M/s. Shyam Corporation, Ahmedabad V. The Dy.CIT.,(OSD),Circle-9, Ahmedabad

ITSSA 144/AHD/2009

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2096 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 13-05-2016
• Assessment Year: misc
• Appeal Filed On: 10-11-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Keywords: Unexplained investment; Unexplained expenditure; Business expenditure; Income from undisclosed sources; Search and seizure; Principle of natural justice; Block assessment
• Section: 40A(3); 37(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER IT(SS)A NO. 144/AHD/2009 ( / ASSESSMENT YEAR: BLOCK PERIOD: 01.04.1989 TO 21.01.1997) M/S. SHYAM CORPORATION 57, MAYUR PARK, OPP: KRISHNA VIDHYALAY, BAPUNAGAR, AHMEDABAD .. APPE LLANT VS THE DY. COMM. OF INCOME TAX (OSD), CIRCLE 9, AHMEDABAD .. RESPONDENT & IT(SS)A NO. 156/AHD/2009 ( / ASSESSMENT YEAR: BLOCK PERIOD: 01.04.1989 TO 21.01.1997) ASST. CIT(OSD), CIRCLE 9, AHMEDABAD .. APPELLANT VS M/S. SHYAM CORPORATION, 1/1, SATHADHAR NAGAR, NATIONAL HIGHWAY, NO.8, BAPUNAGAR CHAR RASTA, AHMEDABAD .. RESPONDENT PAN : AAHFS1691J & IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 2 - IT(SS)A NO. 166/AHD/2009 ( / ASSESSMENT YEAR: BLOCK PERIOD: 01.04.1989 TO 21.01.1997) M/S. SHYAM DEVELOPERS 57, MAYUR PARK, OPP: KRISHNA VIDHYALAY, BAPUNAGAR, AHMEDABAD .. APPE LLANT VS THE DY. COMM. OF INCOME TAX (OSD), CIRCLE 9, AHMEDABAD .. RESPONDENT & IT(SS)A NO. 185/AHD/2009 ( / ASSESSMENT YEAR: BLOCK PERIOD: 01.04.1989 TO 21.01.1997) ASST. CIT(OSD), CIRCLE 9, AHMEDABAD .. APPELLANT VS M/S. SHYAM DEVELOPERS, 57, MAYUR PARK SOCIETY, BAPUNAGAR, AHMEDABAD .. RESPONDENT PAN : AAHFS1691J ASSESSEE(S) BY : SHRI ASEEM THAKKAR , AR REVENUE BY : S MT. VIBHA BHALLA , CIT - DR / DATE OF HEARING 13/05/2016 /DATE OF PRONOUNCEMENT 29/07/2016 IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 3 - / O R D E R PER BENCH ALL TWO SET OF CROSS APPEALS BY DIFFERENT ASSESSEES AND DEPARTMENT ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XV, AHMEDABAD FOR BLOCK PERIOD 01.04.1989 TO 21.01.1997. SINCE ALL T HESE APPEALS PERTAIN TO SAME GROUP AND ALMOST IDENTICAL ISSUES WERE RAISED IN THESE APPEALS; THEREFORE, THESE WERE HEAR D TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDE R FOR THE SAKE OF CONVENIENCE. 2. IN IT(SS)A NO.144/AHD/2009, IN CASE OF M/S. SHY AM CORPORATION, THE ASSESSEE HAS TAKEN THE FOLLOWING G ROUNDS OF APPEAL:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN PASSING AN ORDER WITHOUT GIVING A REASONABLE OPPORT UNITY OF BEING HEARD TO THE APPELLANT BEFORE ISSUING DIRE CTIONS IN RESPECT OF SPECIAL AUDIT U/S. 142(2A) OF THE INCOME TAX ACT, 1961. THE ORDER PASSED BY THE A.O. IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE, HENCE THE SAME IS BA D IN LAW AND LIABLE TO BE CANCELLED. