IN THEIR RETURN FILED IN RESPECT TO NOTICE U/S 153A & 153C, HAVE DISCLOSED TOTAL UNEXPLAINED MISCELLANEOUS INCOME IN DEFERENT YEAR ALL TOTALING TO RS.2354479/-. THUS INCOME TO THE EX TENT OF RS.15764521/- (RS.18300000 RS.2535479/-) REMAIN U NREPORTED AND AGAIN ESCAPED FROM TAXATION THOUGH THE SAME WAS DECLARED BY THE ASSESSEE IN HIS STATEMENT RECORDED ON 16.09.200 5, U/S 132 OF THE I.T. ACT. THEREFORE, THIS INCOME OF RS.15764521 /- IS TO BE TAXED IN THE HAND OF ALL THE FAMILY MEMBERS. AS IN THIS G ROUP SHRI S.N. RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 48 SHARMA, RAM NATH SHARMA, SHYAM NATH SHARMA AND SHRI ASHWANI SHARMA ARE THE MAIN ACTIVE MEMBERS WHO ARE TRANSACTING ALL THE BUSINESS/ PROPERTY DEALS, THIS INCOME IS EQ UALLY DIVIDED AMONG ALL THESE FOUR PERSON. THEREFORE, THE SHARE O F EACH PERSONS COMES TO RS.3941130/- WHICH IS TO BE ADDED AS INCOM E FROM UNDISCLOSED INCOME U/S 69 OF THE IT ACT, IN THE A.Y . 2006-07. THEREFORE, THE ADDITION ON THIS ACCOUNT COMES TO RS .3941130/- WHICH IS ADDED IN THE HAND OF THE ASSESSEE IN THIS YEAR U/S 69 OF THE IT ACT. IN APPELLATE PROCEEDINGS, IT WAS SUBMITTED BY THE APPEL LANT THAT AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.39,41,130/- IN THE HANDS OF THE ASSESSEE. 32. IN REGARD TO THE ISSUE DISCUSSED BY THE AO IN PAR A (1), IT WAS SUBMITTED THAT THE APPELLANT AND OTHER MEMBERS OF HIS FAMILY EXPLAINED THE SOURCE OF PURCHASE OF ALL THE 84 PLOTS IN GANESH NAGAR COLONY IN A.YS. 2004-05, 2005-06 & 2006-07 AND, THEREFORE, NO ADDITION WAS CALLED FOR TO WARDS RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 49 THE UNEXPLAINED INVESTMENT IN THE PURCHASE OF PLOTS I N GANESH NAGAR COLONY. WITHOUT PREJUDICE TO THE ABOVE, IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAD M ADE TOTAL ADDITION OF RS.27,01,672/- IN THE HANDS OF LADY MEMBERS OF THE FAMILY I.E. SMT. RANJANA SHARMA AND SMT. RADHA SHARMA IN A.YS.2004-05 & 2005-06 AND THE ADDITIONS MADE WERE CONFIRMED BY THE LD. CIT (A). THEREFORE, AT LEAST, THE SAID TOTAL AMOUNT OF RS.27,01,6 72/- , OF WHICH ADDITIONS WERE ALREADY MADE, SHOULD BE TREATE D AS CONSIDERED AND THIS AMOUNT SHOULD BE REDUCED FROM T HE TOTAL UNDISCLOSED INCOME OF RS.75,00,000/- DECLARED AT THE TIME OF SEARCH AND SEIZURE OPERATIONS. HENCE, UNDISCLO SED INCOME OF RS.47,98,328/- (RS.75,00,000 RS.27,01,6 72) ONLY SHOULD BE CONSIDERED. 