Shri Narendra Kumar Agrawal, Burhanpur V. The DCIT, Khandwa

ITSSA 14/IND/2009

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0215 (ITAT-INDORE)
• Duration Of Justice: 5 year(s) 6 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-07-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 21-01-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K KARAN
• Assessee Lawyers: S N AGARWAL; PANKAJ MOGRA CAS
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure; Business income; Income from undisclosed sources; Loose papers; Document seized; Opportunity of being heard; Corroborative evidences; Valuation report; Retraction; Documents seized
• Section: 143(3); 153A; 131; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : ADAPA0131B I.T(SS).A.NO. 13 & 14/IND/2009 & ITA NO.74/IND/2009 A.Y. : 2003-04, 2004-05 & 2005-06 SHRI NARENDRA KUMAR AGRAWAL, CHOWK BAZAR, BURHANPUR. VS. DCIT, KHANDWA APPELLANT RESPONDENT APPELLANT BY : SHRI S.N.AGARWAL & SHRI PANKAJ MOGRA, CAS RESPONDENT BY : SHRI V.K.KARAN, CIT DR DATE OF HEARING : 14 . 0 5 .201 4 DATE OF PRONOUNCEMENT : 21 . 0 7 .201 4 O R D E R PER R. C. SHARMA, A.M. THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2003-04, 20 04-05 AND 2005-06 IN THE MATTER OF ORDER PASSED U/S 153A READ WITH SECTION 143(3) OF THE INCOME-TAX ACT, 1961. -: 2: - 2 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PE RUSED. FACTS IN BRIEF ARE A SEARCH ACTION U/S. 132(1) OF THE IN INCOME TAX ACT, 1961 WAS UNDERTAKEN BY THE DEPARTMENT AT T HE BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE S HRI NARENDRA KUMAR AGARWAL, WHO IS MEMBERS OF CHAGANLAL KISHANLAL GROUP, ON 20.12.2004. STATEMENT OF ASSESS EE WAS RECORDED U/S.132(4) WHEREIN ASSESSEE AGREED TO OFFE R INCOME IN RESPECT OF HUNDIES. HOWEVER, STATEMENT TO OFFER INCOME WAS RETRACTED AND IN THE RETURNS OF INCOME SO FILED, NO INCOME WAS OFFERED ON ACCOUNT OF HUNDIES. DURING THE COURSE OF SEARCH VARIOUS DOCUMENTS AND BOOKS INCLUDING HUNDIES WERE FOUND AND SEIZED. THE AMOUNT ADVANCED AS PER THESE HUNDIE S WORKED OUT TO RS.2.35 CRORES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. REQUIRED THE ASSESSEE TO EXPL AIN THESE HUNDIES. THE ASSESSEE SUBMITTED THAT THE HUNDIES OF RS. 1.50 CRORES WERE ON ACCOUNT OF PAYMENT MADE TO M/S. PRAT IBHA SYNTEX LTD., INDORE FROM THE BOOKS OF FIRM M/S. VEN KATESHWAR COTTON CO. THIS ACCOUNT SHOWS THAT AGAINST 4 HUNDIE S OF RS.25 LAKHS EACH, PAYMENT OF RS.1 CRORE WAS MADE ON 27.6. 2003 BY CHEQUE. THE ASSESSEE FURTHER EXPLAINED THAT PAYMENT OF RS.50 -: 3: - 3 LAKHS ON 7.10.03 AND RS. 50 LAKHS ON 10.10.03 WAS R ECEIVED BACK AFTER MATURITY OF HUNDI ON 06.10.03. IT WAS CL AIMED THAT THE HUNDIES WERE NOT RETURNED AND WERE KEPT FOR RET URNING BACK BUT THE SAME WERE MISPLACED AND WERE FOUND BY THE SEARCH PARTIES. THE ASSESSEE FURTHER SUBMITTED THAT PAYMENT OF RS.50 LAKHS AGAINST THE HUNDI OF RS.50 LAKHS DAT ED 12.07.2003 WAS MADE ON 18.07.03 WHICH WAS RETURNED BACK ON 17.10.03 AS PER MATURITY OF HUNDI ON 12.10.03. I T WAS FURTHER SUBMITTED THAT INTEREST ON ACCOUNT OF HUNDI ES WERE ALSO RECEIVED AND CREDITED ON 11.12.03 AND TDS WAS ALSO DEDUCTED THEREON. AS PER ASSESSEE THE HUNDIES OF RS .1.5 CRORE WERE NOT HIS INCOME BUT WERE ON ACCOUNT PAYMENTS AC TUALLY MADE. SO FAR AS THE REMAINING HUNDIES OF RS. 85 LAK HS IS CONCERNED, THE ASSESSEE SUBMITTED THAT THE AMOUNT W ITH REFERENCE TO THESE HUNDIES WERE NEITHER PAID NOR WE RE RECEIVED. AS PER ASSESSEE, THE PARTY M/S. PRATIBHA SYNTEX LTD., INDORE HAD SENT THOSE HUNDIES IN ADVANCE FOR ADVANC ING LOAN, HOWEVER, THE ASSESSEE CLAIMED TO HAVE MADE NO ADVAN CE AGAINST THESE HUNDIES AND THE PARTY ASKED THE ASSES SEE TO RETURN THE HUNDIES OR DESTROY THE SAME. THE ASSESSE E FURTHER -: 4: - 4 SUBMITTED THAT IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH, HE HAS SURRENDERED THE AMOUNT OF HUNDIES OF RS.2.35 CRORES FOUND BECAUSE OF PRESSURE OF SEARCH PARTY. T HE CIRCUMSTANCES, PRESSURE COMPELLED HIM TO ACCEPT THO SE HUNDIES AS HIS INCOME. THE SUBMISSIONS MADE BY THE ASSESSEE WAS NOT FOUND FAVOUR WITH THE A.O. FOR THE REASONS DISCUSSED IN HIS ORDER. PRIMARILY IT WAS OBSERVED BY THE A.O. THAT THE HUNDIES HAVE BEEN SIGNED BY ONE SHRI SHIVKUMAR CHOU DHARY, WHEREAS THE ASSESSEE IS LINKING THE HUNDIES WITH M/ S. PRATIBHA SYNTEX LTD. NAME OF THE LENDER AS PER HUND IES IS SHRI NARENDRA AGRAWAL, WHEREAS THE ASSESSEE CLAIMED THE NAME OF LENDER AS M/S. VENKATESHWAR COTTON CO. THE CLAIM OF THE ASSESSEE THAT A CHEQUE OF RS.1 CRORE DATED 27.06.20 03 WAS ISSUED BY M/S. VENKATESHWAR COTTON CO IN FAVOUR OF M/S. PRATIBHA SYNTEX AGAINST THE 4 HUNDIES OF RS.25 LAKH S EACH DATED 7.5.2003, THE A.O. NOTED THAT THE DATE OF WRI TING THESE HUNDIES WAS 7.5.2003 AND HENCE IT CAN IN NO WAY BE LINKED WITH CHEQUE DATED 27.6.03. ACCORDINGLY, THE A.O. CO NCLUDED THAT THE ASSESSEE HAD ADVANCED THE FUNDS TO SHRI CH OUDHARY -: 5: - 5 OUT OF HIS UNEXPLAINED INCOME AND ADDED THE SAME TO HIS INCOME. 3. AS REGARDS BALANCE AMOUNT OF HUNDI OF RS.85,00,000/- IT WAS CLAIMED BY ASSESSEE THAT THE SAID SUM WAS NEVER PAID OR RECEIVED BY THE ASSESSEE. IT HAS BEEN CONTENDED THAT M/S. PRATIBHA SYNTEX LTD., INDORE HA D SENT THESE HUNDIES IN ADVANCE BUT NO PAYMENT WAS MADE TO THE PARTY. IT HAS BEEN FURTHER SUBMITTED THAT THE HUNDI ES ARE WRITTEN AND SENT BEFORE PAYMENT IS MADE TO THE BORR OWER. IT HAS THEREFORE, BEEN CLAIMED THAT THE SAID HUNDIES W ERE LYING IN GOOD FAITH WITH THE ASSESSEE WITH THE INTENTION OF RETURNING THE SAME BUT WERE MISPLACED AND ASSESSEE DID NOT BO THER TO TRACE THE SAME AS THE TERM OF THE HUNDIES HAD ALREA DY EXPIRED. THUS, AS PER EXPLANATION, THE SAME WERE US ELESS. 4. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ADDITION NOT ONLY ON ACCOUNT OF HUNDIES SO FOUND BU T ALSO INTEREST ASSUMED TO BE EARNED ON SUCH HUNDY LOAN. T HE ASSESSEE IS IN FURTHER APPEAL BEFORE US AND HAVE TA KEN FOLLOWING GROUNDS IN THE ASSESSMENT YEAR 2003-04. -: 6: - 6 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN MAINTAINING ADDITION OF RS. 35,00,000/- ON THE BASIS OF HUNDIES OF SHIV KUMAR CHOUDHARY OF PRATIBHA SYNTEX LTD. FOUND DURING SEARCH, WITHOUT CONSIDERING IN RIGHT PERSPECTIVE THE DETAILED SUBMISSIONS AND EXPLANATIONS FILED. 5 . FOLLOWING ADDITIONAL GROUNDS WERE TAKEN BEFORE US :- 01] ADDITIONAL GROUND BEING GROUND NO.3 1.1] THROUGH THIS ADDITIONAL GROUND OF APPEAL THE ASSESSEE HAS CHALLENGED THE ADDITION MADE BY THE A.O. AND CONFIRMED BY THE CIT(A) REGARDING INVESTMENT MADE IN THE FIXED DEPOSIT IN THE NAME OF DIFFERENT MEMBERS OF THE FAMILY OF HIS SISTERS. 1.2] THE SAID GROUND WAS TAKEN IN THE APPEAL AS FILED BEFORE LD. CIT(A). THE LD. CIT(A) VIDE HIS OR DER DATED 19.11.2008 HAS SET-ASIDE THE ADDITION TO THE ASSESSING OFFICER TO VERIFY THE DATE OF PREPARATION OF THE FIXED DEPOSIT. HOWEVER, INVESTMENT AND OWNERSHIP OF THE FIXED DEPOSIT WAS CONFIRMED IN THE HANDS OF THE ASSESSEE. SINCE, THE LD CIT(A) SET-ASI DE THE SAID ISSUE, FOR THIS REASON THE GROUND CHALLENG ING THE OWNERSHIP OF FDR THAT OF THE ASSESSEE REMAINED TO BE CHALLENGED BEFORE THE HONBLE BENCH AT THE TI ME OF FILING OF THIS APPEAL. 1.3] THAT WHILE PREPARING THE APPEAL FOR THE YEAR UNDER CONSIDERATION IT WAS NOTICED THAT THE SAID GROUND NEEDS TO BE FILED. HENCE, THROUGH THE ADDITIONAL GROUND OF APPEAL, THE ASSESSEE HAS CHALLENGED THE ADDITION MADE ON ACCOUNT OF INVESTMENT MADE IN THE FIXED DEPOSIT IN HIS HANDS. 1.4] IN VIEW OF THE ABOVE IT IS PRAYED THAT SAID ADDITIONAL GROUND OF APPEAL MAY KINDLY BE ADMITTED BY YOUR HONOURS. 02.] ADDITIONAL GROUND BEING GROUND NO. 4 2.1] THROUGH THIS ADDITIONAL GROUND OF APPEAL THE ASSESSEE HAS CHALLENGED THE ADDITION MADE BY THE -: 7: - 7 A.O. AND CONFIRMED BY THE CIT(A) IN RESPECT OF INTEREST ON FDRS IN THE NAME OF DIFFERENT FAMILY MEMBERS. 2.2] THE SAID GROUND IS CONSEQUENTIAL TO THE ADDITIONAL GROUND NO 1 OF THIS APPEAL. 2.3] IN VIEW OF THE ABOVE, IT IS PRAYED THAT SAID ADDITIONAL GROUND OF APPEAL MAY KINDLY BE ADMITTED BY YOUR HONOURS. 6. THE LD. CIT(A) CONCLUDED AS UNDER :- 1.14 IN VIEW OF THE FACTUAL AND LEGAL POSITION DISCUSSED ABOVE, IT IS HELD THAT THE APPELLANT MADE ADVANCES AS PER THESE HUNDIES TO ONE SHRI SHIV KUMA R CHOUDHARY. SINCE HE HAS NOT BEEN ABLE TO EXPLAIN TH E SOURCE OF ADVANCE MADE VIDE THESE HUNDIES, THE ADDI TION MADE BY THE A.O. ON THIS ACCOUNT IN THE YEAR CONCER NED I.E RS.35,00,000/- IN THE YEAR UNDER CONSIDERATION AND RS.2 CRORE IN THE NEXT YEAR I.E ASSESSMENT YEAR 2004-05, IS HEREBY CONFIRMED. 