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESS ING OFFICER FOR THE ALLEGED UNACCOUNTED WITHDRAWALS BY PARTNERS AS UNDER: A. YRS. AMOUNT IN RS. 1995-96 1,23,220/- IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 4 - 1996-97 3,70,000/- 01.04.1996 TO 21.01.1997 3,21,775/- 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN ENHANCING THE ADDITION MADE BY THE ASSESSI NG OFFICER IN RESPECT OF ALLEGED UNACCOUNTED WITHDRAWA LS AS UNDER:- A. YRS. AMOUNT IN RS. 1996-97 43,000/- ( 3,70,000/-+ 43,000/-) 01.04.1996 TO 21.01.1997 44,000/- (3,21,000/- + 44,000/-) 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITIONS MADE BY THE ASSES SING OFFICER FOR THE NET SURPLUS AS PER AUDIT REPORT U/S.142(2A) OF THE ACT, THE DETAILS OF WHICH ARE AS UNDER:- A. YRS. AMOUNT IN RS. 1995-96 35,31,530/- 1996-97 62,49,885/- 01.04.1996 TO 21.01.1997 88,99,750/- 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT GRANTING DEDUCTION OF EXPENSES/INVESTMENTS AGAINST THE UNDISCLOSED INCOME SO COMPUTED IN SPITE OF SPECIFIC EVIDENCES & OTHER MATERIAL FOUND & SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN NOT GRANTING DEDUCTION OF LAND AND OTHER EXPENDITUR E RELATED TO BUSINESS ACTIVITIES WHEN IT HAS BEEN ADM ITTED BY HIM THAT THERE IS UNACCOUNTED INVESTMENT THEREIN . 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN ENHANCING THE ADDITIONS FOR ALLEGED UNACCO UNTED WITHDRAWALS FROM RS.3,70,000/- TO 4,13,000/-IN A.YR.1996-97 AND FROM RS.3.21,775/- TO RS.3,65,000/ - IN THE BROKEN PERIOD WITHOUT AFFORDING A REASONABLE OPPORTUNITY OF SHOWING CAUSE AGAINST SUCH ENHANCEME NT & THEREBY ENHANCING THE CONTRAVENTION OF PROVISIONS OF SEC.251(2) OF THE I.T. ACT, 1961. IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 5 - 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING THE ALLEGED UNEXPLAINED INVESTM ENT IN LAND OF RS.L 1,34,092/- IN A.YR. 1994-95 FORMING PA RT OF THE BLOCK PERIOD. 9. THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS ERRED IN PLACING RELIANCE ON THE ALLEGED PROFIT/SUR PLUS AS INDICATED IN THE PROFIT & LOSS A/C. OF THE DUPLICAT E BOOKS OF ACCOUNT AS PER SPECIAL AUDITOR'S REPORT IN SPITE OF SPECIFIC SHORTCOMINGS & DEFICIENCIES POINTED OUT TH EREIN. 10. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) OUGHT TO HAVE CONSIDERED THE FACT THAT BOOKING MONEY IN T HE DUPLICATE BOOKS OF ACCOUNT ALSO INCLUDES BOOKING MO NEY SHOWN IN THE REGULAR BOOKS OF ACCOUNTS. 3. IN IT(SS)A NO.156/AHD/2009, IN CASE OF M/S. SHY AM CORPORATION, THE REVENUE HAS TAKEN THE FOLLOWING GR OUNDS OF APPEAL:- 1. THE LD. COMMISSIONER OF INCOME-TAX (A)-XI, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.1908021/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT FOR PURCHASE OF LAND FOR A.Y. 1994-95. 2. THE LD. COMMISSIONER OF INCOME-TAX (A)-XI, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT IONS MADE OF RS.850946/- AND RS.11747212/- MADE ON ACCOUNT OF UNACCOUNTED WITHDRAWALS BY THE PARTNERS A.Y. : 1995-96 AND FOR A.Y. 1994-95 RESPECTIVELY. 