33. AS REGARDS PARA (2) OF THE ASSESSMENT ORDER, IT WAS SUBMITTED THAT DURING THE COURSE OF SEARCH, SOME INCRIMINATING DOCUMENTS WERE FOUND REFLECTING THAT FAM ILY RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 50 MEMBERS OF THE APPELLANT I.E. SHRI SHAMBHU NATH SHARMA AND SHRI ASHWINI NATH SHARMA PAID RS.15,00,000/- AND RS.5,00,000/-TOWARDS THE PURCHASE OF CERTAIN LAND AS WAS EVIDENT FROM THE AGREEMENT TO SALE AVAILABLE AT PAGE NO. 7 TO 13 OF THE SEIZED PAPERS LPS-5. SHRI RAM NATH SHARMA ACCEPTED THE SAID INCOME OF RS.20,00,000/- AS UNDISCL OSED INCOME OF THE SHARMA FAMILY AS EVIDENT FROM REPLY TO Q.NO.8 OF HIS STATEMENT U/S 132(4) DATED 16.09.2005. THE ASSESSEE SUBMITTED THAT THE SAID LOOSE PAPERS NO.7 TO 1 3 OF LPS-5 REFLECTED THE FOLLOWING TRANSACTIONS : (I) SHRI SHAMBHU NATH SHARMA PAID RS.5,00,000/- AS ADVANCE TO KANAIYALAL GYANCHANDANI ON 29.03.2005 (PAGE NO.12 & 13) FOR PURCHASE OF 4 ACRES OF LAND; RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 51 (II) SHRI SHAMBHU NATH SHARMA PAID RS.10,00,000/- AS ADVANCE TO SHRI ASHOK NANDA ON 08.06.2004 (PAGE NO. 9, 10 & 11) FOR PURCHASE OF 2 ACRES OF LAND ; AND (III) SHRI ASHWINI NATH SHARMA PAID RS.5,00,000/- AS ADVANCE TO THADDARAM HOUSING SOCIETY ON 29.07.2005 (PAGE NO. 7 & 8) FOR PURCHASE OF 2 ACRES OF LAND. IT WAS SUBMITTED THAT SHRI SHAMBHU NATH SHARMA AND SHRI ASHWINI NATH SHARMA HAD FILED THEIR RETURNS OF INCOME ALONGWITH STATEMENTS OF RECEIPTS & PAYMENTS ACCOUNTS AND BALANCE SHEETS FOR THE A.YS. 2005-06 & 2006-07. SHRI SHAMBHU NATH SHARMA HAD DISCLOSED PAYMENTS OF RS.5,00,000/- AND RS.10,00,000/- MADE B Y HIM IN HIS STATEMENT OF RECEIPTS & PAYMENTS ACCOUNT. SIMILARLY, SHRI ASHWANI NATH SHARMA HAD ALSO SHOWN PAYMENT OF RS.5,00,000/- ON 29.07.2005 IN HIS CASH F LOW STATEMENT. IN VIEW OF FACT THAT THESE PAYMENTS WERE RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 52 REFLECTED IN THEIR RECEIPTS & PAYMENTS ACCOUNT, NO ADDITION WAS CALLED FOR. IN RESPECT OF INCOME OF RS.58.08 LACS OFFERED AS UNDI SCLOSED INCOME ON ACCOUNT OF UNEXPLAINED CASH PAYMENTS ENTERED IN LOOSE PAPERS SEIZED AS LPS-2 AS DISCUSSED IN PARA 3 O F THE ASSESSMENT ORDER, IT WAS SUBMITTED THAT THE TRANSACTIONS RECORDED IN THE LOOSE PAPERS OF LPS-2 PER TAIN TO DIFFERENT MEMBERS OF THE FAMILY AND THEIR CONCERNS AS UNDER :- NAME OF PERSON P.NO. OF LPS-2 DATE MODE OF PAYMENT A.Y. 2004-05 A.Y. 2005-06 A.Y. 2006-07 TOTAL ASHWINI NATH SHARMA 1 22.06.05 CASH - - 30,000 11 10.06.05 CASH - - 20,000 14 09.08.05 CASH - - 10,000 18 11.01.05 CASH - 5,000 - 26 31.03.05 CASH - 1,45,000 - 29 25.07.04 CHEQUE