1.15 THE APPELLANT FURTHER CHALLENGED THE INCOME OF INTEREST AMOUNTING TO RS. 2,10,000/- ON THESE HUNDIES TAKEN BY THE A.O. VIDE GROUND OF APPEAL NO.1.2. THE RELEVANT EXT RACTS FROM THE ORDER OF THE A.O. IS HEREBY REPRODUCED: AS DISCUSSED IN THE PRECEDING PARAS, THE ASSESSEE HAS ADVANCED RS.35,00,000/- ON HUNDIES IN CASH. THE INTEREST DURING THE SUBJECT YEAR IN THE CASES OF BU SINESS CONCERNS ASSOCIATED WITH THE ASSESSEE WAS CHARGED A ND PAID AT THE RATE OF 18% PER ANNUM. THUS THE SAME RA TE OF INTEREST IS ESTIMATED ON THE ABOVE HUNDIES ALSO WHI CH HAS NOT BEEN DISCLOSED BY THE ASSESSEE. THE SAID INTERE ST WORKS OUT TO RS.2,10,000/- THE SAME IS ADDED TO THE ASSES SEES TOTAL INCOME. 1 .16 THE ISSUE IS CONSIDERED. SINCE THE ACTION OF THE AO OF TREATING THE ADVANCE MADE BY THE APPELLANT THROUGH THESE HUNDIES AS UNEXPLAINED, HAS BEEN CONFIRMED BY THIS OFFICE, THE ADDITION MADE BY THE A.O. ON ACCOUNT OF INTEREST ON THESE HUNDIES IS CORRECT AND HENCE THE SAME IS ALSO CONFIRMED. 2. GROUND NO.2.1, 2.2., 2.3 2.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED A.O. ERRED IN ADDING AN AMOUNT OF RS.3,76,0 00/- ON ACCOUNT OF -: 8: - 8 ALLEGED UNEXPLAINED INVESTMENT MADE IN FIXED DEPOSI TS EVEN WHEN THE ASSESSEE HAS PROPERLY EXPLAINED THE SOURCE OF ALL T HESE FIXED ASSETS. 2.2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED A.O. EARED IN TAXING INTEREST OF RS.17,234/ - ON UNEXPLAINED ALLEGED INVESTMENT IN FIXED DEPOSITS EVEN WHEN ALL THESE FDRS BELONGED TO OTHER FAMILY MEMBERS OF THE ASSESSEE. 2.01 RELEVANT PARA FROM THE ORDER OF THE A.O. IS RE PRODUCED BELOW: LPS-1 PAGES 18 TO 23 OF PANCHNAMA DATED 21.12.2004 OF FACTORY PREMISES. THESE ARE THE FIXED DEPOSIT RECEIPTS DETAILED BELOW : LOOSE PAPER NO. NAME OF WHICH DEPOSITED AMOUNT OF FD DATE OF FD INTEREST @ 11% 18 MEGHNA RS.45,000 23.10.2002 19 SUDHA RS.90,000 23.10.2002 20 PALLAVI RS.35,000 23.10.2002 21 SHARDDHA RS.18,000 23.10.2002 22 SMT. SUNITA & BALGOVIND RS.1,63,000 23.10.2002 23 BHARAT KUMAR RS.25,000 23.10.2002 TOTAL RS.3,76,000 RS.17,234 WHEN ASKED TO EXPLAIN, A WRITTEN SUBMISSION WAS MAD E STATING THAT THESE FIXED DEPOSITS PERTAIN TO THE ASSESSEES SIS TERS, BROTHER-IN-LAW AND THEIR CHILDREN. IT HAS BEEN STATED THAT THE ASS ESSEE WAS LOOKING AFTER THE AFFAIRS OF SISTERS AND THEIR FAMILY MEMBE RS AS THE SAID PERSONS ARE NOT WELL ACQUAINTED. IN SUPPORT OF THE ABOVE CO NTENTION, A LETTER SIGNED BY SMT. SUDHA GARG AND SMT. SUNITA AGRAWAL H AS BEEN FILED CLAIMING OWNERSHIP FOR THE SAID DEPOSITS. THE EXPLANATION AND THE LETTER REFERRED ABOVE ARE CLEARLY ACCOMMODATIVE IN NATURE PROMPTED BY AFTER THOUGH. T HESE FDS HAVE BEEN MADE AT BURHANPUR, WHEREAS THE ASSESSEES SIST ERS ARE RESIDENT OF FAR OFF PLACES. HAD THERE BEEN ANY GENUINENESS I N THE CONTENTION, LADIES WOULD HAVE SPECIFIED THE SOURCE OF SUCH DEPO SITS AND THE SOURCE OF INCOME OF THEIR HUSBANDS. OBVIOUSLY, THE DEPOSIT S IN QUESTION HAVE BEEN MADE BY THE ASSESSEE IN THE NAMES OF THE RELAT IVES FROM OUT OF HIS INCOME FROM UNDISCLOSED SOURCES. ACCORDINGLY, THE S AME IS ASSESSED AS UNDISCLOSED INVESTMENT. INTEREST @ 11% ON THE ABOVE SUM IS FURTHER ADDED WHICH WORKS OUT TO RS.17,234/-. -: 9: - 9 7. CONTENTION OF LD. AUTHORIZED REPRESENTATIVE BEF ORE US WAS AS UNDER:- 1 .4] THAT DURING THE COURSE OF SEARCH PROMISSORY NOT ES OF RS.2,35,00,000/- (RUPEES TWO CRORE THIRTY FIVE L ACS ONLY) WERE FOUND AND SEIZED BY THE INCOME TAX DEPARTMENT FROM THE RESIDENCE OF THE ASSESSEE. OUT OF THE SAID AMOUNT, PROMISSORY NOTES TOTALING TO RS. 35,00,000/- WERE RELATED TO A.Y. 2003-04 AND REMAINING RS. 2,00,00,000/- PERTAINED TO THE A.Y. 2004-05. DETAILS OF ALL THESE PROMISSORY NOTES ARE AS UNDER:- S. NO. DATE OF HUNDI WRITER OF HUNDI HUNDI IN FAVOUR OF AMOUNT OF HUNDI MODE OF LENDING DATE OF MATURITY OF HUNDI 1 29.5.02 SHIV KU CHOUDHARY NARENDRA AGRAWAL 1000000 NOT MENTIONED 29.09.02 2 25.5.02 SHIV KU CHOUDHARY NARENDRA AGRAWAL 2500000 NOT MENTIONED 25.9.02 A.Y.2003-04 3500000 3 07.05.03 SHIV KUM CHOUDHARY NARENDRA AGRAWAL 2500000 NOT MENTIONED 07.10.03 4 07.05.03 SHIV KUM CHOUDHARY NARENDRA AGRAWAL 2500000 NOT MENTIONED 07.10.03 5 07.05.03 SHIV KUM CHOUDHARY NARENDRA AGRAWAL 2500000 NOT MENTIONED 07.10.03 6 07.05.03 SHIV KUM CHOUDHARY NARENDRA AGRAWAL 2500000 NOT MENTIONED 07.10.03 7 12.07.03 SHIV KUM CHOUDHARY NARENDRA AGRAWAL 2500000 NOT MENTIONED 12.10.03 8 12.07.03 SHIV KUM CHOUDHARY NARENDRA AGRAWAL 5000000 NOT MENTIONED 18.10.03 9 18.07.03 SHIV KUM CHOUDHARY NARENDRA AGRAWAL 2500000 NOT MENTIONED 18.10.03 A.Y.2004-05 20000000 23500000 1. 1.5] DURING THE COURSE OF SEARCH, THE ASSESSEE WITH THE OTHER ITEMS HAS AGREED TO PAY TAX ON THE AMOUNT OF PROMIS SORY NOTES AS FOUND AND SEIZED FROM HIS RESIDENCE TO THE TUNE OF RS 2,35,00,000/-. THE RELEVANT QUESTION AND REPL Y OF THE ASSESSEE IS AVAILABLE ON INNER PAGE NO 9 OF THE STATEMENT RECORDED AND PAGE NO 27 OF THE COMPILATIO N BEING COPY OF STATEMENT RECORDED DURING THE SEARCH ON 22-12-2004. -: 10: - 10 1.6] THAT AFTER THE SEARCH WAS CONCLUDED, AN AFFIDA VIT DT. 15- 02-2005 WAS PREPARED BY THE ASSESSEE AND FILED BY H IM. THAT IN THE SAID AFFIDAVIT IN PARA 6 AND PARA 7 OF THAT AFFIDAVIT HE HAS EXPLAINED THE CORRECT NATURE OF PROMISSORY NOTES AS FOUND DURING THE SEARCH. IT WAS ALSO EXPLAINED THAT THE AMOUNT OF RS 1.50 CRORES WE RE PAID BY M/S SHREE VENKATESHWAR COTTON CO, ONE OF THE FIRM OF THE ASSESSEE FAMILY TO PRATIBHA SYNTEX LIMI TED BUT PROMISSORY NOTES WERE EXCHANGED IN THE INDIVIDU AL NAME OF THE KEY PERSON OF BOTH THE GROUP. SINCE, IN THE BUSINESS WORLD GROUP KNOWN WITH THE NAME OF KEY PERSON OF THE GROUP. 1. 1.7] THE ASSESSING OFFICER DURING THE COURSE OF ASS ESSMENT PROCEEDING HAS CONFRONTED THE AFFIDAVIT AS FILED BY THE ASSESSEE ON 15-122006. THE ASSESSEE IN REPLY TO THE QUESTION NOS 7 TO 9 OF THE STATEMENT RECORDED ON 15 -12-2006 HAS AGAIN CATEGORICALLY EXPLAINED THE CONTENT OF TH E AFFIDAVIT. 2. 1.8.1]COPY OF ACCOUNT OF M/S. PRATIBHA SYNTEX LIMIT ED IN THE BOOKS OF M/S SHREE VENKATESHWAR COTTON COMPANY. FOR THE A.Y. 2004-05 IS AVAILABLE ON PAGE NO 58 OF THE COMPILATION. THE DATE AS MENTIONED ON PROMISSORY NOTES ALSO TALLIES WITH THE DATE OF AMOUNT RECEIVED AND AMOUNT PAID BY THE SAID CONCERNS. 3. 1.8.2]COPY OF TRADING ACCOUNT OF M/S. PRATIBHA SYNT EX LIMITED IN THE BOOKS OF VARIOUS ASSOCIATE GROUP FIR MS OF THE ASSESSEE WERE ALSO FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. COPIES OF SAME AR E ENCLOSED ON PAGES 17 A TO 17S OF THE COMPILATION. DETAIL OF THE I SAME IS AS UNDER:- S.NO NAME OF THE PARTIES PERIOD PAGE NO OF COMPILATION -: 11: - 11 1.9] THE ASSESSEE HAS ALSO FILED AN AFFIDAVIT OF SHRI SH IV KUMAR CHOUDHARY, CHAIRMAN OF M/S PRATIBHA SYNTEX LIMITED DT. 17-10-2008 DURING REMAND PROCEEDING. CO PY OF THE SAME IS AVAILABLE ON PAGE NO 63 & 64 OF THE COMPILATION. SHRI CHOUDHARY IN HIS AFFIDAVIT HAS CATEGORICALLY DENIED THE RECEIPT OF ANY AMOUNT FROM THE ASSESSEE IN CASH. 1.10]THE LD. CIT (A) DURING THE APPEAL HAS CALLED F OR REMAND REPORT OF A.O. COPY OF REMAND REPORT AS RECEIVED FR OM THE ASSESSING OFFICER DURING THE COURSE OF APPELLAT E PROCEEDING IS ENCLOSED ON PAGE NOS. 59 & 60 OF THE COMPILATION. THE CONTENT OF AFFIDAVIT OF THE ASSESS EE AND THAT OF SHRI SHIV KUMAR CHOUDHARY HAS ALSO CONSIDER ED BY THE AO IN HIS REMAND REPORT. 1.11]COPY OF LETTER DT. 25-07-2006 AS FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING IS ENCLO SED ON PAGE NOS. 42 TO 43 WHEREIN THE ASSESSEE HAS PROPERLY EXPLAINED THE CORRECT NATURE OF HUNDIES/ PROMISSORY NOTES. 1.12]THAT IN VIEW OF THE ABOVE, IT IS CLEAR THAT TH E INCOME AS DECLARED BY THE ASSESSEE DURING THE COURSE OF SEARC H WAS UNDER UNDUE PRESSURE. THE ASSESSEE BY FILING HI S AFFIDAVIT, IN THE STATEMENT AS RECORDED DURING THE COURSE OF ASSESSMENT PROCEEDING AND WITH THE AFFIDA VIT OF SHRI SHIV KUMAR CHOUDHARY AND BY FILING THE COPY OF LEDGER ACCOUNT OF HIS CONCERNS HAS DULY ESTABLIS HED THAT NO AMOUNTS WERE ACTUALLY GIVEN BY HIM IN RESPE CT OF THE PROMISSORY NOTES AS FOUND AND SEIZED FROM TH E PREMISES OF THE ASSESSEE. 1.13]THAT IN THE STATEMENT OF THE ASSESSEE AS RECOR DED 1 NARENDRA INDUSTRIES 01-04-02 TO 31-03- 03 17K TO 17M 2 VENKATESH COTTON CO 01-04-02 TO 31-03- 03 17N 3 CHAGANLAL KISHANLAL & CO 01-04-03 TO 31-03- 04 17- O 4 VENKATESH COTTON CO 01-04-03 TO 31-03- 04 17- P -: 12: - 12 AT THE TIME OF SEARCH ON 22.12.2004, IN REPLY TO TH E QUESTION NO.1 OF STATEMENT DT. 22.12.2004, THE ASSESSEE HAD AGREED TO SURRENDER AN AMOUNT OF RS.86,00,000 /- ON ACCOUNT OF CASH EVEN WHEN CREDIT OF CASH WITHDRAWN FROM THE BANK OF RS.50,00,000 /- WAS NOT ALLOWED AT THE TIME OF SEARCH. THAT TO AVOID HARASSMENT AND UNDUE TENSION TO THE OTHER MEMBERS OF THE FAMILY THE ASSESSEE HAS SURRENDERED THE ENTIRE AMOUNT OF PROMISSORY NOTES FOUND. THAT WHILE PASSING THE ASSESSMENT ORDER FOR THE A.Y. 2005-06, THE LD A.O HIMSELF HAS ALLOWED CREDIT OF THE CASH WITHDRAWN FROM THE BANK AND AN AMOUNT OF RS 47,81,762/- ONLY WAS ADDED TO THE INCOME OF THE ASSESSEE IN PLACE OF INCOME OF RS 91,00,000/- AS DECLARED BY THE ASSESSEE ON ACCOUNT OF EXCESS CASH FOUND AND SEIZED DURING THE COURSE OF SEARCH. 