3. THE LD. COMMISSIONER OF INCOME-TAX (A)-XI, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.2473950/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT. 4. THE LD. COMMISSIONER OF INCOME-TAX (A)-XI, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT IONS OF RS.367175/- AND RS.4326155/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENTS FOR PURCHASE OF LAND FOR A. Y. 1994-95 AND A.Y. 1995-96 RESPECTIVELY. IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 6 - 5. THE LD. COMMISSIONER OF INCOME-TAX (A)-XI, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT IONS OF RS.26264/- MADE ON ACCOUNT OF NET SURPLUS (AS PER A UDIT REPORT NEGATIVE BALANCE OF UNACCOUNTED INCOME FOR A .Y. 1995-9. 6. THE LD. COMMISSIONER OF INCOME-TAX (A)-XI, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT IONS OF RS.30832/- MADE ON ACCOUNT OF UNACCOUNTED INCOME FO R A.Y. 1995-96. 7. THE LD. COMMISSIONER OF INCOME-TAX (A)-XI, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT IONS OF RS.874762/- MADE ON ACCOUNT OF DISALLOWANCE IN VIOLATIONS OF PROVISIONS OF SECTION 40(A)(3). 8. THE LD. COMMISSIONER OF INCOME-TAX (A)-XI, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT IONS OF RS.40130/- MADE ON ACCOUNT OF TRIAL BALANCE DIFFERE NCE. 4. ASSESSING OFFICER PASSED BLOCK ASSESSMENT ORDER FOR BLOCK PERIOD 1.4.89 TO 21.1.97 ON 31.12.2007. THE ASSESS EE FIRM DEVELOPED SHYAMAL PARK SCHEME ON LAND IN NARODA VIL LAGE, NEAR NIKOL ROAD AND CONSISTS OF FOLLOWING PARTNERS: I. BHAGWANBHAI K. PATEL 40% II. ARVINDBHAI PATEL 40% III. RAMESHBHAI PATEL 10% IV. CHANDUBHAI PATEL 10%. 4.1 IN THIS CASE, SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON 21.1.97. BHAGWANBHAI AND ARVINDBHAI WERE FOUND T O BE THE KINGPINS OF SHYAM GROUP. THE SEARCH ACTION REVEALED THAT THE GROUP ENTITIES WERE : I. NOT ACCOUNTING FOR SUBSTANTIAL PART OF THE RECEI PTS ON ACCOUNT OF SALE OF HOUSES / SHOPS IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 7 - II WERE HEAVILY INDULGING INTO UNACCOUNTED SALE A ND PURCHASE OF LAND, FOR WHICH TRANSACTIONS WERE CARRI ED OUT MOSTLY IN CASH. III. WERE MAINTAINING SEPARATE SET OF BOOKS OF ACCO UNTS (HEREINAFTER REFERRED TO AS NO.II BOOKS) IN RESPECT OF TRANSACTIONS NOT INCORPORATED IN THE REGULAR BOOKS OF ACCOUNTS (HEREINAFTER REFERRED TO AS NO.I BOOKS). THESE DUPLICATE SET OF BOOKS I.E. NO.II BOOKS SEIZE D REVEALED AMONG OTHER THINGS, THE DETAILS OF ON-MONEY RECEIVE D ON ACCOUNT OF SALE OF HOUSES / SHOPS AND HUGE UNACCOUN TED CASH WITHDRAWALS MADE BY THE PARTNERS. 4.2 ASSESSING OFFICER STATED THAT SEARCH RESULTED I NTO SEIZURE OF VARIOUS DOCUMENTS WHICH GAVE DETAILS OF BUSINESS CARRIED ON BY THE ASSESSEE IN LAND, HUGE AMOUNT OF CASH INVEST ED AND UNACCOUNTED PROFITS MADE IN THE LAND BUSINESS. IT H AS BEEN STATED THAT ALL THESE EVIDENCES WERE CONFRONTED WIT H THE ASSESSEE AND THE MAIN PERSONS OF THE ASSESSEE GROUP (SHRI BHAGWANBHAI K.PATEL, SHRI ARVIND P.PATEL AND SHRI K ALYAN K. PATEL) WHO CLAIMED TO HAVE ADMITTED ALL THE SEIZED BOOKS OF ACCOUNTS AND DOCUMENTS AND CONTENTS THEREIN. 