NO. 5685 P & S BANK - 1,00,000 - 34 10.09.05 CASH - - 1,80,000 39 23.09.04 CHEQUE NO. 5681, 5684, 5684 - 3,00,000 - 48 13.07.04 CASH - 1,00,000 - TOTAL - 6,50,000 2,40,000 8,90,000 SHAMBHU NATH SHARMA 24 01.10.04 12.10.04 CASH CASH - - 3,00,000 2,00,000 - RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 53 35 29.03.04 CASH 2,00,000 - - TOTAL 2,00,000 5,00,000 - 7,00,000 RAM NATH SHARMA 33 27.08.04 CASH - 1,00,000 - 38 28.03.04 CASH 1,50,000 - - 44 30.01.04 26.05.04 CHEQUE NO. 749363 & 749366 (50,000) TREATED AS CASH (74,000) TREATED AS CASH - TOTAL 2,00,000 1,74,000 - 3,74,000 HARE KRISHNA 21 18.01.04 CHEQUE NO. 061727 CASH 2,00,000 1,00,000 - - 41 28.07.05 28.07.05 CASH CHEQUE NO. 200498 - - 8,00,000 3,00,000 47 15.07.05 CASH CHEQUE NO. 200247 - - 3,50,000 1,50,000 TOTAL 3,00,000 16,00,000 19,00,000 NO NAME 32 NO DATE - - - 30,25,000 30,25,000 GRAND TOTAL 68,89,000 IT WAS CLARIFIED THAT THE TOTAL AMOUNT OF THE TRANSACTIONS REFLECTED IN THESE LOOSE PAPERS WORKED OUT AT RS.68,89,000/- AND NOT AT RS.58.08 LACS AS MENTIONED IN THE STATEMENT U/S 132 (4) OF SHRI RAM NATH SHARMA AND IN THE ASSESSMENT ORDER. IT WAS, THUS, CONTENDED THAT PAYMENT OF RS.8,90,000/- RELATED TO SHRI ASHWINATH SHARMA, OF RS.7,00,000/- TO SHRI SHAMBHU NATH SHARMA, RS.3,75,000/- TO SHRI RAM NATH SHARMA AND RS.19,00,000/ TO M/S HARE KRISHNA RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 54 COLONIZERS PVT. LTD., BHOPAL. THE DETAILS OF AMOUNT OF RS.30,25,000/- REFLECTED AT PAGE NO. 32 OF LPS-2 DO N OT RELATE TO THE SHARMA FAMILY. WITHOUT PREJUDICE TO THE ABOVE, IT WAS SUBMITTED THAT IN THE APPELLATE ORDER IN T HE CASE OF M/S HARE KRISHNA COLONIZERS PVT. LTD., IT WAS H ELD THAT THE ACTUAL SALE CONSIDERATION FOR SALE OF LAND AT CHUN A BHATTI WAS RS.1,42,00,000/- AND THAT RS.30,00,000/- IN CASH WAS RECEIVED BY SHRI RAM NATH SHARMA OUT OF SALE CONSIDERATION AND ADDITION WAS MADE IN THE HANDS OF THE COMPANY M/S HARE KRISHNA COLONIZERS PVT. LTD. THE DETAI LS OF RS.30,25,000/- RECORDED ON PAGE NO.32 OF LPS-2 CO ULD BE SAID TO BE THAT AMOUNT AND, THEREFORE, THIS TRANSACTIO N MAY BE TREATED AS CONSIDERED IN THE HANDS OF M/S HARE KRISHNA COLONIZERS PVT. LTD. IN REGARD TO PARA 4 OF THE ASSESSMENT ORDER, IT WAS SUBMITTED THAT THE ISSUE INVOLVED WAS REGARDING THE AMOUNT OF RS.30,00,000/- RECEIVED FROM THE SALE OF LAN D AT RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 55 CHUNA BHATTI TO SHRI PARAMJEET SINGH CHANDOK. IT WAS POINTED OUT THAT THIS