8. WITH REGARD TO THE ADDITION ON ACCOUNT OF STATEM ENT RECORDED DURING THE COURSE OF SEARCH/SURVEY, CONTEN TION OF LD. AUTHORIZED REPRESENTATIVE WAS AS UNDER :- 1.14.2] THAT HON'BLE GUJRAT HIGH COURT IN THE CASE OF KAILASHBEN MANHARLAL CHOKSI VIS CIT REPORTE D IN 328 ITR 411 HAS ALSO HELD THAT STATEMENT RECORDE D AT ODD HOURS CANNOT BE CONSIDERED TO BE A VOLUNTARY STATEMENT AND IF IT IS SUBSEQUENTLY RETRACTED AND NECESSARY EVIDENCE IS LED CONTRARY TO SUCH ADMISSIO N AND THEREFORE ADDITION ON THE BASIS OF ORIGINAL STATEMENT UNDER S. 132(4) WAS NOT CALLED FOR IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 1.14.3]THE HON'BLE ITAT AHMEDABAD BENCH IN ACIT VIS HAREKRISHNA EXPORTS REPORTED IN 34 CCH 48 (AHD. TRIB) HAS DISMISSED THE APPEAL FILED BY THE REVENUE BY HOLDING THAT MERELY ON THE BASIS OF ADMISSION OF ASSESSEE, IT CANNOT BE SUBJECTED TO ADDITION UNLESS AND UNTIL SOME CORROBORATIVE EVIDENCE IS FOUND IN SUPPORT OF SUCH ADMISSION. -: 13: - 13 1.14.4]THE HON'BLE MADRAS HIGH COURT IN THE CASE OF M.NARAYANAN & BROS. VIS ACIT REPORTED IN 339 ITR 192 IN PARAS 12 TO 15 HAS HELD THAT WHILE THE STATEMENT RENDERED AT THE TIME OF SEARCH U/ S 132(4 ) MAY BE USED IN EVIDENCE IN ANY PROCEEDING, YET, THA T BY ITSELF DOES NOT BECOME THE SOLE MATERIAL TO REST THE ASSESSMENT MORE SO WHEN THE ASSESSEE SEEKS TO WITHDRAW THE SAME BY PRODUCING MATERIAL EVIDENCE IN THE SUPPORT OF SUCH RETRACTION. 1.14.5]THE HON'BLE JHARKHAND HIGH COURT IN THE CASE OF SHREE GANESH TRADING CO. VIS CIT REPORTED IN 84 CCH 025 IN PARAS 06 AND 07 HAS HELD THAT RETRACTED STATEMENT RECORDED U/S 132 (4) CANNOT BE BASIS FOR ASSESSING UNDISCLOSED INCOME OF THE ASSESSEE. THERE MUST BE SOME CORROBORATIVE EVIDENCE TO THE ADMISSION. 1. 14.6]THAT HON'BLE NAGPUR BENCH OF ITAT IN THE CA SE OF SMT GODAVARI DEVI AGRAWAL VS JCIT REPORTED IN 95 TT J 720 IN PARA 7 HAS HELD THAT WHEN THE WAS FILED SO A S TO EXPLAIN THE SEIZED DOCUMENTS FOUND DURING THE SEARCH IN THAT CASE, NO ADDITION IS JUSTIFIED ON TH E BASIS OF SEIZED DOCUMENTS. L.14.7]THE HON'BLE GUJRAT HIGH COURT IN THE CASE OF HEIRS AND LR'S OF LATE LAXMANBHAI S. PATEL VIS CIT REPORTED I N 327 ITR 290 IN PARAS 21 TO 25 HAS HELD THAT DEPARTMENT HAS CLEARLY FAILED TO ESTABLISH ANY NEXUS BETWEEN THE A LLEGED PROMISSORY NOTE AND THE AMOUNT SAID TO HAVE BEEN GI VEN BY THE ASSESSEE TO THE OTHER PARTY. THEREFORE, THE ORDERS OF THE AUTHORITIES BELOW ON THIS POINT WERE SET ASIDE AND IT WAS HELD BY THE HIGH COURT THAT TRIBUNAL WAS NOT RI GHT IN LAW IN UPHOLDING THE ADDITION IN THE HANDS OF THE ASSESSEE. KISHINCHAND CHELLARAM VS. CIT (1980) 19 C TR (SC) 360 : (1980) 125 ITR 713 (SC) RELIED ON. I.14.8]THE ASSESSEE ALSO RELY ON FOLLOWING DECISION WHEREIN RETRACTION FROM STATEMENT OF ASSESSEE HAS BEEN CONSIDERED AS PROPER IF THE SAME IS SUPPORTED BY AF FIDAVIT AND NECESSARY SUPPORTING EVIDENCES. -: 14: - 14 9. WITH REGARD TO ADDITION ON ACCOUNT OF INTEREST O N HUNDIES, CONTENTION OF LD. AUTHORIZED REPRESENTATIV E WAS AS UNDER :- 2.3] THE INTEREST AS RECEIVED ON THE AMOUNT OF LOAN S OF RS 1,50,00,000/AS ADVANCED BY M/S SHREE VEKTESHWAR COTTON CO HAS DULY BEEN OFFERED BY THAT FIRM. THE SAID FACT CAN ALSO BE VERIFIABLE FROM THE COPY OF ACCOUNT OF M/S PRATIBHA SYNTEX LIMITED IN THE BOOK OF M/S SHREE VENKTESHWAR COTTON CO IS ENCLOSED ON PAGE NO 58 OF THE COMPILATION. 2.4 THAT IN VIEW OF THE ABOVE AND AS STATED IN THE SUBMISSION FOR THE GROUND NO 1, THE HON'BLE BENCH IS REQUESTED TO DELETE THE ENTIRE AMOUNT OF ADDITIO N MADE ON ACCOUNT OF INTEREST ON PROMISSORY NOTES. S.N O NAME CITATION 0L. RAJESH JAIN V/S DCIT 100 TT J 929 (DEL) 02. PULLANGODE RUBBER PRODUCE CO. LTD 91 ITR 18 (SC) 03. NAGUBAI AMMAL V /S B. SHARMA RAO AIR 1956 SC 593 04. KRISHAN LAL SHIV CHAND RAI V / S CIT 88 ITR 293 (P& H) 05. CONTROL TOUCH ELECTRONICS (PUNE) P. LTD 72 TTJ 65 (PUNE) 06. KASAT PAPER PULP LTD. V / S ACIT 69 TTJ 924(PUNE) 07. DEEP CHAND & CO. V / S ACIT 51 TTJ 421 (MUM) 08. ACIT V /S SURYA KANTA DALMIA 99 TT J 1 (KOL)(SB) 09. DCIT V /S OKASA P. LTD. 10S0T 164 (MUM) 10. DCIT V /S RATAN CORPORATION. 197 CTR 536 (GUJ) 11. NIRMA TEXTILES MILLS P. LTD. V /S ACIT 284 ITR 325 ( GUJ) 12. CIT V / S ASHOK KUMAR SONI 291 ITR 172 -: 15: - 15 10. WITH REGARD TO ADDITION MADE ON ACCOUNT OF INVE STMENT IN FIXED DEPOSIT, CONTENTION OF LD. AUTHORIZED REPRESE NTATIVE WAS AS UNDER :- 3.1] THE ASSESSEE HAS TAKEN AN ADDITIONAL GROUND OF APPEAL IN THE ASSESSMENT YEAR 2003-04 WHEREIN HE HAS CHALLENGED THE ADDITION MADE BY THE A.O. AND CONFIR MED BY THE CIT(A) REGARDING INVESTMENT MADE IN THE FIXE D DEPOSIT IN THE NAME OF DIFFERENT FAMILY MEMBERS. TH E SAID GROUND WAS TAKEN IN THE APPEAL FILED BEFORE LD .CIT (A). THE LD.CIT(A) HAS SET- ASIDE THE ADDITION TO T HE ASSESSING OFFICER TO VERIFY THE DATE OF PREPARATION OF THE FIXED DEPOSIT. HOWEVER, INVESTMENT AND OWNERSHIP OF THE FIXED DEPOSIT WAS CONFIRMED THAT OF THE ASSESSEE. THAT DUE TO WRONG INTERPRETATION, GROUND WAS REMAINED TO BE TAKEN IN THE APPEAL BEFORE THE HON'BLE BENCH. 3.2] THAT WHILE PREPARING THE SAID APPEAL IT CAME T O OUR NOTICE THAT SAID GROUND OF APPEAL REMAINED TO BE TA KEN. HENCE, THROUGH THE ADDITIONAL GROUND OF APPEAL, THE ASSESSEE HAS CHALLENGED THE ADDITION MADE ON ACCOUN T OF INVESTMENT MADE IN THE FIXED DEPOSIT. 3.3] THAT DURING THE COURSE OF SEARCH FOLLOWING DEP OSIT WERE FOUND AND SEIZED FROM THE FACTORY PREMISES OF THE ASSESSEE.- LOOSE NAME ON WHICH DEPOSITED AMOUNT DATE OF INTEREST PAPER OF FD FD @11% NO 18 MEGHNA D / 0 SUNITA 45000 23.10.02 [ SISTER OF THE ASSESSEE ] 19 SUDHA 90000 23.10.02 [SISTER OF THE ASSESSEE] 20 PALLAVI D / 0 SUDHA 35000 23.10.02 [ SISTER OF THE ASSESSEE ] 21 SHRADDHA D/0 SUDHA 18000 23.10.02 -: 16: - 16 [ SISTER OF THE ASSESSEE] 22 SMT SUNITA 163000 23.10.02 [ SISTER OF THE ASSESSEE ] 23 BHARAT KUMAR S/0 SUDHA 25000 23.10.02 [ SISTER OF THE ASSESSEE] 376000 3.4] THAT ALL THE ABOVE MEMBERS BELONGING TO THE FA MILY OF THE SISTERS OF THE ASSESSEE VIZ SMT. SUDHA GARG AND SMT SUNITA AGRAWAL. 3.5] THAT DURING THE COURSE OF SEARCH NO QUESTION W AS RAISED ABOUT ALL THE ABOVE FIXED DEPOSITS. THAT DURING THE COURSE OF ASSESSMENT PROCEEDING, A LETTER DULY SIGNED BY BOTH THE SISTERS OF THE ASSESSEE WAS FILED WHEREIN BOTH THES E SISTERS CLAIMED OWNERSHIP ON THESE DEPOSITS. HOWEVER, THE ASSESSING OFFICER WITHOUT ASSIGNING ANY REASON ADDE D THE ENTIRE AMOUNT OF INVESTMENT IN THE FIXED DEPOSIT TO THE INCOME OF THE ASSESSEE. COPY OF LETTER AS FIELD BEF ORE THE ASSESSING OFFICER DULY SIGNED BY BOTH THESE SISTERS OF THE ASSESSEE IS ENCLOSED. [ PG. 47 TO 47 OF THE SYNOPSIS] 3.6.1]THAT FOUR FIXED DEPOSIT OF SMT SUDHA GARG'S F AMILY WAS ORIGINALLY PREPARED BETWEEN 18/03/1996 TO 26/03/2006 TOTALING TO RS.86,300 DATE OF PREPARATION AMOUNT DATE OF MATURITY MATURITY AMOUNT 18-03-96 & 26-03-96 86300 18-06-98 & 26-06-98 114900 18-06-98 & 26-06-98 114900 18-06-00 & 26-06-00 141366 FDR NOS 753311 TO 14 18-06-00 & 26-06-00 141366 18-09-01 & 26-09-01 156078 18-09-01 & 26-09-01 156078 18-09-02 & 26-09-02 168944 380717,18,20&21 23.10.02 168000 FOUND D DURING THE COURSE OF SEARCH -: 17: - 17 3.6.2] THAT ORIGINALLY THREE FIXED DEPOSITS OF SMT SUNITA AGRAWAL'S FAMILY WAS PREPARED ON 30.05.96 W.E.F. 19.9.95 FOR THE PERIOD OF ONE YEAR AND SO ON, DETAI L OF THE SAME ARE AS UNDER:- DATE OF PREPARATION AMOUNT DATE OF MATURITY MATURITY AMOUNT 19.09.1995 98900 19.09.1996 110200 19.9.1996 110200 19.9.1999 157124 19.9.1999 FDRS NO. 432534 TO 432536 157124 19.9.2002 206243 23.10.2002 208000 FOUND DURING THE COURSE OF SEARCH 3.7] THAT ALL THE ABOVE DEPOSITS ARE RELATED TO THE FAMILY OF THE SISTERS OF 1 THE ASSESSEE. THAT DURING THE COURSE OF ASSESSMENT A LETTER DULY SIGNED BY BOTH THESE SISTE RS HAVE ALREADY BEEN FILED WHEREIN BOTH THESE SISTERS OF THE ASSESSEE CLAIMED OWNERSHIP OF ALL THE ABOVE FDR'S. 3.8] THE LD. CIT(A) IN HIS ORDER IN 2.03 AND 2.04 H AS CONSIDERED THE SAID GROUND AND HAS GIVEN HIS FINDIN G ON PAGE 21 OF THE ORDER. THE LD. CIT(A) HAS DIRECTED T HE A.O. TO VERIFY THE CLAIM OF THE ASSESSEE THAT IF THE INVEST MENT HAS BEEN MADE IN THE 1996 AS CLAIMED BY HIM NO ADDITION OF THE INVESTMENT CAN BE MADE IN THE YEAR UNDER CONSIDERATION. HOWEVER HE HAS NOT ACCEPTED THE PRIN CIPLE FACT OF THE ISSUE THAT SAID FDR'S WERE NOT BELONGIN G TO THE ASSESSEE. 