4.3 CHRONOLOGY OF EVENTS SUBSEQUENT TO THE SEARCH H AVE BEEN SUMMARIZED BY THE ASSESSING OFFICER AS UNDER: (A) NOTICE U/S.158BC ISSUED ON - 27.2.97 ASKING THE ASSESSEE TO FILE RETURN FOR THE BLOCK PERIOD WITHIN 16 DAYS OF RECEIPT OF NOTICE. (B) NOTICE RECEIVED BY THE ASSESSEE 28.2.97 (C) BLOCK RETURN FILED LATE ON 25 TH AUGUST 98 DECLARING UNDISCLOSED INCOME AT RS.28,55,930. IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 8 - (D) ASSESSEE DIRECTED BY THE THEN ASSE SSING OFFICER VIDE LETTER DATED 5.10.98 TO GET ITS BOOKS OF ACC OUNTS AUDITED U/S.142(2A) BY NOMINATED AUDITORS VIZ. P. K. AJMERA AND COMPANY CAS. AND TO SUBMIT AUDIT REPORT BY 7.12.98. (E) AUDIT REPORT U/S.142(2A) DATED 30.3.99 FILED BY THE ASSESSES FOR VARIOUS AYS. 94-95 TO 96-97 AND FOR TH E BROKEN PERIOD FROM 1.4.96 TO 21.1.97 AND SAME WAS FILED BE FORE THE ASSESSING OFFICER ON 17.6.99. (F) ASSESSEE FILED APPLICATION BEFOR E SETTLEMENT COMMISSION, MUMBAI - VIDE DATED 1.12.1998 (G) SETTLEMENT COMMISSION APPLICATION OF TH E ASSESSEE ADMITTED - 14TH MAY 1999 (H) SETTLEMENT COMMISSION U/S.245HA ABATED THE SETT LEMENT APPLICATION FILED BY THE ASSESSEE BACK TO THE ASSES SING OFFICER BECAUSE THE ASSESSEE FAILED TO MAKE PAYMENT OF THE ENTIRE TAX LIABILITY AND INTEREST THEREON ARISING FROM THE INC OME ADMITTED BEFORE THE COMMISSION ON OR BEFORE 31ST JULY 2007. AS PER THE ASSESSEE IT FAILED TO PAY INTEREST ON THE TAX LIABI LITY.- VIDE ORDER PASSED U/S. 245HA DATED 22ND OCTOBER 2007. (I) THE SAID ORDER OF HON'BLE ITSC WAS RECEIVED IN THE OFFICE OF CIT IV, AHMEDABAD ON - 5 TH NOVEMBER 2007 (J) BLOCK ASSESSMENT WAS PASSED BY DCIT (OSD) CIRCL E-9, AHMEDABAD - SHRI M. J. PAUL - ON 31.12.2007. VARIOUS ADDITIONS WERE MADE IN THE BLOCK ASSESSMENT ORDER WHICH ARE DISPUTED BEFORE THE FIRST APPELLATE AUTHO RITY. 5. BEFORE CONCERNED CIT(A), ASESSEE FILED WRITTEN SUBMISSIONS FROM TIME TO TIME. REMAND REPORT WAS C ALLED AND SAME WAS MADE AVAILABLE TO THE ASSESSEE. IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 9 - 5.1 CIT(A) AFTER GOING THROUGH THESE SUBMISSIONS ST ATED THAT THE NET PROFIT CALCULATED IN THE SPECIAL AUDIT REPO RT AS PER NO.II BOOKS OF ACCOUNTS WAS CORRECT, SO HE CONFIRMED, HOW EVER THE ASSESSING OFFICER WAS DIRECTED TO GIVE SET OFF OF NET PROFIT DECLARED BY THE ASSESSEE IN THE BLOCK RETURN FOR DI FFERENT YEARS TOTALING TO RS.28,55,929/- WHILE COMPUTING THE INCO ME. BESIDE THIS, CIT(A) GRANTED PARTIAL RELIEF TO ASSESSEE. B OTH PARTIES ARE IN APPEAL BEFORE US AS GROUND OF APPEAL BY BOTH THE PARTIES. 6. ASSESSEE RAISED VARIOUS GROUNDS BEFORE US AS DET AILED ABOVE. BUT GROUND NOS. 1, 2, 3, 7 & 8 WERE NOT PRE SSED BY LD. AUTHORIZED REPRESENTATIVE. SO, SAME ARE DISMISSED AS NOT PRESSED. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT GROUND NOS. 9 & 10 ARE GENERAL IN NATURE. THESE GENERAL ARGUMENTS WILL BE TAKEN CARE AT APPRO PRIATE PLACE OF THIS ORDER. 