RECEIPT OF PAYMENT BELONGED TO THE COMPANY M/S HARE KRISHNA COLONIZERS PVT. LTD. FOR THE SALE OF ITS LAND AT CHUNA BHATTI AND ADDITION TOWARDS THIS CONSIDERATION HAD ALREADY BEEN MADE IN THE HANDS OF M/S HARE KRISHNA COLONIZERS PVT. LTD. WHEREIN THE TOTAL SA LE CONSIDERATION WAS TAKEN AT RS.1,42,70,256/- IN PLACE OF RS.40,00,000/- SHOWN FOR THE SALE OF TOTAL LAND. IT WAS ALSO SUBMITTED THAT THE ADDITION MADE IN THE HANDS OF M/S HAR E KRISHNA COLONIZERS PVT. LTD. HAD BEEN CONFIRMED BY TH E LD. CIT (A) AS WELL AS HON'BLE ITAT. HENCE, THIS AMOUNT CAN NOT BE CONSIDERED AGAIN FOR MAKING ADDITION IN THE HANDS OF APPELLANT. IN VIEW OF THE ABOVE, IT WAS PRAYED THAT ADDITION OF RS.39,41,130/- AS 1/4 TH SHARE MADE IN THE HANDS OF APPELLANT MAY PLEASE BE DELETED. RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 56 34. THE LEARNED CIT(A) AFTER CONSIDERING THE ARGUMENTS OF THE ASSESSEE, CONFIRMED THE ADDITION WITH THE FOLLOWI NG OBSERVATIONS :- 7.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF T HE APPELLANT AND FACTS OF THE CASE. AS REGARDS PARA (1) OF THE ASSESSMENT ORDER, IT IS AN ADMITTED FACT THAT DURING THE COURSE OF SEARCH AND SEIZURE O PERATIONS, CERTAIN INCRIMINATING DOCUMENTS WERE FOUND SHOWING UNEXPLAI NED INVESTMENT IN THE PLOTS OF GANESH NAGAR, BHOPAL BY THE FAMILY MEMBERS OF THE APPELLANT. SHRI RAM NATH SHARMA IN HIS STATEMENTS RECORDED U/S 132( 4) DATED 16.09.2005 & 17.09.2005 ADMITTED THAT THE FAMILY MEMBERS HAD MAD E UNEXPLAINED INVESTMENT IN THE PURCHASE OF PLOTS IN GANESH NAGAR AND SURRENDERED AN AMOUNT OF RS.75,00,000/- ON ACCOUNT OF SUCH UNEXPLA INED INVESTMENT AND ASSURED PAYMENT OF TAX THEREON. THUS, THERE WAS UNE XPLAINED INVESTMENT IN THE PURCHASE OF PLOTS OF GANESH NAGAR, BHOPAL OF RS .75,00,000/- AT LEAST BY THE FAMILY MEMBERS OF THE APPELLANT AS ADMITTED IN THE STATEMENTS RECORDED U/S 132(4). HOWEVER, IT IS NOTICED, AS ALSO SUBMITT ED BY THE APPELLANT THAT ADDITION OF RS.27,01,672/- WERE MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PURCHASE OF PLOTS OF GANESH NAGAR, BHOPAL IN THE HANDS OF SMT. RANJANA SHARMA AND SMT. RADHA SHARMA IN A.YS. 2004- 05 & 2005-06. IT IS ALSO NOTICED THAT THE ADDITIONS MADE IN THE HANDS O F SMT. RANJANA SHARMA AND SMT. RADHA SHARMA WERE CONFIRMED BY THE CIT (A) . ACCORDINGLY, THE RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 57 SUBMISSION OF THE APPELLANT IS ACCEPTABLE THAT THE AMOUNT OF ADDITIONS OF RS.27,01,672/- MADE IN THE HANDS OF SMT. RANJANA SH