3.9] THAT IT IS GENERAL TENDENCY AMONGST THE INDIAN WOMEN TO HAVE SOME INVESTMENT FROM THEIR PIN MONEY IN THE NAME OF THEIR CHILDREN FOR THEIR FUTURE. NORMALLY T HEY KEEP THE SAME WITH THEIR FATHER/ELDER BROTHER. HERE IN THE CASE OF ASSESSEE HE WAS THE ELDEST SON OF THE FAMILY AND LOOKING TO THE STATUS OF THE ASSESSEE AN D THE AMOUNT OF FDR'S FOUND IT IS VERY CLEAR THAT HE WILL NOT MAKE SUCH A SMALL INVESTMENT IN FDR VIZ. RS. 18000,35000,25000 ALLEGED TO BE MADE OUT OF UNEXPLAINED INCOME AND MORE SO WHEN BOTH THE SISTER S -: 18: - 18 OF THE ASSESSEE HAVE CLAIMED OWNERSHIP OF ALL THE ABOVE FDR'S BY FILING THEIR CONFIRMATION LETTERS. 3.10]THAT IN VIEW OF THE ABOVE, THE HON'BLE BENCH I S REQUESTED THAT ADDITION OF RS.3, 76,000/ - MADE TO THE INCOME OF THE ASSESSEE AND CONFIRMED BY THE LD. CIT(A) BE DELETED IN FULL. 11. WITH REGARD TO ADDITIONAL GROUND TAKEN IN THE A SSESSMENT YEAR 2003-04 AND 2004-05, CONTENTION OF LD. AUTHORI ZED REPRESENTATIVE WAS AS UNDER :- 4.1]THAT IN THE SAID GROUND OF APPEAL THE LD. CIT(A) HAS CONFIRMED ADDITION OF RS. 17,234/- AND RS. 34,468/- IN THE A.Y. 2003-04 AND 2004-05 TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF INTEREST ON FDR'S OF RS. 3,76,000/- AS MENTIONED ABOVE IN THE GROUND NO 3 OF A.Y. 2003-04. 4.2] THE ASSESSEE HAS TAKEN AN ADDITIONAL GROUND IN RESPECT OF ADDITION MADE IN THE A. Y. 2003-04 WHICH REMAINED TO BE TAKEN IN THE ORIGINAL APPEAL FILED BY HIM. AS WE HAVE SUBMITTED ABOVE THAT WHILE PREPARING THE SAID APPEALS IT CAME TO OUR NOTICE THAT GROUND RELATED TO ADDITION IN RESPECT O F FDR'S HAS NOT BEEN PROPERLY ALLOWED BY THE CIT (A) HENCE WE HAVE ADVISED THE ASSESSEE TO FILE AN ADDITIONAL GROUND OF APPEAL. THE GROUND RELATED TO INTEREST ON SAID FDR'S BEING CONSEQUENTIAL IN NATURE. THE SAME MAY ALSO KINDLY BE ADMITTED. 4.3] THAT AS SUBMITTED BY US IN OUR SUBMISSION TO GROUND NO 3 FOR THE A.Y. 2003-04 THAT OWNERSHIP OF ALL THE ABOVE FDR'S BELONGING TO THE FAMILY OF THE SISTERS OF THE ASSESSEE. HENCE, TAXABILITY OF INTEREST ON ALL THESE FDR'S IN THE HAND OF THE ASSESSEE ARE NOT JUSTIFIED. 4.4]THAT IN VIEW OF THE ABOVE, THE HON'BLE BENCH IS REQUESTED TO DELETE ADDITION MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) OF RS.17,234/- AND RS. 34,468/- FOR THE A.Y. 2003-04 AND 2004-05 RESPECTIVELY BEING CONSEQUENTIAL IN NATURE. -: 19: - 19 12. WITH REGARD TO ITS PLEA OF SETTING OFF AN AMOUN T OF RS. 35 LAKHS, WHICH WAS ADDED TO THE INCOME OF THE ASSESSE E IN THE ASSESSMENT YEAR 2003-04, D ETAIL OF PROMISSORY NOTES OF RS.35,00,000/- AS FOUND AND SEIZED DURING THE COURSE OF SEARCH ARE AS UNDER:- 5.3] THAT ON PERUSAL OF THE ABOVE TABLE YOUR HON'OU R WILL FIND THAT ON THE ! FACE OF THE PROMISSORY NOTE S THE DATE OF EXECUTION AND DATE OF MATURITY OF THESE PROMISSORY NOTES WERE MENTIONED. THAT THE SAID AMOUNT OF PROMISSORY NOTES EVEN IF VERSION OF THE ASSESSING OFFICER HAS BEEN ACCEPTED MATURED ON 29.09.2002 .HENCE, THE SAID AMOUNT OF CASH WAS AVAILABLE WITH THE ASSESSEE FOR FURTHER ADVANCING. HENCE, SET- OFF OF THE SAID AMOUNT OF RS. 35,00,000 / - REQUIRES TO BE ALLOWED TO THE ASSESSEE. 5.4] THAT ADDITION MADE BY THE ASSESSING OFFICER O N BOTH THE COUNT WAS UPHELD BY THE LD. CIT(A) WITHOUT ALLOWING CREDIT BY FOLLOWING THE PRINCIPLE OF TELESCOPING WAS NOT JUSTIFIED AND AGAINST THE SETTL ED POSITION OF LAW. 5.5] THAT CREDIT OF ADDITION OF RS.35,00,000 / - B E ALLOWED BY FOLLOWING THE PRINCIPLE OF TELESCOPING. S.NO DATE OF HUNDI WRITER OF HUNDI HUNDI IN FAVOUR OF AMOUNT OF HUNDI MODE OF LENDING DATE OF THE MATURITY OF HUNDI 1 29.05.02 SHIV KU CHOUDHARY NARNEDRA AGRAWAL 1000000 NOT MENTIONED 29.9.02 2 25.05.02 SHIV KU CHOUDHARY NARNEDRA AGRAWAL 2500000 NOT MENTIONED 25.5.02 3500000 -: 20: - 20 13. TO SUPPORT ITS VIEW OF TELESCOPING, CONTENTION OF LD. AUTHORIZED REPRESENTATIVE WAS AS UNDER :- 5.6 THAT HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS VENKATESWARA TIMBER DEPOT REPORTED IN 222 ITR 768 HAS HELD THAT ( REFER CONCLUSION IN PERMEABLE):- ' THE TRIBUNAL WAS JUSTIFIED IN LAW IN TELESCOPING THE UNEXPLAINED CREDITS WITH THE ESTIMATED ADDITION TO THE BUSINESS INCOME TOWARDS DEFICIENCY IN GROSS PROFIT.' 5.7] THAT HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS K.S.M. GURUSWAMY NADAR & SONS REPORTED IN 149 ITR 127 HAS HELD THAT ( REFER PARA 8):- '8. IT IS THUS CLEAR THAT THE VIEW TAKEN BY THE TRI BUNAL IN THIS CASE THAT THE ADDITIONS TOWARDS THE SUPPRES SED BOOK PROFITS SHOULD BE TELESCOPED WITH THE ADDITION S TOWARDS THE CASH CREDIT IS LEGALLY TENABLE.' 5.8] THAT HON'BLE JODHPUR BENCH OF ITAT IN THE CASE OF SMT MAINA DEVI VS INCOME TAX OFFICER REPORTED IN 98 TT J 21 ( REFER PARA 5) HAS HELD :- '5. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THA T THE AO MADE TRADING ADDITION OF RS 21,600, WHICH WAS REDUCED IN THE FIRST APPEAL TO RS.10,000/-. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. TYARYMAJ BAL CHAND (1987) 62 CTR (RAJ) 216:(1987) 165 ITR 453( RAJ) HAS HELD THAT THE ASSESSEE CAN EXPLAIN THAT THE SUPPRESSED PROFITS HAD BEEN BROUGHT IN AS CASH CREDITORS AND ONE HAS TO BE TELESCOPED INTO THE OTHER RESULTING ONLY IN O NE ADDITION. SUCH TELESCOPING WAS UPHELD IN THE CASE O F K.S.M. GURUSWAMY NADAR & SONS ( 1984) 149 ITR 127 ( MAD) IN WHICH IT WAS HELD THAT SEPARATE ADDITION FOR BOGUS CASH CREDITS AND SUPPRESSION OF PROFITS CANNOT BE SUSTAINED AND BOTH ARE TO BE TELESCOPED AND COVERED INTO ONE ADDITION. THE JODHPUR BENCH OF THE, TRIBUNAL IN RAMESHWAR 'LAL SONI VS ASSTT. CIT (2004) 85 TTJ (JD)(TM) 553: (200 4) -: 21: - 21 91 ITD 301(JD)(TM) HAS UPHELD THE TELESCOPING. UNDER THESE CIRCUMSTANCES, WE ALLOW THE TELESCOPING OF THE TRADING OF ADDITION SO FINALLY SUSTAINED TO THE TUNE OF RS.10,000/- INTO THE ADDITION MADE UNDER S. 68 TO THE EXTENT OF RS.10,000/-. THE OTHER CONTENTI ON OF THE ASSESSEE FOR TELESCOPING THE ADDITION OF SQUARED UP ACCOUNTS INTO CASH CREDIT ADDITION DOES NOT OBVIOUSLY, MERIT ACCEPTANCE, BECAUSE NO TANGIBL E ADDITION, UNLIKE TRADING ADDITION, CAN BE SAID TO H AVE BEEN MADE, WHICH IS TO BE TELESCOPED INTO THE ADDITION OF CASH CREDIT. WE, THEREFORE, ALLOW BENEF IT OF RS.10,000/- TO THE ASSESSEE ON THIS COUNT.' 5.9] THAT HON'BLE JAIPUR BENCH OF ITAT IN THE CASE OF ARUN KALA VS ASSISTANT COMMISSIONER OF INCOME TAX REPORT ED IN 98 TTJ 1046 HAS HELD (PERMEABLE ): 'THE ASSESSEE IS MERELY ASKING THE TELESCOPING BENEFIT OF THE INCOME EARNED FROM SATTA BUSINESS AGAINST THE PEAK WHICH WAS SURRENDERED AND DULY ASSESSED BY THE AO. BY CONSIDERING THE TOTALITY OF THE FACTS AND STANCES OF THE CASE, BENEFIT OF TELESCOPING OR SET- OFF OF SE OR UNDISCLOSED INCOME OF THE ASSESSEE MAY CONSTITUTE A WHICH THE ASSESSEE MAY DRAW SUBSEQUENTLY FOR MEETING THE EXPENDITURE OR MAKING INVESTMENTS. THE AO MAY ALSO ALLOW BENEFIT OF SEEPING/SETTING OFF OF INCOME AGAINST EXPENDITURE I INVESTMENT, EVEN DURING THE CURRENT YEAR, AFTER LOOKING INTO THE FACT THAT UNEXPLAINED EXPENDITURE I INVESTMENT COULD BE REASONABLY ATTRIBUTED TO THE PRE- EXISTING FUND OF CONCEALED INCOME OR THEY WERE REASONABLY EXPLAINED BY REFERENCE TO THE CONCEALED INCOME EARNED IN THE RELEVANT YEAR. ANANTHARAM VEERASINGHAIAH & CO. VS CIT ( 1980) 16 CTR (SC) 189: (1980) 123 ITR 457(SC) RELIED ON.' 5.10] 123 ITR 457 (SC) ANANTRAM VEERASINGHIAH & CO. V/S CIT 5 .11] 85 TTJ 553(JODH) (TM) RAMESHWARLAL SONI V/ S ACIT -: 22: - 22 THIS PRINCIPLE OF TELESCOPING IS BEING CONSISTENTLY ACCEPTED BY TRIBUNALS, HIGH COURTS AND SO ALSO BY THE SUPREME COURT AS QUOTED ABOVE. IN VIEW OF THE ABOVE IT IS SUBMITTED THAT SET- OFF OF PROMISSORY NOTES OF RS.35,00,000 I-TAXED IN THE ASST YEAR 2003- 04 NOW REQUIRES TO BE ALLOWED TO THE ASSESSEE. 14. WITH REGARD TO ADDITION MADE IN THE ASSESSMENT YEAR 2004-05, ON THE BASIS OF ITEM NOS. 22 TO 25 OF BS-1 OF PANCHNAMA DATED 22.12.2004, CONTENTION OF LD. AUTH ORIZED REPRESENTATIVE WAS AS UNDER :- 6.1] CHAT IN THE SAID GROUND OF APPEAL THE ASSESSE E HAS CHALLENGED THE I ADDITION OF RS.38,387/-MADE BY THE ASSESSING OFFICER AND CONFIRMED I BY THE LD. CIT(A) ON THE BASIS OF ITEM NO 22 TO 25 OF BS-1 OF PANCHANAMA DATED 22.12.2004 AT FACTORY PREMISES. 6.2] THAT FROM THE STATEMENT AND RECORDS THE ASSESSEE SUBMITTED THAT THAT NO QUESTION WAS RAISED DURING THE COURSE OF SEARCH AND EVEN AFTER THE DATE OF SEARCH IN RESPECT OF ALL THESE ITEMS. 