6.1 THE MAIN ISSUE AS STATED IN ASSESSEES APPEAL B EFORE US IS WITH REGARD TO ENHANCING THE ADDITION MADE BY THE A SSESSING OFFICER FOR THE NET SURPLUS AS PER AUDIT REPORT U/S .142(2A) OF THE ACT, THE DETAILS OF WHICH ARE AS UNDER: A. YRS. AMOUNT IN RS. 1995-96 35,31,530/- 1996-97 62,49,885/- 01.04.1996 TO 21.01.1997 88,99,750/- 6.1.1 ASSESSING OFFICER HAS STATED THAT DURING THE SEARCH PROCEEDINGS NO. I & II BOOKS OF ACCOUNTS WERE FOUND AND SEIZED. TO ARRIVE AT THE CORRECT PROFIT SPECIAL AUD IT WAS DIRECTED. HE HAS STATED THAT SPECIAL AUDITOR MATCHED THE ENTR IES MADE IN NO.L & NO.II BOOKS OF ACCOUNTS AND ELIMINATED THE C OMMON IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 10 - ENTRIES AND PREPARED THEREAFTER THE TRADING, P&L AC COUNT & B/S. ACCORDINGLY, THE PROFITS AS PER THE SPECIAL AU DIT REPORT HAVE BEEN TREATED AS UNDISCLOSED INCOME. 6.1.2 ASSESSEE MADE A DETAILED SUBMISSION WHICH IS PLACED ON PG.20 OF THE PAPER BOOK FILED ON 29.08.20 12. PARTICULAR ATTENTION WAS DRAWN TO PARA 17.4 & PG.22 OF THE PB DATED 29.08.2012. ATTENTION IS DRAWN TO PG.12 & PAR A 10.2 OF THE ASSESSMENT ORDER WHEREIN HE HIMSELF HAS QUESTIO NED THE VERACITY OF THE SPECIAL AUDIT REPORT. THE FALLACIE S IN THE SPECIAL AUDIT REPORT AS POINTED BY ASSESSEE ARE LISTED AS U NDER: A. THE GROSS RECEIPT OF THE VARIOUS YEARS IS RS.2,4 7,71,301/- AND UNDISCLOSED INCOME IS RS.5,75,01,561/- B. NO EXPENSES OF LAND HAVE BEEN GRANTED AND INFACT THE PAYMENTS FOR LAND HAVE BEEN TREATED AS UNEXPLAINED INVESTMENT. C. ABNORMAL GP WORKED OUT BY THE SP. AUDITOR. IT IS 75.41% OVER THE BLOCK PERIOD. D. THE CASH ON HAND ON THE DATE OF SEARCH WAS WORKE D OUT AT RS.64,30,185/- AS PER SPECIAL AUDIT REPORT. NO SUCH CASH HAS BEEN ACTUALLY FOUND. E. NON GRANTING OF LAND EXPENSES WHILE PREPARING SP ECIAL AUDIT REPORT IN SPITE OF SPECIFIC TERM OF REFERENCE IN PA RA 7.1 A(IX) OF THE ASST. ORDER. (REFER PG.7 OF ASST. ORDER). THE T OTAL EXPENSES MADE IN CASH AND OUT OF NO.II BOOKS IS RS.35,02,778 /- WHICH HAS NOT BEEN GRANTED BY WAY OF DEDUCTION. IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 11 - F. NO STOCK APPEARS IN THE BALANCE SHEET AS CONTAIN ED IN THE SPECIAL AUDIT REPORT. (PG.204, 229 & 249 OF THE PAP ER BOOK DATED 29.08.2012). G. AUTHENCITY OF THE BALANCE SHEET OF THE SPECIAL A UDITOR IS DOUBTFUL SINCE IT SHOWS A TRIAL BALANCE DIFFERENCE OF RS.51,01,513/-. H. METHOD OF BOOKING SALES NOT UNIFORM WITH THE NO. L BOOKS I.E. ON THE BASIS OF THE POSSESSION HANDED OVER. WHEN HE HAS CERTIFIED BOTH THE SALES I.E. NO.L & II BOOKS OF AC COUNTS. 6.1.3 MANNER IN WHICH THE DUPLICATE BOOKS OF ACCOU NTS ARE WRITTEN WAS EXPLAINED IN PG.27 TO 31 OF THE PAPER B OOK DATED 29.08.2012. COMPLETE RECEIPTS I.E. NO.L & II RECORD ED IN THE DUPLICATE BOOKS OF ACCOUNTS. STATEMENT SHOWING RECE IPTS BY CHEQUE RECORDED IN DUPLICATE BOOKS OF ACCOUNTS. (PG .255 TO 256 OF PB DATED 29.08.2012). FURTHERMORE, THE CASH DEP OSITED IN THE BANK AS PER THE NO.II IS DULY REFLECTED IN THE BANK STATEMENT WHICH INDICATES THE FLOW OF CASH IN THE R EGULAR BOOKS OF ACCOUNTS. THE BALANCE SHEET DRAWN ON THE NO.II B OOKS AND PLACED ON PG.280 TO 285 OF THE PAPER BOOK DATED 29. 