ARMA AND SMT. RADHA SHARMA IN THEIR ASSESSMENTS FOR A.YS. 2004-05 & 200 5-06 SHOULD BE REDUCED FROM THE TOTAL UNEXPLAINED INVESTMENT OF RS .75,00,000/- ADMITTED AND SURRENDERED BY SHRI RAM NATH SHARMA IN HIS STAT EMENT U/S 132(4) ON BEHALF OF THE FOUR MALE MEMBERS OF THE FAMILY. ACCO RDINGLY, THE BALANCE AMOUNT OF UNEXPLAINED INVESTMENT IN ACQUISITION OF SUCH PLOTS WORKS OUT TO RS.47,98,328/- (RS.75,00,000 RS.27,01,672). THE A PPELLANTS 1/4 TH SHARE, THUS, WORKS OUT AT RS.11,99,582/- (1/4 TH OF RS.47,98,328). ACCORDINGLY, THE AO IS DIRECTED TO MAKE AN ADDITION OF RS.11,99,582/ - IN THE HANDS OF THE APPELLANT ON THIS ACCOUNT. AS REGARDS PARA 2 RELATING TO RS.20,00,000/-, IT IS NOTICED THAT THIS AMOUNT PERTAINS TO THE PAYMENTS MADE BY SHRI SHAMBHU NATH SHARMA OF RS.15,00,000/- I.E. RS.5,00,000/- PAID ON 29.03.20 05 AND RS.10,00,000/- PAID ON 08.06.2004. THEREFORE, THESE AMOUNTS HAVE T O BE CONSIDERED IN THE HANDS OF SHRI SHAMBHU NATH SHARMA AND NO ADDITION C AN BE MADE IN THE HANDS OF APPELLANT IN RESPECT OF THESE PAYMENTS. TH E BALANCE AMOUNT OF RS.5,00,000/- WAS RELATED TO PAYMENT MADE BY SHRI A SHWANI NATH SHARMA TO SHRI KANAIYALAL GYANCHANDANI AND AS SUBMITTED BY TH E APPELLANT, THE AO HAD MADE A SEPARATE ADDITION ON ACCOUNT OF THIS TRA NSACTION, INCLUDED IN THE ADDITION OF RS.8,21,261/- MADE AS UNEXPLAINED LAND ADVANCES IN THE HANDS RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 58 OF SHRI ASHWANI NATH SHARMA IN A.Y.2006-07. IT MAY BE NOTED THAT THE ADDITION OF THIS AMOUNT OF RS.5,00,000/- HAS BEEN C ONFIRMED BY THE CIT(A) IN GROUND NO.4 OF A.Y.2006-07 IN THE CASE OF SHRI ASHW ANI NATH SHARMA. THEREFORE, NO SEPARATE ADDITION IS REQUIRED TO BE M ADE, OTHERWISE IT WOULD AMOUNT TO DOUBLE ADDITION. HENCE, NO ADDITION IN TH E HANDS OF THE APPELLANT WAS CALLED FOR IN RESPECT OF THE AMOUNT OF RS.20,00 ,000/- DISCUSSED IN THE SAID PARA 2 OF THE ASSESSMENT ORDER. IN REGARD TO AMOUNT OF RS.68.89 LACS (RS.58.08 LACS TAKEN BY THE AO), DISCUSSED IN PARA 3 RELATED TO TRANSACTIONS REFLECT ED IN LOOSE PAPERS SEIZED AS LPS-2, IT IS NOTICED, THAT THERE ARE CLEAR CUT N ARRATIONS ON THESE LOOSE PAPERS ABOUT THE PERSONS TO WHOM THE TRANSACTIONS R ECORDED ON THESE PAPERS BELONG. AS SUBMITTED BY THE APPELLANT, IN THE DETAI LED CHART MENTIONED HEREINABOVE, THE TRANSACTION OF RS.7,00,000/- BELON GED TO SHRI SHAMBHUNATH SHARMA, OF RS.8,90,000/- (RS.6,50,000/- FOR A.Y.200 5-06 AND OF RS.2,40,000/- FOR A.Y.2006-07) TO SHRI ASHWANI NATH