6.3] THAT DURING THE ASSESSMENT PROCEEDINGS' THE ASSESSEE HAS EXPLAINED THAT SAID PAPERS RELATES TO ADVANCES MADE TO EMPLOYEES OF THE UNITS. THESE ADVANCE COPY IS MAINTAIN BOOK OR PETTY CASH. THE MAXIMUM TOTAL BALANCES IN THESE ADVANCE COPY IS OUT OF THE FIRMS AND DEPOSITS OF LABOURERS WHO COME FROM OUTSIDE TO WORK. THE PEAK OF ADVANCES AT ANY TIME WAS RS.7,85,000/- . -: 23: - 23 6.4] THAT ADVANCE COPY IS BASICALLY EMPLOYEE'S WISE LIST DETAIL AS MAINTAINED BY THE CASHIER OF TH E GROUP OF THE ASSESSEE FOR CONTROLLING POINT OF VIEW AND IN THE SHAPE OF PETTY CASH BOOK. 6.5]THAT TOTAL AMOUNT OF PEAK INVESTMENT WAS CALCULATED BY THE A.O. AT RS.7,85,000/- OUT OF THAT AN AMOUNT OF RS.7,46,613/- WAS TAXED IN THE ASST YEAR 2002-03 AND BALANCE AMOUNT OF RS.38,387/- TAXED IN THE ASST YEAR 2004-05. 6.6] THE ASSESSEE ALSO EXPLAINED THAT ADVANCE REGISTER WAS MAINTAINED BY THE ASSESSEE TO HAVE EMPLOYEE WISE CONTROL OF ADVANCES AND THEIR RECOVERY. THAT ALL THE PERSONS AS MENTIONED IN THE ADVANCE REGISTER ARE REGULAR EMPLOYEES OF VARIOUS CONCERNS OF ASSESSEE'S GROUP. 6.7] THAT CASH BALANCE IN THE REGULAR BOOK OF ACCOUNT IS HIGHER THAN PEAK CALCULATED IN THE ADVANCE COPY. HENCE, IN ANY CASE NO ADDITION IS JUSTIFIED MORE SO WHEN ALL THE EMPLOYEES ARE REGULAR EMPLOYEE OF THE ASSESSEE'S FIRM AND HIS ASSOCIATES. 6.8] THE ASSESSEE HAS TAKEN THE SAID GROUND OF APPEAL BEFORE THE HON'BLE BENCH IN THE APPEAL FILED FOR THE A.Y. 2002-03 ALSO WHERE THE ADDITION OF RS. 7,46,613/- WAS MADE BY THE A.O. AND CONFIRMED BY THE CIT(A) . THE HON'BLE BENCH WHILE DECIDING THE APPEAL OF THE ASSESSEE IN ITS COMMON ORDER DT. 23.01.2013 IN PARA 9.1 ON PAGE 28 HAS DIRECTED THE A.O. TO EXAMINE THE SAID ISSUE FRESH AND EXAMINE THE NATURE OF THESE ENTRIES AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. PAGE NO. 45. 6.9] FOLLOWING THE SAME RATIO YOUR HONOUR IS REQUESTED TO SET-ASIDE THE SAID ISSUE TO THE FILE O F A.O. AS IN THE A.Y. 2002-03 15. WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAV E ALSO -: 24: - 24 DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS CITED AT BAR IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. FROM THE REC ORD, WE FOUND THAT THERE WAS SEARCH AT ASSESSEES BUSINESS PREMISES AND ITS GROUP ON 20-12-2004. DURING THE COURSE OF S EARCH, BOOKS OF ACCOUNT, HUNDIES/PROMISSORY NOTE ETC. WAS FOUND, WHEREIN ASSESSEE HAS SURRENDERED INCOME ON ACCOUNT OF HUNDIES, CASH ETC. SO FOUND. RETURN FOR AY 2003-04 WAS FILED AT INCOME OF RS.38,74,010/-, WHICH WAS ASSESSED BY THE AO AT RS.79,98,740/-. IN THE ASSESSMENT SO FRAMED, THE AO HAS MADE AN ADDITION ON ACCOUNT OF PROMISSORY NOTES AMO UNTING TO RS.35 LAKHS, INTEREST ON THESE PROMISSORY NOTES AT RS.2.10 LACS AND ADDITION ON ACCOUNT OF INVESTMENT IN FDR A T RS.3.76 LAKHS. SIMILARLY, IN THE AY 2004-05, RETURN WAS FIL ED AT AN INCOME OF RS.50,36,230/-, WHICH WAS ASSESSED BY THE AO AT RS.262,74,620/-. WHILE FRAMING ASSESSMENT, THE AO H AS MADE AN ADDITION OF RS.2 CRORES ON ACCOUNT OF PROMISSOR Y NOTES AND RS.12 LAKHS ON ACCOUNT OF INTEREST IN RESPECT OF PR OMISSORY NOTES. IN THE ASSESSMENT YEAR 2005-06, ASSESSEE HAS DECLARED ADDITIONAL INCOME OF RS.1,02,00,000/- IN THE FORM O F EXCESS CASH, JEWELLERY AND OTHER DOCUMENTS AND ASSETS FOUN D DURING -: 25: - 25 THE COURSE OF SEARCH. THE RETURN OF INCOME FOR THE AY 2005-06 WAS FILED AT AN INCOME OF RS.2,16,88,780/-, WHICH I NCLUDED ADDITIONAL INCOME OF RS.1,02,00,000/-. 16. THE ASSESSEE ALONG WITH HIS OTHER FAMILY MEMBER S AND ASSOCIATES DECLARED FOLLOWING AMOUNT OF ADDITIONAL INCOME DURING THE COURSE OF SEARCH AND TAX ON THE SAME WAS ALSO DEPOSITED. BREAKUP OF THE SAME ARE AS UNDER:- S.NO NAME OF THE ASSESSEE NATURE OF ADDITION AMOUNT [RS] 1 NARENDRA AGRAWAL ON ACCOUNT OF EXCESS CASH & JEWELLERY FOUND 87,00,000 ON ACCOUNT OF MARRIAGE EXP OF SHILPA D/O LATE SH RAJENDRA AGRAWAL 10, 00,000 ON ACCOUNT OF RENOVATION 5,00,000 1,02,00,000 2 SHRI CHAGANLAL AGRAWAL [FATHER OF SHRI NARENDRA AGRAWAL] ON ACCOUNT OF JEWELLERY 5,50,000 5,50,000 3 SHRI SANJAY KUMAR AGRAWAL [ BROTHER OF THE ASSESSEE] ON ACCOUNT OF JEWELLERY 8,23,598 ON ACCOUNT OF CASH 4,57,402 12,80,000 4 SHRI ASHUTOSH AGRAWAL [ COUSIN BROTHER OF THE ASSESSEE] ON ACCOUNT OF CASH 1,00,000 1,00,000 GRAND TOTAL OF INCOME DECLARED 1,21,30,000 -: 26: - 26 WITH REGARD TO THE ADDITION MADE ON ACCOUNT OF PRO MISSORY NOTES, WE FOUND THAT THE AO MADE ADDITION BY MENTIO NING THAT MODE OF LENDING IN CASE OF HUNDI WAS IN CASH, HOW EVER, NO MODE WAS PRESCRIBED ON THE PROMISSORY NOTES ITSELF. WE HAD VERIFIED COPY OF PROMISSORY NOTES AS PLACED IN THE PAPER BOOK, WHEREIN THERE IS NO MENTION OF ANY MODE WHETHER BY CASH OR CHEQUE HAS BEEN MENTIONED THEREON. ACCORDINGLY, OBS ERVATION MADE BY AO WAS NOT CORRECT. WE FOUND THAT DURING TH E COURSE OF SEARCH PROMISSORY NOTES OF RS. 2,35,00,000/- WER E FOUND AND SEIZED BY THE INCOME TAX DEPARTMENT. OUT OF THE SAID AMOUNT, PROMISSORY NOTES TOTALLING TO RS. 35,00,00 0/- WERE RELATED TO A.Y. 2003-04 AND REMAINING RS. 2,00,00,0 00/- PERTAINED TO THE A.Y. 2004-05. DETAILS OF ALL THESE PROMISSORY NOTES ARE AS UNDER:- S.NO DATE OF HUNDI WRITER OF HUNDI HUNDI IN FAVOUR OF AMOUNT OF HUNDI MODE OF LENDING DATE OF MATURITY OF HUNDI 1 29.5.02 SHIV KU CHOUDHARY NARENDRA AGRAWAL 1000000 NOT MENTIONED 29.9.02 2 25.5.02 SHIV KU CHOUDHARY NARENDRA AGRAWAL 2500000 NOT MENTIONED 25.9.02 A.Y. 2003-04 3500000 3 07.05.03 SHIV KU CHOUDHARY NARENDRA AGRAWAL 2500000 NOT MENTIONED 07.10.03 4 07.05.03 SHIV KU CHOUDHARY NARENDRA AGRAWAL 2500000 NOT MENTIONED 07.10.03 5 07.05.03 SHIV KU NARENDRA 2500000 NOT 07.10.03 -: 27: - 27 CHOUDHARY AGRAWAL MENTIONED 6 07.05.03 SHIV KU CHOUDHARY NARENDRA AGRAWAL 2500000 NOT MENTIONED 07.10.03 7 12.07.03 SHIV KU CHOUDHARY NARENDRA AGRAWAL 2500000 NOT MENTIONED 12.10.03 8 12.07.03 SHIV KU CHOUDHARY NARENDRA AGRAWAL 5000000 NOT MENTIONED 12.10.03 9 18.07.03 SHIV KU CHOUDHARY NARENDRA AGRAWAL 2500000 NOT MENTIONED 18.10.03 A.Y. 2004-05 20000000 23500000 WE HAD VERIFIED THE COPIES OF THE PROMISSORY NOTES WHICH ARE PLACED AT PAGES 17 TO 19 OF THE PAPER BOOK. WE HAD ALSO GONE THROUGH THE RELEVANT QUESTIONS AND REPLY OF ASSESSE E WHILE RECORDING STATEMENT U/S.132(4) ON 22-12-2004, WHICH ARE PLACED AT PAGE 27 OF THE PAPER BOOK. AFTER THE SEAR CH WAS COMPLETED, THE ASSESSEE HAS FILED AN AFFIDAVIT DATE D 15-2-2005, WHEREIN IN PARA 6 & 7, ASSESSEE HAS EXPLAINED THE C ORRECT NATURE OF PROMISSORY NOTES AS FOUND DURING THE COUR SE OF SEARCH. IT WAS ALSO EXPLAINED THAT AMOUNT OF RS.1.5 0 CRORES WERE PAID BY M/S SHREE VENKATESHWAR COTTON CO, ONE OF THE FIRM OF THE ASSESSEE FAMILY TO M/S PRATIBHA SYNTEX LIMITED BUT PROMISSORY NOTES WERE EXCHANGED IN THE INDIVIDU AL NAME OF THE KEY PERSON OF BOTH THE GROUP, SINCE, IN THE BUSINESS -: 28: - 28 WORLD GROUP IS KNOWN WITH THE NAME OF KEY PERSON OF THE GROUP. 17. THE AO ALSO CONFRONTED WITH THE AFFIDAVIT AS FI LED BY THE ASSESSEE ON 15-12-2006. IN REPLY TO AOS QUERY NO.7 TO 9 OF THE STATEMENT RECORDED ON 15-12-2006, THE ASSESSEE HAS AGAIN CATEGORICALLY EXPLAINED THE CONTENT OF THE AFFIDAVI T. ALONG WITH THE COPY OF PROMISSORY NOTE, WE HAD ALSO GONE THROU GH THE COPY OF THE ACCOUNT OF M/S PRATIBHA SYNTEX LIMITED IN THE BOOKS OF ACCOUNT OF SHRI VENKATESHWAR COTTON COMPAN Y AND FOUND THAT THE DATE AS MENTIONED ON PROMISSORY NOTE S ALSO TALLIES WITH THE DATE OF AMOUNT RECEIVED AND AMOUNT PAID BY THE SAID CONCERNS. THE ASSESSEE HAS ALSO FILED AN A FFIDAVIT OF SHRI SHIV KUMAR CHOUDHARY, CHAIRMAN OF M/S PRATIBHA SYNTEX LIMITED DT 17-10-2008 DURING REMAND PROCEEDI NG. SHRI CHOUDHARY IN HIS AFFIDAVIT HAS CATEGORICALLY D ENIED THE RECEIPT OF ANY AMOUNT FROM THE ASSESSEE IN CASH. HO WEVER, DURING THE APPELLATE PROCEEDINGS, THE CIT(A) ALSO C ALLED FOR REMAND REPORT OF A.O. COPY OF REMAND REPORT AS RECE IVED FROM THE ASSESSING OFFICER DURING THE COURSE OF APPELLAT E PROCEEDING IS PLACED AT PAGE NOS 59 & 60 OF THE PAPER BOOK. TH E CONTENT -: 29: - 29 OF AFFIDAVIT OF THE ASSESSEE AND THAT OF SHRI SHIV KUMAR CHOUDHARY HAS ALSO CONSIDERED BY THE AO IN HIS REMA ND REPORT. UNDER THESE FACTS AND CIRCUMSTANCES EVEN TR EATING THE SURRENDER AS ADMISSION OF CONCEALMENT OF UNDISCLOSE D INCOME, THE ASSESSEE COULD NOT BE DENIED ITS RIGHTS TO PROV E THAT FACT OF SURRENDER WAS NOT SUCH ADMISSION AND THAT THE SO CA LLED ADMISSION WAS IN FACT WRONG. AS PER OUR CONSIDERED VIEW AN ASSESSEE CAN RETRACT A STATEMENT PROVIDED HE IS ABL E TO PROVE THAT THE STATEMENT SO GIVEN WAS NOT CORRECT ON ANY POINT, THAT IS, EITHER IT WAS NOT VOLUNTARY OR NOT CORRECT ON T HE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS NOW AN ESTABLISHED PROPOSITION OF LAW THAT COMPUTATION OF UNACCOUNTED INCOME SHOUL D BE MADE ON THE BASIS OF EVIDENCE, DOCUMENT AND MATERIA L AND INFORMATION FOUND AS A RESULT OF SEARCH AND THE SAM E MUST BE AUTHENTIC, RELIABLE AND VERIFIABLE. THE ADDITION TO INCOME CANNOT BE MADE MERELY ON THE BASIS OF SUSPICION AND SURMISES AND THE AO MUST BRING POSITIVE EVIDENCE TO SHOW THA T THE NOTINGS IN THE SEIZED MATERIALS REPRESENT INCOME EA RNED BY AN ASSESSEE OUT OF BOOKS OF ACCOUNT. WITHOUT SUCH POSI TIVE EVIDENCE NO INCOME CAN BE ASSESSED AS UNACCOUNTED I NCOME. -: 30: - 30 18. IN VIEW OF THE ABOVE, IT IS CRYSTAL CLEAR THAT INCOME AS DECLARED BY THE ASSESSEE DURING THE SEARCH IN RESPE CT OF HUNDIES TO THE EXTENT OF RS.1.50 CRORES WAS UNDER U NDUE PRESSURE AND THE SAME WAS ACTUALLY ADVANCED THROUGH ACCOUNT PAYEE CHEQUES AND DULY ENTERED IN THE BOOKS OF ACCOUNT. THE FACTUM OF ASSESSEE GIVING SUCH TYPE OF LOAN ON HUNDIES WERE WELL PROVED NOT ONLY BY THE BANK STATE MENT THROUGH WHICH LOANS WERE ADVANCED BUT ALSO FURTHER CORROBORATED BY THE INTEREST RECEIVED ON THESE LOAN S ON WHICH TAX HAVE ALSO BEEN DEDUCTED BY CONCERN OF SHRI SHIV KUMAR CHOUDHURY. PRESUMPTION OF AO THAT DATE OF HUNDIES W ERE PRIOR TO THE DATE OF ADVANCING LOAN, THEREFORE, THE SE LOANS CANNOT BE TREATED AS PERTAINING TO THESE HUNDIES, D OES NOT HOLD TRUE INSOFAR AS GENERALLY PERSON ASKING FOR LO AN IS UNDER HAND AND OFFERS HUNDIES WHEN ASK FOR LOAN. MERELY, BECAUSE CHEQUES OF LOAN WAS ISSUED AFTER RECEIPT OF HUNDIES CANNOT BE MADE REASON FOR DECLINING THE LOAN TRANSACTION UNLE SS CONTRARY MATERIAL IS BROUGHT ON RECORD. AFTER GOING THROUGH THE STATEMENT WE FOUND THAT AT THE TIME OF SEARCH ON 22.12.2004, IN REPLY TO THE QUESTION NO.1OF STATEMENT DT.22.12.2004, ASSESSEE HAD -: 31: - 31 AGREED TO SURRENDER AN AMOUNT OF RS.86,00,000/- ON ACCOUNT OF CASH WHEN CREDIT OF CASH WITHDRAWN FROM THE BANK OF RS.50,00,000/- WAS NOT ALLOWED AT THE TIME OF SEARC H. THAT TO AVOID HARASSMENT AND UNDUE TENSION TO THE OTHER MEM BERS OF THE FAMILY THE ASSESSEE HAS SURRENDERED THE ENTIRE AMOUNT OF CASH SO FOUND. THAT WHILE PASSING THE ASSESSMENT OR DER FOR THE A.Y. 2005-06, THE LD A.O HIMSELF HAS ALLOWED CR EDIT OF THE CASH WITHDRAWN FROM THE BANK AND AN AMOUNT OF RS 47,81,762/- ONLY WAS ADDED TO THE INCOME OF THE ASS ESSEE IN PLACE OF INCOME OF RS 91,00,000/- AS DECLARED BY TH E ASSESSEE ON ACCOUNT OF EXCESS CASH FOUND AND SEIZED DURING T HE COURSE OF SEARCH. THE FACT THAT UNDER PRESSURE THE ASSESSE E HAS HIMSELF ACCEPTED AND SURRENDERED THE CASH AMOUNT FO UND, HOWEVER, DURING THE ASSESSMENT PROCEEDINGS, NO ADDI TION WAS MADE BY THE AO AS THE CASH WAS FOUND TO BE WITHDRAW N FROM BANK. SURRENDER OF CASH BY ASSESSEE EVEN WHEN IT WA S WITHDRAWN FROM THE BANK CLEARLY PROVES THE PRESSURE BUILT ON THE ASSESSEE BECAUSE OF WHICH ASSESSEE HAS SURRENDE RED EVEN THE HUNDIES WHEREIN LOAN WAS GIVEN BY ACCOUNT PAYEE CHEQUES AMOUNTING TO RS.1.50 CRORES. -: 32: - 32 19. AFTER GOING THROUGH THE COPIES OF HUNDIES, ACCO UNT OF M/S PRATIBHA SYNTEX AND AFFIDAVITS SO FILED, WE FOU ND THAT HUNDIES OF RS.1.5 CRORES WERE ON ACCOUNT OF PAYMENT MADE TO M/S PRATIBHA SYNTEX LTD FROM THE BOOKS OF THE FIRM M/S SHREE VENKAESHWAR COTTON COMPANY. THIS ACCOUNT CLEARLY SH OWS THAT AGAINST FOUR HUNDIES RS.25 LAKHS EACH, PAYMENT OF RS.1 CRORE WAS MADE ON 27-6-2003 BY CHEQUE. FURTHER PAYM ENT OF RS.50 LAKHS ON 7-10-2003 AND RS.50 LAKHS ON 10-10-2 003 WAS RECEIVED BACK BY THE ASSESSEE AFTER MATURITY OF HUNDI ON 6-10-2003. IT WAS ALSO EXPLAINED THAT HUNDIES WERE NOT RETURNED AND WERE KEPT FOR RETURNING BACK BUT THE S AME WERE MISPLACED AND WERE FOUND BY THE SEARCH PARTIES. WE ALSO FOUND THAT AGAINST HUNDI OF RS.50 LAKHS DATED 12-7 -2003 LOAN WAS GIVEN ON 18-7-2003, WHICH WAS RETURNED BACK ON 17-10- 2003, AS PER MATURITY OF HUNDI ON 12-10-2003. MEREL Y BECAUSE HUNDIES WERE SIGNED AND EXCHANGED BETWEEN INDIVIDUAL NAME OF KEY PERSONS OF BOTH GROUP INSTEA D OF CONCERNS OR GROUP ITSELF CANNOT BE MADE THE REASON TO DECLINE THE HUNDIES WHEREIN TRANSACTIONS WERE THROUGH ACCOU NT PAYEE CHEQUES, MORE PARTICULARLY WHEN IN THE BUSINESS WOR LD GROUP -: 33: - 33 IS KNOWN WITH THE NAME OF KEY PERSONS OF THE GROUP. NONE OF THE LOWER AUTHORITIES HAVE ALSO DISPUTED RECEIPT OF INTEREST ON THESE HUNDIES AND TAX WAS ALSO DEDUCTED THEREON BY THE PAYEE. THUS, HUNDIES OF RS.1.50 CRORES WAS NOT ASSE SSEES UNDISCLOSED INCOME BUT WERE ON ACCOUNT OF PAYMENTS ACTUALLY MADE. IF THE CONCLUSION DRAWN IN IMPUGNED ORDERS, OBSERVATIONS MADE IN ASSESSMENT ORDER, ASSERTIONS M ADE BY RESPECTIVE COUNSEL AND THE MATERIALS AVAILABLE ON R ECORD ARE KEPT IN JUXTAPOSITION AND ANALYSED, THE IRRESISTIBL E CONCLUSION WILL BE THAT LOAN OF RS.1.50 CRORES WAS GIVEN THROU GH ACCOUNT PAYEE CHEQUES DULY RECORDED IN BOOKS OF ACCOUNTS. O F M/S VENKATESHWAR COTTON COMPANY, A GROUP CONCERN OF ASS ESSEE. ACCORDINGLY, WE DIRECT TO DELETE THE ADDITION OF RS .1.50 CRORES MADE IN THE ASSESSMENT YEAR 2004-05. 20. WITH RESPECT TO ADDITION MADE IN AY 2003-04 IN RESPECT OF HUNDIES DATED 29-5-2002 & 25-5-2002 AMOUNTING TO RS.10 LAKHS AND 25 LAKHS, WE FOUND THAT THESE HUNDIES WER E DUE FOR MATURITY ON 29-9-2002 AND 25-9-2002. SINCE THE ASSE SSEE COULD NOT EXPLAIN THE SAME, WE CONFIRM THE ADDITION IN RESPECT OF THESE TWO HUNDIES AMOUNTING TO RS.35 LAKHS(RS.10 LAKHS -: 34: - 34 +25 LAKHS) IN THE ASSESSMENT YEAR 2003-04. AFTER CO NFIRMING THE ADDITION OF RS.35 LAKHS FOR THE ASSESSMENT YEAR 2003-04, REPAYMENT OF WHICH WAS ALSO DUE DURING THE ASSESSME NT YEAR 2003-04 ITSELF, WE CAN REASONABLE CONCLUDE THAT AMO UNT RECEIVED BACK ON MATURITY WAS AVAILABLE TO THE ASSE SSEE. AS OUT OF HUNDI OF LOAN OF RS.2 CRORES GIVEN IN ASSESS MENT YEAR 2004-05, WE HAVE ALREADY DELETED THE ADDITION OF RS .1.50 CRORES WHICH WAS GIVEN THROUGH ACCOUNT PAYEE CHEQUE , IN RESPECT OF BALANCE AMOUNT OF RS.50 LAKHS, WE SEE TH AT AMOUNT OF RS.35 LAKHS WAS AVAILABLE IN RESPECT OF ADDITION ON ACCOUNT OF HUNDI MADE IN THE PRECEDING ASSESSMENT YEAR I.E. AY 2003- 04 AS DISCUSSED ABOVE. AS THE HUNDI LOAN WAS OF RS. 35 LAKHS GIVEN IN THE AY 2003-04 WAS REPAYABLE IN THE VERY S AME ASSESSMENT YEAR I.E. A.Y.2003-04, THEREFORE, CREDIT OF RS.35 LAKHS CAN BE GIVEN ON ACCOUNT OF TELESCOPING IN THE A.Y.2004- 05. THUS, WE FURTHER DELETE ADDITION OF RS.35 LAKHS OUT OF BALANCE ADDITION OF RS.50 LAKHS IN THE AY 2004-05. IN VIEW OF THE ABOVE, WE CONFIRM ADDITION ON ACCOUNT OF HUNDIE S TO THE TUNE OF RS.35 LAKHS IN THE AY 2003-04 AND RS.15 LAK HS IN THE AY 2004-05. -: 35: - 35 21. AS WE HAVE DELETED THE ADDITION MADE ON ACCOUNT OF HUNDIES TO THE EXTENT OF RS.1.50 CRORES IN THE AY 2 004-05, SEPARATE ADDITION MADE BY THE AO ON ACCOUNT OF INTE REST ATTRIBUTABLE TO THIS AMOUNT IS ALSO DIRECTED TO BE DELETED. THE ADDITION SO MADE ON ACCOUNT OF INTEREST IS CONSEQUE NTIAL TO THE ADDITION MADE AND DISPUTED BY THE ASSESSEE ON ACCOU NT OF HUNDIES/PROMISSORY NOTES. SINCE INTEREST AS RECEIVE D IN RESPECT OF HUNDI LOAN OF RS.1.50 CRORES ADVANCED BY M/S SHREE VENKATESHWAR COTTON COMPANY HAS BEEN DULY OFFERED B Y THAT FIRM AND TAX AT SOURCE HAVE ALREADY BEEN DEDUCTED A T SOURCE BY PAYEE, ACCORDINGLY, THE ADDITION OF INTEREST ATT RIBUTABLE TO HUNDI LOAN OF RS.1.50 CRORES IS NOT JUSTIFIED. THER EFORE, THE AO IS DIRECTED TO DELETE THE SAME. 22. IN THE ASSESSMENT YEAR 2003-04 THE ASSESSEE HAS CHALLENGED THE ADDITION MADE BY THE A.O. AND CONFIR MED BY THE CIT(A) REGARDING INVESTMENT MADE IN THE FIXED D EPOSIT IN THE NAME OF DIFFERENT FAMILY MEMBERS. THE ASSESSEE HAD TAKEN THE SAID GROUND IN THE APPEAL FILED BEFORE LD. CIT( A). WE FOUND THAT THE LD CIT(A) HAS SET- ASIDE THE ADDITION TO T HE ASSESSING OFFICER TO VERIFY THE DATE OF PREPARATION OF THE FI XED DEPOSIT. -: 36: - 36 FROM THE RECORD, WE FOUND THAT DURING THE COURSE OF SEARCH FOLLOWING DEPOSITS WERE FOUND AND SEIZED FROM THE P REMISES OF THE ASSESSEE:- LOOSE PAPER NO NAME ON WHICH DEPOSITED AMOUNT OF FD DATE OF FD INTEREST @11% 18 MEGHNA D/O SUNITA [ SISTER OF THE ASSESSEE ] 45000 23.10.02 19 SUDHA [ SISTER OF THE ASSESSEE] 90000 2 3.10.02 20 PALLAVI D/O SUDHA [ SISTER OF THE ASSESSEE ] 35000 23.10.02 21 SHRADDHA D/O SUDHA [ SISTER OF THE ASSESSEE] 18000 23.10.02 22 SMT SUNITA [ SISTER OF THE ASSESSEE ] 163000 23.10.02 23 BHARAT KUMAR S/O SUDHA [ SISTER OF THE ASSESSEE] 2 5000 23.10.02 376000 DURING THE COURSE OF SEARCH, IT WAS EXPLAINED THAT ALL THE ABOVE MEMBERS WERE BELONGING TO THE FAMILY OF THE S ISTERS OF THE ASSESSEE VIZ SMT. SUDHA GARG AND SMT SUNITA AGR AWAL. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDING , A LETTER DULY SIGNED BY BOTH THE SISTERS OF THE ASSESSEE WAS ALSO FILED WHEREIN BOTH THESE SISTERS CLAIMED OWNERSHIP ON THE SE DEPOSITS. FOUR FIXED DEPOSIT OF SMT SUDHA GARGS FA MILY WAS ORIGINALLY PREPARED BETWEEN 18/03/1996 TO 26/03/200 6 -: 37: - 37 TOTALLING TO RS.86,300/-. IT IS GENERAL TENDENCY AM ONGST THE INDIAN WOMEN TO HAVE SOME INVESTMENT FROM THEIR PIN MONEY IN THE NAME OF THEIR CHILDREN FOR THEIR FUTUR E. NORMALLY THEY KEEP THE SAME WITH THEIR FATHER/ELDER BROTHER. HERE IN THE CASE OF ASSESSEE HE WAS THE ELDEST SON OF THE FAMILY AND LOOKING TO THE STATUS OF THE ASSESSEE AN D THE AMOUNT OF FDR'S FOUND IT IS CLEAR THAT HE WILL NOT MAKE SUCH A SMALL INVESTMENT IN FDR ALLEGED TO BE MADE OUT OF UNEXPLAINED INCOME AND MORE SO WHEN BOTH THE SISTE RS OF THE ASSESSEE HAVE CLAIMED OWNERSHIP OF ALL THE ABOVE FD RS BY FILING THEIR CONFIRMATION LETTERS. AFTER GOING THRO UGH THE RECORDS, WE DO NOT FIND ANY MERIT FOR MAKING ADDITI ON OF SMALL DEPOSITS MADE BY THE FAMILY OF THE SISTERS OF THE A SSESSEE. ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE ADDIT ION OF RS.3,76,000/- AND INTEREST COMPUTED THEREON IN THE HANDS OF ASSESSEE. 23. IN THE AY 2004-05, AN ADDITION OF RS.38,387/- W AS MADE ON THE BASIS OF BS-1 OF PANCHANAMA DATED 22-12-2004 . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS EXPLAINED THE SAID PAPERS AS RELATING TO ADVANCES M ADE TO -: 38: - 38 EMPLOYEES OF THE UNITS. THESE ADVANCES WERE RECORDE D IN A SUBSIDIARY BOOK OR PETTY CASH. WE FOUND THAT THE TR IBUNAL HAS DEALT WITH THE SIMILAR ADDITION IN ASSESSEES OWN C ASE IN AY 2002-03, WHERE AN ADDITION OF RS.7,46,613/- WAS MAD E BY THE AO AND SAME WAS CONFIRMED BY THE CIT(A). THE HON'BL E BENCH WHILE DECIDING THE APPEAL OF THE ASSESSEE IN ITS CO MMON ORDER DT. 23.01.2013 IN PARA 9.1 ON PAGE 28 HAS DIRECTED THE A.O. TO EXAMINE THE SAID ISSUE FRESH AND EXAMINE THE NATURE OF THESE ENTRIES AFTER GIVING DUE OPPORTUNITY TO THE ASSESSE E. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL D ATED 23-1- 2013 IN ASSESSEES OWN CASE, THE ADDITION OF RS.38, 387/- MADE IN THE AY 2004-05 IS ALSO RESTORED BACK TO THE FILE OF THE AO FOR DECIDING AFRESH IN TERMS OF DIRECTION GIVEN BY THE TRIBUNAL IN ITS ORDER DATED 23-1-2013. 24. IN AY 2005-06, ADDITION OF RS.3,71,851/- WAS MA DE BY THE AO ON ACCOUNT OF LOOSE PAPERS FOUND FROM THE PR EMISES OF THE ASSESSEE, MARKED AS LPS-1 OF PANCHANAMA DATED 2 1-12- 2004. WE FOUND THAT THE SAID EXPENSES OF RS.3,71,85 1/- INCLUDES AN AMOUNT OF RS 12,000/- AND RS.2,20,000/ - TOTALLING TO RS 2,32,000/- WHICH RELATES TO THE REN OVATION OF -: 39: - 39 THE HOUSE OF THE ASSESSEE. THE ASSESSEE HAS SEPARAT ELY DECLARED AN AMOUNT OF RS. 5,00,000/- ON ACCOUNT OF RENOVATION OF HOUSE. ONCE, THE ASSESSEE HAS SURREND ERED AN AMOUNT OF RS 5,00,000/- ON ACCOUNT OF RENOVATION OF HOUSE, IN THAT CASE THERE IS NO JUSTIFICATION FOR MAKING S EPARATE ADDITION FOR PURCHASE OF TILES OF RS.2,20,000/- AND PAYMENT TO PAINTER OF RS 12,000/-. THE LD CIT(A) HIMSELF WHILE DECIDING THE GROUND IN RESPECT OF INVESTMENT MADE IN THE REN OVATION OF THE HOUSE HAS CONSIDERED THE AMOUNT OF RS. 2,20,000 /- AND RS 12,000/- AS PAID TO M/S ADARSH SANITARY AND MUNS HI PAINTER RESPECTIVELY ON INNER PAGE NO 34 & 35 IN PA RA 6.06 OF HIS APPELLATE ORDER. HENCE, THE SAID AMOUNT INCLUDE D IN THE FIGURE OF RS 3,71,851/- SEEMS DOUBLE ADDITION. ACCO RDINGLY, WE DIRECT THE AO VERIFY THE SAME AND DELETE THE ADDITI ON OF RS.2,32,000/-(RS.2,20,000+12,000/-), AFTER GIVING D UE OPPORTUNITIES TO THE ASSESSEE. 25. ADDITION OF RS.24,62,210/- AND RS.1,99,945/- WA S MADE IN THE AY 2005-06 ON ACCOUNT OF UNEXPLAINED GOLD JE WELLERY AND SILVER ARTICLES, RESPECTIVELY. WE HAVE CONSIDER ED RIVAL CONTENTIONS AND GONE THROUGH THE ORDERS OF THE AUTH ORITIES -: 40: - 40 BELOW. DETAILS OF GOLD ORNAMENTS AND JEWELLERY FOUN D FROM THE DIFFERENT PREMISES AND LOCKERS OF THE ASSESSEE HAS BEEN DISCUSSED BY THE AO ON PAGE NO 4 OF THE ASSESSMENT ORDER AS UNDER:- S.NO NATURE NET WEIGHT [ IN GMS] AMOUNT [RS] 1 GOLD ORNAMENTS WITH PRECIOUS & SEMI PRECIOUS GEMS [ CORRECT NET WEIGHT WAS 1632.470 GMS, REFER VALUATION REPORT DT 22.12.2004, ENCLOSED ON PAGE NO 104 OF THE COMPILATION] 1865.680 21,62,340 2 GOLD ORNAMENTS 9458.320 52,14,686 11324.000 73,77,026 IN THE ORDER OF AO, IT APPEARS THAT THE AO HAS WRON GLY CONSIDERED NET WEIGHT OF GOLD ORNAMENTS AND JEWELLE RY AT 1865.680 GMS IN PLACE OF 1632.470 GMS, AS PER VALUA TION REPORT DT 22.12.2004. THE LD CIT(A) IN HIS ORDER ON INNER PAGE NO 19 IN PARA 3.05 HAS ACCEPTED THE CONTENTION OF T HE ASSESSEE AND DIRECTED THE AO TO CONSIDER NET WEIGHT OF JEWELLERY AT 11090.790 GMS IN PLACE OF 11324.000 GM S. THE LD CIT(A) IN HIS ORDER ON INNER PAGE NO 22 IN PARA 3.11 HAS ACCEPTED 100 GMS AS RELATED TO THE CHILDREN OF THE ASSESSEE I.E FOR MISS DIPALI AGRAWAL AND MASTER RAHUL AGRAWAL. T HE LD -: 41: - 41 CIT(A) IN INNER PAGE NO 24 IN PARA 3.14 HAS ALLOWED FURTHER CREDIT IN TERM OF VALUE OF RS 164716/- AS BELONGING TO THE ASSESSEE HIMSELF. THE ASSESSEE HAD DECLARED ADDITIO NAL INCOME ON ACCOUNT OF JEWELLERY AT RS 39,00,000/-. 26. AFTER CONSIDERING THE CREDIT GIVEN BY THE CIT(A ), THE REVISED CHART OF JEWELLERY WORKS OUT TO BE AS UNDER :- S.NO NATURE NET WEIGHT [ IN GMS] AMOUNT [RS] 1 GOLD ORNAMENTS WITH PRECIOUS & SEMI PRECIOUS GEMS [ CORRECT NET WEIGHT WAS 1632.470 GMS, REFER VALUATION REPORT DT 22.12.2004, ENCLOSED ON PAGE NO 104 OF THE COMPILATION] 1865.680 2162340 LESS DIFFERENCE IN THE NET WEIGHT AS DISCUSSED IN PARA 2.2.2.1 OF THIS SYNOPSIS 233.210 1632.470 2162340 2 GOLD ORNAMENTS 9458.320 5214686 11090.790 7377026 LESS AS BELONG TO SMT ABHA DEVI AGRAWAL , AS ACCEPTED BY THE AO AND LD CIT(A) [ REFER REPLY TO THE Q. NO 2 OF THE ASSESSEE ON PAGE NO 42 & 43 OF THE COMPILATION] 700.000 1035000 [345100+6899 00] [VALUATION AS DECLARED IN THE W.T RETURN FOR THE A.Y. 2004- 05] AS PERTAIN TO THE CHILDREN OF THE ASSESSEE 100.000 55133 [5214686/945 8.320*100] 10290.790 6342026 LESS AS PERTAIN TO THE ASSESSEE 235.000 164716 -: 42: - 42 ADDITIONAL INCOME DECLARED BY THE ASSESSEE ON ACCOUNT OF JEWELLERY 6917.020 3751100 ADDITION ON ACCOUNT OF EXCESS JEWELLERY MADE BY THE AO AND MAINTAINED BY THE LD CIT(A) 3138.770 2371077 FROM THE RECORD, WE FOUND THAT DURING THE COURSE OF SEARCH ITSELF, THE AUTHORISED OFFICER HIMSELF HAS ALLOWED CREDIT OF 350 GMS IN RESPECT OF THE DAUGHTER AND SON OF THE ASSES SEE. REFER QUESTION NO 2 OF THE STATEMENT OF ASSESSEE AS RECOR DED ON 22- 12-2004. HOWEVER THE LD. ASSESSING OFFICER HAS NOT ALLOWED ANY CREDIT IN RESPECT OF THE SON AND DAUGHTER OF TH E ASSESSEE. HOWEVER, LD CIT(A) IN HIS ORDER HAS ALLOWED CREDIT OF 50 GM ONLY OF 2 CHILD TOTALLING TO 100 GMS. SINCE, THE C BDT VIDE ITS CIRCULAR NO 1916, F.NO 286/63/93-IT [INV.II ] DATED 11TH MAY, 1994 HAS ACCEPTED THE POSSESSION OF 250 GMS IN CASE OF UNMARRIED DAUGHTER AND 100 GMS. IN CASE OF MALE MEM BER, THERE IS NO JUSTIFICATION FOR NOT GIVING CREDIT TO THE EXTENT OF 250 GRMS IN THE CASE OF UNMARRIED DAUGHTER AND 100 GMS IN THE CASE OF MALE MEMBERS. IN CASE OF M S AGRAWAL (H UF), 11 DTR 169 AND SMT.PATI DEVI, 240 ITR 727,, THE OWNERS HIP OF JEWELLERY ON THE BASIS OF CBDT CIRCULAR NO.1916 DAT ED 11-5- -: 43: - 43 1994 HAS BEEN ACCEPTED AND ADDITION SO MADE TO THAT EXTENT WAS HELD TO BE NOT JUSTIFIED. IN VIEW OF THE ABOVE, WE DIRECT THE AO TO GIVE FURT HER CREDIT OF 250 GMS IN RESPECT OF MISS DEEPALI AGRAWA L AND MASTER RAHUL AGRAWAL. 27. WITH REGARD TO JEWELLERY OF 2789.180 GMS, AS BE LONGING TO LATE SMT RAMARANI GARG , MOTHER OF SMT ABHA DEVI AG RAWAL WIFE OF THE ASSESSEE, WE FOUND THAT SMT ABHA DEVI A GRAWAL IN HER STATEMENT AS RECORDED ON 21-12-2004, PRIOR TO T HE OPERATION OF THE LOCKER IN REPLY TO THE QUESTIONS N O 5 AND 6 HAS CATEGORICALLY EXPLAINED ABOUT THAT JEWELLERY. E VEN IN REPLY TO THE QUESTION NO 2 OF THE STATEMENT DT 22-12-2004 AS RECORDED U/S 132[4] OF THE INCOME TAX ACT, ASSESSEE HAS EXPLAINED THE SOURCE OF JEWELLERY AS BELONGING TO H ER MOTHER IN LAW LATE SMT. RAMRANI GARG. BEFORE THE LOWER AUTHO RITIES, ASSESSEE HAS FILED AFFIDAVIT OF SMT ABHA DEVI AGRAW AL AND AFFIDAVIT OF SHRI OM PRAKASH GARG, HUSBAND OF LATE SMT. RAMA GARG DURING THE REMAND PROCEEDINGS. AS PER OUR CONSIDERED VIEW, THE STATEMENT AS RECORDED DURING T HE COURSE OF SEARCH U/S 132(4) HAS EVIDENTIARY VALUE UNTIL AN D UNLESS -: 44: - 44 THE SAME IS REBUTTEED WITH SOME DOCUMENTARY EVIDENC ES, IT CANNOT BE IGNORED. IN THE PRESENT CASE, WIFE OF THE ASSESSEE SMT ABHA DEVI AGRAWAL AND THE ASSESSEE HIMSELF HAS EXPLAINED THE OWNERSHIP AS BELONGING TO LATE SMT RA MARANI GARG. HENCE, THE LOWER AUTHORITIES WERE NOT CORRECT IN NOT APPRECIATING THE FACTS OF THE STATEMENT AS RECORDED U/S 132(4) OF THE I.T ACT AND MAKING ADDITION WITHOUT BRINGING OTHER CORROBORATIVE MATERIAL ON RECORD. 