08.2012 INDICATES THE CASH DEPOSITED IN THE BANK ACCOUNT. CONFORMATION OF THE MEMBERS REGARDING THE BOOKING M ONEY PAID TILL THE DATE OF SEARCH PLACED ON PG.270 TO 27 3 OF THE PAPER BOOK DATED 29.08.2012. THE MANNER IN WHICH THE INC OME HAS BEEN WORKED OUT HAS BEEN MENTIONED IN PG.27 OF THE PB DATED 29.08.2012. THE CREDIT SIDE OF THE DUPLICATE CASH B OOK INCLUDES THE BOOKING MONEY RECEIVED FROM THE MEMBERS (ACCOUN TED INCLUDING THAT RECEIVED BY CHEQUE AS WELL AS UNACCO UNTED), LOANS FROM GROUP CONCERNS, MISCELLANEOUS INCOME ETC . THE IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 12 - DEBIT SIDE OF THE CASH BOOK INCLUDES THE PAYMENTS M ADE TOWARDS VARIOUS EXPENSES, PERSONAL WITHDRAWALS, NON BUSINESS EXPENDITURE, CASH DEPOSITED IN THE BANK ACCOUNT, RE PAYMENT OF LOANS AND AMOUNT GIVEN TO 'KAKA'. THE AMOUNT GIVEN TO KAKA IS THE NET SURPLUS OF THE FIRM AFTER MEETING ALL TH E EXPENDITURE. WHILE OFFERING ADDITIONAL INCOME BEFORE THE HON. IN COME TAX SETTLEMENT COMMISSION THESE AMOUNTS HANDED OVER TO KAKA HAVE BEEN CONSIDERED AS INCOME AND THE PRIMA FACIE DISALLOWABLE EXPENSES AND PERSONAL WITHDRAWALS OF T HE PARTNERS AS DEBITED IN THE DUPLICATE BOOKS OF ACCOU NTS HAVE BEEN ADDED BACK. OUT OF THE MONEY HANDED OVER TO KA KA THE LAND PAYMENTS HAVE BEEN MADE BY HIM WHICH ARE RECOR DED SEPARATELY IN THE DIARY. THIS DIARY CONTAINED THE N OTINGS OF LAND PAYMENTS HAD ALSO BEEN FOUND AND SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS. WHILE OFFERING ADDITIONAL INCOM E BEFORE ITSC OUT OF THE TOTAL INCOME OFFERED THE CLAIM OF D EDUCTION FOR LAND EXPENSES HAVE BEEN MADE SINCE THE SAME IS NOT RECORDED IN THE DUPLICATE CASH BOOK MAINTAINED. GENERALLY O NE FIRM DEVELOPS / CONSTRUCTS ONE PARTICULAR SCHEME. THE SC HEME DEVELOPED BY THE ASSESSEE IS 'SHYAMAL PARK' SCHEME. THE SURPLUS EARNED BY ONE FIRM WAS USED FOR PURCHASING LAND WHICH WAS SUBSEQUENTLY DEVELOPED BY ANOTHER FIRM. 6.1.4 TO EXPLAIN THE FLOW OF FUNDS A DETAILED CASH FLOW STATEMENT WAS ALSO PREPARED AND PRODUCED AT THE ASS ESSMENT AND APPELLATE STAGE. THE SAME WAS ALSO FURNISHED DU RING THE COURSE OF HEARING BEFORE US. THE CASH FLOW STATEME NT CONTAINS DAY TO DAY FLOW OF CASH TRANSACTIONS. THE RECEIPT C OLUMN IN THE CASH FLOW STATEMENT IS THE AMOUNT HANDED OVER TO KA KA AFTER MEETING ALL EXPENDITURE. THE PAYMENT COLUMN INDICAT ES THE IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 13 - DISBURSEMENTS MADE FOR THE PURCHASE OF LAND. THE DE TAILS OF LAND PAYMENTS HAVE BEEN NOTED IN THE DIARIES FOUND AND SEIZED FROM THE POSSESSION OF KAKA. THE 'TRANSFER INWARD' COLUMN INDICATES THE DATE, AMOUNT AND FROM WHERE THE FUNDS HAVE BEEN RECEIVED FOR MAKING LAND PAYMENTS. THE 'TRANSF ER OUTWARD' COLUMN INDICATES THE DATE, AMOUNT AND WHER E THE MONEY HAS BEEN GIVEN FOR MAKING LAND PAYMENTS BY OT HERS. THE BALANCE COLUMN INDICATES THE CASH AVAILABLE WIT H THE RESPECTIVE FIRM. WHEREVER THE INVESTMENT HAS BEEN M ADE IN EXCESS OF THE FUNDS AVAILABILITY THE