SHARMA AND OF RS.19,00,000/- TO M/S HARE KRISHNA COLONIZERS PVT. LTD. BHOPAL AND THEREFORE, THESE TRANSACTIONS CANNOT BE CONSIDERED FOR THE PURPOSE OF MAKING ADDITION IN THE HANDS OF THE APPELLANT. THE TRANSACTIONS RECORDED RELATING TO THE APPELLANT, SHRI RAM NATH SHARMA ON THESE LOOSE PAPERS OF LPS-2 WERE OF RS.3,74,000/- (RS.2,00,000/- FOR A.Y. 2004-05 AND RS.1,74,000/- FOR A.Y. 2005-06). ACCORDINGLY, THE A MOUNT OF RS.2,00,000/- RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 59 HAS TO BE CONSIDERED IN THE HANDS OF THE APPELLANT IN A.Y. 2004-05 AND RS.1,74,000/- IN A.Y.2005-06 ONLY. APART FROM THE ABOVE, TRANSACTIONS RECORDED ON LOOSE PAPER NO.32 OF LPS-2 IS OF RS.30, 25,000/- FOR WHICH THE APPELLANT HAD NOT FURNISHED ANY COGENT EXPLANATION. THE APPELLANT SUBMITTED THAT THIS TRANSACTION MAY PERTAIN TO M/S HARE KRISHNA COLONIZERS PVT. LTD. RELATING TO THE SALE OF LAND AT CHUNA BHA TTI FOR WHICH ADDITION HAD ALREADY BEEN MADE IN THE HANDS OF M/S HARE KRISHNA COLONISERS PVT. LTD. BUT IT WAS NOTICED THAT THE TRANSACTION IN RESPECT OF RECEIPT OF CASH OF RS.30,00,000/- PERTAINING TO M/S HARE KRISHNA COLON ISERS PVT. LTD. WAS RECORDED ON PAGE 6 OF LPS-1 AND, THEREFORE, THE TRA NSACTION RECORDED ON PAGE NO. 32 OF LPS-2 AMOUNTING TO RS.30,25,000/- WA S A DIFFERENT TRANSACTION. SINCE, THE APPELLANT FAILED TO SATISFA CTORILY EXPLAIN THE TRANSACTION OF RS.30,25,000/- RECORDED ON THIS PAGE , THIS AMOUNT OF RS.30,25,000/- IS TO BE CONSIDERED AS UNEXPLAINED I NCOME OF ALL THE FOUR FAMILY MEMBERS AS WAS ADMITTED BY SHRI RAM NATH SHA RMA IN HIS STATEMENTS U/S 132(4). THE APPELLANTS 1/4 TH SHARE WORKS OUT AT RS.7,56,250/- (1/4 TH OF RS.30,25,000/-). ACCORDINGLY, THE TOTAL ADDITION IN THE HANDS OF THE APPELLANT AS PER PARA 3 OF THE ASSESSMENT ORDER WORKS OUT AT RS.7,56,250/-. ACCORDINGLY, THE AO IS DIRECTED TO MAKE AN ADDITION OF RS.7,56,250/- ON THIS ACCOUNT. RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 60 AS REGARDS PARA 4 INVOLVING AN AMOUNT OF RS.30,00,0 00/-, IT WAS NOTICED THAT THIS AMOUNT RELATING TO UNACCOUNTED RECEIPTS ON SAL E OF PLOT AT CHUNA BHATTI TO SHRI PARAMJEET SINGH CHANDOK WAS CONSIDERED IN T HE HANDS OF THE COMPANY M/S HARE KRISHNA COLONISERS PVT. LTD. IN IT S ASSESSMENT FOR A.Y. 2006-07 RELATING TO THE TRANSACTION OF SALE OF LAND AT CHUNA BHATTI WHILE CONSIDERING THE ACTUAL SALE CONSIDERATION RECEIVED AS AGAINST THE SALE CONSIDERATION SHOWN. THE ADDITION MADE INCLUDED TH IS AMOUNT OF RS.30,00,000/- ALSO. IT