28. WITH REGARD TO STATEMENT U/S.132(4), HON'BLE KE RALA HIGH COURT IN THE CASE OF CIT VS O. ABDUL RAZAK REPORTED IN 68 DTR 237 HAS HELD THAT:- A PLAIN READING OF S. 132(4) WOULD CLEARLY SHOW T HAT WHAT WAS INTENDED BY EMPOWERING AN OFFICER CONDUCTING THE SE ARCH TO TAKE A STATEMENT ON OATH WAS TO RECORD EVIDENCE AS CONTEMP LATED IN ANY ADJUDICATION ESPECIALLY SINCE S. 131 CONFERS ON ALL OFFICERS EMPOWERED THEREIN WITH THE SAME POWERS AS VESTED IN A COURT UNDER THE CRPC, FOR THE PURPOSE OF THE IT ACT. THE TRIBUNALS FINDING THAT THE STATEMENT RECORDED UNDER S. 132(4) HAS NO EVIDENTIARY VALUE, HENCE, CANNOT BE SUSTAINED. THE RELIANCE PLA CED BY THE TRIBUNAL ON THE RETRACTION STATEMENT IS TOTALLY UNT ENABLE INSOFAR AS ANY STATEMENT RECORDED UNDER S. 132(4), STATUTORILY DEEMED TO HAVE EVIDENTIARY VALUE, CANNOT BE RETRACTED AT THE MERE WILL OF THE PARTY. A STATEMENT MADE UNDER OATH DEEMED AND PERMITTED TO BE USED IN EVIDENCE, BY EXPRESS STATUTORY PROVISION, HAS TO BE TAKEN AS TRUE UNLESS THERE IS CONTRA EVIDENCE TO DISPEL SUCH ASSU MPTION. A SELF- SERVING RETRACTION, WITHOUT ANYTHING MORE CANNOT DI SPEL THE STATUTORY PRESUMPTION. THE ADMISSION MADE BY THE ASSESSEE BEF ORE THE AO CORROBORATED BY THE TITLE DEEDS SEIZED IN SEARCH AB SOLVES THE DEPARTMENT FROM DISCHARGING ANY BURDEN REGARDING TH E ADDITIONS MADE ON THE STRENGTH OF SUCH ADMISSION. ADMISSION A S HAS BEEN OFTEN HELD IS THE BEST EVIDENCE ON A POINT IN ISSUE AND THOUGH NOT -: 45: - 45 CONCLUSIVE IS DECISIVE OF THE MATTER UNLESS SUCCESS FULLY WITHDRAWN OR PROVED ERRONEOUS. ANY RETRACTION OF A CLEAR ADMISSI ON MADE HAS TO BE ON THE GROUND OF IT BEING EITHER ERRONEOUS OR FA CTUALLY INCORRECT OR ONE MADE UNDER THREAT OR COERCION. IN THE INSTANT C ASE, THE FIRST APPELLATE AUTHORITY HAS CLEARLY FOUND THAT THE PLEA OF THE ASSESSEE THAT THE ADMISSIONS WERE MADE UNDER THREAT AND COER CION IS CLEARLY UNFOUNDED. THE TRIBUNAL ALSO HAS CATEGORICALLY REFU SED TO CONSIDER THE ISSUE OF THREAT AND COERCION. IN SUCH CIRCUMSTA NCES, THE TRIBUNAL OUGHT TO HAVE SEEN IF THE ASSESSEE HAS ESTABLISHED THAT THE ADMISSIONS MADE WERE ERRONEOUS AND FACTUALLY INCORR ECT. IT WAS WELL WITHIN THE CAPACITY OF THE ASSESSEE TO HAVE SH OWN BEFORE THE FACT-FINDING AUTHORITIES EITHER AT THE ORIGINAL OR AT THE APPELLATE STAGE THAT THE ASSESSEE HAD ONLY PAID AMOUNTS AS DISCLOSE D IN THE DOCUMENTS FOR THE VARIOUS PROPERTY TRANSACTIONS ENT ERED INTO BY HIM. THE ASSESSEE HAVING NOT PROVED ANY THREAT OR COERCI ON AND FURTHER HAVING FAILED TO PROVE THAT THE AMOUNTS SHOWN IN TH E DOCUMENTS WERE THE ONLY PAYMENTS MADE, THE TRIBUNAL WAS NOT R IGHT IN CASTING A BURDEN ON THE DEPARTMENT. THE ASSESSEE IN THE INS TANT CASE HAS FAILED TO SUCCESSFULLY DISPROVE THE ADMISSIONS MADE BY HIM AND ADMISSIONS MADE IN A STATEMENT UNDER S. 132(4), BY THE CLEAR PROVISIONS IN THE STATUTE HAVE TO BE CONSIDERED TO HAVE EVIDENTIARY VALUE.CIT VS. HOTEL MERIYA (2010) 45 DTR (KER) 356 : (2011) 332 ITR 537 (KER) FOLLOWED. HONBLE APEX COURT IN THE CASE OF P.R.METRANI VS CI T REPORTED IN 287 ITR 209 HAS HELD THAT :- THIS IS ALSO EVIDENT FROM THE FACT THAT WHEREAS T HE LEGISLATURE UNDER SECTION 132(4) HAS PROVIDED THAT THE BOOKS OF ACCOUNT, MONEY, BULLION, JEWELLERY AND OTHER VALUABLE ARTICLES OR T HINGS AND ANY STATEMENT MADE BY SUCH PERSON DURING EXAMINATION MA Y THERAFTER BE USED AS EVIDENCE IN ANY OTHER PROCEEDINGS UNDER THE ACT IT HAS NOT PROVIDED SO UNDER SUB- SECTION (4A) OF SECTION 132. IT DOES NOT PROVIDE THAT THE PRESUMPTION UNDER SECTION 132(4A) WOULD BE AVAILABLE WHILE FRAMING THE REGULAR ASSESSMENT OR F OR THAT MATTER UNDER ANY OTHER PROCEEDING UNDER THE ACT EXCEPT UND ER SECTION 278D. IF THE CONCLUSION DRAWN IN THE IMPUGNED ORDERS AND THE OBSERVATION MADE BY THE AO ALONG WITH THE CBDT CIRC ULAR NO.1916 AND THE ASSERTIONS MADE BY THE RESPECTIVE C OUNSEL AND MATERIAL AVAILABLE ON RECORD AND JUDICIAL PRONO UNCEMENT -: 46: - 46 AS DISCUSSED ABOVE ARE KEPT IN JUXTAPOSITION AND AN ALYZED, WE DO NOT FIND ANY MERIT IN THE ADDITION MADE IN RESPE CT OF 2789.180 GMS JEWELLERY BELONGING TO MOTHER OF SMT. ABHA DEVI AGRAWAL. HENCE, THE AO IS DIRECTED TO DELETE THE SA ME. 29. WITH REGARD TO THE ADDITION OF RS.8 LAKHS ON AC COUNT OF RENOVATION OF THE HOUSE IN THE AY 2005-06, WE FOUND THAT WHILE PREPARING THE CASHFLOW STATEMENT, ASSESSEE HA S INCORPORATED ENTIRE AMOUNT OF EXPENSES INCURRED TOW ARDS RENOVATION OF HOUSE AT RS.8 LAKHS WHICH WAS NOT DIS PUTED BY THE AO HIMSELF. HOWEVER, THE AO WHILE PASSING THE A SSESSMENT ORDER ALLOWED THE CREDIT OF INCOME SURRENDERED, RED UCED THE AMOUNT OF INCOME SURRENDERED AT RS.1,02,00,000/- BY THE AMOUNT OF RS.8 LAKHS IN PLACE OF RS.5 LAKHS, WHICH WAS DECLARED BY THE ASSESSEE. IN THE REVISED CASHFLOW S TATEMENT, FILED BEFORE THE LOWER AUTHORITIES, AN AMOUNT OF RS .3 LAKHS AS PAID BY THE ASSESSEE OUT OF HIS PERSONAL FUNDS WAS DULY REFLECTED. THUS, THE AMOUNT OF RS.3 LAKHS PAID BY T HE ASSESSEE STANDS DULY PROVED, THEREFORE, THE AMOUNT OF INCOME AS SURRENDERED BY THE ASSESSEE ON ACCOUNT OF RENOVATIO N OF HOUSE AT RS.5 LAKHS, WHICH WAS CONSIDERED BY THE AO AT RS .8 LAKHS, -: 47: - 47 NOW, REQUIRES TO BE REDUCED TO RS.5 LAKHS. WE ACCOR DINGLY RESTORE THE MATTER TO FILE OF AO TO DECIDE AFRESH T HE ADDITION OF RS.3 LAKHS SUSTAINED BY HIM. 30. IN THE ASSESSMENT YEAR 2005-06, AN ADDITION WAS MADE ON ACCOUNT OF SILVER UTENSILS/ARTICLES. FROM THE RE CORD WE FOUND THAT DURING THE COURSE OF SEARCH, 32.895 KGS OF SILVER UTENSILS, ORNAMENTS AND COINS WERE FOUND VALUING FO R RS 3,00,409/-. THE ASSESSING OFFICER AT PAGE 5 OF T HE ASSESSMENT ORDER HAS DISCUSSED THE SAID ISSUE IN DE TAIL AND AFTER ALLOWING CREDIT OF 5 KGS AT RS 9132/- TOTALLI NG TO RS 45662/- , ADDED BALANCE AMOUNT OF RS 254747/- TO TH E INCOME OF THE ASSESSEE. THE LD CIT(A) IN HIS ORDER AT PAGE 25 IN PARA 3.17 HAS DISCUSSED THE SAID ISSUE IN DETAIL AND ACCEPTED THE OWNERSHIP OF 10 KGS AS BELONGING TO SM T ABHA DEVI AGRAWAL AND 1 KG THAT OF THE ASSESSEE. ACCORDI NGLY, BY TAKING THE AVERAGE RATE OF RS 9132/-, HE HAS ALLOWE D FURTHER CREDIT OF RS 54792/- AND ACCORDINGLY, ADDITION FOR BALANCE AMOUNT OF RS 199955/- WAS MAINTAINED TO THE INCOME OF THE ASSESSEE. WE HAD GONE THROUGH THE STATEMENT RECORDE D -: 48: - 48 U/S.132(4) AND FOUND THAT THE ASSESSEE IN HIS STAT EMENT AS RECORDED DURING THE COURSE OF SEARCH U/S 132(4) OF THE INCOME TAX ACT HAS EXPLAINED THAT 15 KGS OF SILVER ARTICLE S WERE DECLARED BY HER WIFE AND 5 KGS OF ARTICLES WERE DEC LARED BY HIM. HOWEVER, IN PLACE OF 20 KGS CREDIT OF 11 KGS W ERE ONLY ALLOWED TO THE ASSESSEE. THUS, FURTHER CREDIT OF 9 KGS NOW REQUESTED TO BE ALLOWED. ON PERUSAL OF THE CASH FLO W STATEMENT, WE FOUND THAT THE ASSESSEE HAS CONSIDERE D JEWELLERY FOR RS 39,00,000/- AS DECLARED DURING THE COURSE OF SEARCH. HOWEVER, IN THE STATEMENT, JEWELLERY OF RS 37,51,100/- ONLY HAS BEEN CONSIDERED. HENCE, EXCESS AMOUNT OF R S 148900/- AS CONSIDERED IN THE CASH FLOW STATEMENT A PPEARS TO BE AVAILABLE WITH THE ASSESSEE FOR SETTING OFF AGAI NST THE SILVER AND GOLD. 31. IN VIEW OF THE ABOVE DISCUSSION, WE RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR DECIDING AFRESH AFTE R CONSIDERING THE OBSERVATIONS MADE HEREINABOVE. THE ASSESSEE SHO ULD BE GIVEN DUE OPPORTUNITY OF BEING HEARD BEFORE DECIDIN G THE MATTER. WE DIRECT ACCORDINGLY. -: 49: - 49 32. WITH REGARD TO THE ADDITION MADE ON THE BASIS O F LOOSE PAPERS FOUND WITH RESPECT TO SALE OF SCRAP AND EXPE NDITURE INCURRED ON RAILWAY TICKETS, SINCE THE ASSESSEE COU LD NOT EXPLAIN THE RECORDING OF THESE EXPENSES AND INCOME IN THEIR REGULAR BOOKS OF ACCOUNT, WE DO NOT FIND ANY INFIRM ITY IN THE ORDER OF LOWER AUTHORITIES FOR MAKING ADDITION IN R ESPECT OF INCOME ON ACCOUNT OF SALE OF SCRAP AND EXPENDITURE ON ACCOUNT OF RAILWAY TICKETS. WE DIRECT ACCORDINGLY. 33. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED IN PART, IN TERMS INDICATED HEREIN ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21/ 07 /2014. SD/- SD/- (JOGINDER SINGH) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 21/07 /2014 CPU,SR.PS,INDORE/PKM , PS, MUM OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT INDORE 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), INDORE 4. CIT, INDORE 5. DR, ITAT, INDORE 6. GUARD FILE. //TRUE COPY//