BALANCE AMOUNT HAS BEEN OFFERED AS 'UNEXPLAINED INVESTMENT' IN THE HANDS OF THE ASSESSEE. THEREFORE, IN THE CASE OF THE ASSESSEE FI RM THE UNEXPLAINED INVESTMENT OF RS.11,34,092/- HAS BEEN O FFERED BY WAY OF ADDITIONAL TAX. AS STATED EARLIER WHILE OFF ERING ADDITIONAL INCOME BEFORE THE HON. INCOME TAX SETTLEMENT COMMIS SIONS THE NET SURPLUS WAS THE AMOUNT GIVEN TO KAKA HAS BE EN CONSIDERED. THIS AMOUNT WAS ALSO IN ACCORDANCE WIT H THE VERIFICATION DONE IN THE SPECIAL AUDIT REPORT. OUR ATTENTION WAS INVITED TO THE PAPER BOOK DATED 22.09.2015. THE ADD ITIONAL INCOME OFFERED IS RS. 10,23,220/- WHICH INCLUDES NE T SURPLUS OF RS.9.00 LACS AND WITHDRAWALS OF THE OTHER PARTNE RS RS. 1,23,220/-. ATTENTION WAS INVITED TO PAGE 204 OF TH E PAPER BOOK DATED 28.09.2012 WHICH CONTAINS THE NO.II BALA NCE SHEET IN THE SPECIAL AUDIT REPORT. THE PARTNER DEBIT BALA NCE ARE RS.10,23,220/- (9,00,000+1,23,220). THEREFORE, THE ACCURACY OF THE ADDITIONAL INCOME OFFERED COULD NOT BE DOUBLED AND WAS INFACT VERIFIABLE WITH THE SAR. 6.1.5 SIMILARLY, ATTENTION WAS INVITED TO PAGE 9C OF THE PB DATED 22.09.2015, THE ADDITION INCOME OFFERED C OMPRISES OF IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 14 - NET SURPLUS (AMOUNT GIVEN TO KAKA) OF RS.41,19,000/ - AND WITHDRAWALS BY PARTNERS RS.4,10,000/-. THIS WAS VE RIFIABLE WITH NO.II BALANCE SHEET PREPARED BY THE SPECIAL AU DIT REPORT AND APPEARING ON PG.229 OF THE PAPER BOOK DATED 29. 08.2012. THE PARTNERS DEBIT BALANCES AMOUNT TO 4.13 WHICH IS MORE OR LESS IN AGREEMENT WITH THE ADDITIONAL INCOME OFFERE D BY THE ASSESSEE FIRM AND THAT TO SHRI BHAGWANBHAI K. PATEL (KAKA) WAS RS.41,19,000/- WHICH IS IN COMPLETE AGREEMENT. ATTENTION WAS INVITED TO PAGE 9D OF THE PAPER BOOK DATED 22.0 9.2015 WHICH CONTAINS THE DETAILS OF ADDITIONAL INCOME OFF ERED FOR THE BROKEN PERIOD 01.04.1996. THE NET SURPLUS (AMOUNT G IVEN TO KAKA) IS RS. 53,00,000/- AND WITHDRAWALS OF PARTNER S IS RS.3,65,775/-. THE NO.II BALANCE AS PREPARED BY THE SPECIAL AUDITOR IS PLACED ON PG.249 OF THE PB DATED 29.08.2 012 WHICH SHOWS THAT THE AMOUNTS AS APPEARING IN THE PARTNERS ACCOUNTS ARE MORE OR LESS IN ACCORDANCE WITH THE ADDITIONAL INCOME OFFERED. THEREFORE, THE ACCURACY AND VERACITY OF TH E ADDITIONAL INCOME OFFERED BY THE APPLICANT FIRM WAS ALSO VERIF IABLE WITH THE SPECIAL AUDIT REPORT. 6.1.6 THE MANNER OF COMPUTING UNDISCLOSED INCOME H AS BEEN ACCEPTED IN THE GROUP CONCERN M/S SHYAM ORGANI ZERS BY THE ITSC. IN THE ORDER PASSED U S 245D(4) BY THE I TSC THE ACCURACY OF THE CASH FLOW STATEMENT WAS ALSO ACCEPT ED. 6.1.7 IN FACT, SEPARATE INQUIRY DIRECTED BY THE IT SC U/S 245D(3) OF THE ACT AND NO ADVERSE FINDING WAS REPOR TED BY THE DEPARTMENT. THE WRITTEN SUBMISSIONS DATED 25.11.20 14 WERE CONFRONTED TO THE CIT-5, AHMEDABAD AND NO ADVERSE C OMMENTS HAVE BEEN RECEIVED THEREON. IN VIEW OF ABOVE FACTU AL IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 15 - DISCUSSION, ENHANCING THE ADDITION MADE BY ASSESSIN G OFFICER FOR THE NET AS PER AUDITED REPORT U/S.142(2A) OF TH E ACT I.E. RS.35,31,530/- FOR A.Y. 1995-96, RS.62,49,885/- FOR A.Y. 1996-97 AND RS. 88,99,750/- FOR BROKEN PERIOD 01.04 .1996 TO 21.01.1997 IS NOT JUSTIFIED. SAME IS DIRECTED TO B E DELETED. 