MAY BE NOTED THAT THE ADDIT ION MADE IN THE HANDS OF M/S HARE KRISHNA COLONISERS PVT. LTD. STANDS CONFIR MED BY THE LD. CIT (A) AND HON'BLE ITAT. HENCE, THIS AMOUNT OF RS.30,00,00 0/- CANNOT BE CONSIDERED FOR MAKING ANY ADDITION IN THE HANDS OF THE APPELLANT, OTHERWISE, IT WOULD AMOUNT TO DOUBLE ADDITION. IN VIEW OF THE ABOVE, THE TOTAL ADDITION REQUIRED T O BE MADE IN THE HANDS OF THE APPELLANT WORKS OUT TO RS.19,55,832/- (RS.11,99 ,582 + RS.7,56,250) AS AGAINST ADDITION OF RS.39,41,130/- MADE BY THE AO. ACCORDINGLY, THE AO IS DIRECTED TO RESTRICT THE ADDITION TO THE EXTENT OF RS.19,55,832/-. THUS, THE APPELLANT GETS A RELIEF OF RS.19,85,298/- (RS.39,41 ,130 RS.19,55,832) IN THIS GROUND. 35. NOW THE REVENUE IS IN APPEAL BEFORE US CONTESTING THE FINDINGS RECORDED BY THE LEARNED CIT(A). RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 61 36. THE LEARNED DR SUBMITTED THAT THE LEARNED CIT(A) W AS NOT JUSTIFIED IN GRANTING RELIEF TO THE ASSESSEE AS TH E ASSESSEE DID NOT PROVE HIS CASE BEFORE THE LEARNED CI T(A). ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESS EE STRONGLY OPPOSED THE ORDERS OF THE LOWER AUTHORITIE S WITH THE SUBMISSION THAT THE ORDER OF THE LEARNED CIT(A) IS AGAINST THE VERY SPIRIT OF SECTION 68 OF THE ACT. 37. AN IDENTICAL ISSUE WAS INVOLVED IN THE CASE OF SHRI SHAMBHU NATH SHARMA IN IT(SS)A NOS. 644 & 627/IND/2014 WHEREIN AFTER DISCUSSING THE ISSUE AT LE NGTH IN PARAS 34 TO 54 OF OUR ORDER DATED 9 TH DECEMBER, 2015, WE HAVE DECIDED THE SAME IN FAVOUR OF THE ASSESSEE. WE, THEREFORE, FOLLOWING THE REASONINGS GIVEN THEREIN, D ECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. 38. IN THE RESULT, THE DEPARTMENTAL APPEAL STANDS DISMISSED. RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 62 39. IT HAS ALSO COME TO OUR NOTICE THAT RECENT THE CBD T VIDE CIRCULAR NO. 21/20145 ISSUED ON 10.12.2015 HAS REVISED THE MONETARY LIMIT FOR FILING OF APPEAL BEFORE ITAT FIXING THE TAX EFFECT LIMIT AT RS.10 LACS. IN VIEW O F THE ABOVE CIRCULAR ISSUED BY THE CBDT, SINCE THE TAX EFFECT IN VOLVED IN THE REVENUES APPEAL IS BELOW THE MONETARY LIMIT, THEREFORE, WE DISMISS THIS DEPARTMENTAL APPEAL ALSO IN LIMINE BEING NOT MAINTAINABLE. 40. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED AND T HAT OF THE REVENUE DISMISSED. PRONOUNCED IN OPEN COURT ON 21 ST DECEMBER, 2015 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 21 ST DECEMBER, 2015 DN/- RAM NATH SHARMA IT(SS)A NOS. 127 & 117/IND/2014 63