6.2 NEXT ISSUE IN ASSESSEES APPEAL IS WITH REGARD TO NOT GRANTING DEDUCTION OF EXPENSES/INVESTMENTS AGAINST THE UNDISCLOSED INCOME. IN THIS REGARD THE STAND OF AS SESSEE HAS BEEN THAT THE UNACCOUNTED INVESTMENT IN LAND IS AMO UNTING TO RS.35,02,778/-. THE EVIDENCES OF THE SAME HAVE BEE N FOUND DURING THE COURSE OF SEARCH PROCEEDINGS. NO DEDUCT ION OF THE LAND COST HAVE BEEN GRANTED WHILE COMPLETING THE AS SESSMENT. SIMILAR DISALLOWANCE WAS PROPOSED IN THE CASE OF M/ S SHYAM ORGANIZERS WHICH CASE HAS BEEN FINALIZED BY THE INC OME TAX SETTLEMENT COMMISSION. REFERENCE WAS INVITED TO PA RA 7.4 & PAGE 22 OF THE ORDER WHEREIN THE UNACCOUNTED INVEST MENT MADE HAS BEEN VERIFIED AND ACCEPTED. THE SEIZED RE CORDS HAS TO BE CONSIDERED IN ENTIRETY AND NOT PIECEMEA L AS HAS TO BE DONE IN THE ASSESSMENT. UNDER FACTS AND CIRCUMSTAN CES, DEDUCTION OF INVESTMENT /EXPENSES AGAINST UNDISCLOS ED INCOME SHOULD BE GIVEN BECAUSE SAME WAS BASED ON EVIDENCES AND OTHER MATERIAL FOUND AND SEIZED DURING COURSE OF SE ARCH. NO DEDUCTION OF THE LAND COST HAVE BEEN GRANTED WHILE COMPLETING THE ASSESSMENT. THE SOURCE OF INVESTMENT HAS BEEN F URNISHED BEING SURPLUS FROM GROUP CONCERNS AS FROM THE CASH FLOW STATEMENT FURNISHED. WHERE THE SOURCE OF INVESTMENT HAS NOT BEEN EXPLAINED THE SAME HAS BEEN OFFERED TO TAX. S IMILAR DISALLOWANCES PROPOSED IN M/S. SHYAM ORGANISER (PAR T OF ASSESSEES GROUP) HAS BEEN FINALIZED BY INCOME TAX SETTLEMENT IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 16 - COMMISSION, WHEREIN SIMILAR UNACCOUNTED INVESTMENT MADE HAVE BEEN VERIFIED AND ACCEPTED. AS PER SETTLED LE GAL POSITION, THE SEIZED RECORD HAS TO BE CONSIDERED IN ENTIRETY AND NOT IN PEACE MEAL BASES. IN VIEW OF THIS, ASSESSING OFFIC ER IS DIRECTED TO ALLOW DEDUCTION OF UNACCOUNTED INVESTMENT IN LAN D AS CLAIMED. 7. AS A RESULT, THIS APPEAL OF ASSESSEE IS PARTLY A LLOWED. 8. IN REVENUES APPEAL IN IT(SS)A NO.156/AHD/2009, FIRST ISSUE IS WITH REGARD TO ADDITION ON ACCOUNT OF WITH DRAWALS MADE BY PARTIES HAVE BEEN MADE AS PER PARA 12 OF TH E BLOCK ASSESSMENT ORDER. THE SAME WAS OFFERED BEFORE SETTL EMENT COMMISSION BY THE APPELLANT BUT WAS NOT OFFERED IN THE BLOCK RETURN. AY 1995-96 1,23,220 AY 1996-97 3,70,000 BROKEN PERIOD COMPRISING FROM 01/04/1996 TO 21/01/1997 3,21,775 ASSESSING OFFICER MADE FURTHER ADDITION OF UNACCOUN TED WITHDRAWALS MADE BY PARTNERS AS PER PARA 13 OF THE BLOCK ORDER AS UNDER : AY 1994-95 10,23,220 AY 1995-96 8,50,996 BROKEN PERIOD COMPRISING FROM 01/04/1996 TO 21/01/1997 1,17,47,212 IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 17 - 8.1 WITH RESPECT TO THE ADDITIONS MADE BY THE ASSES SING OFFICER, IN RESPONSE TO THE REMAND REPORT THE ASSES SEE VIDE WRITTEN SUBMISSION DATED 20.03.2009 STATED AS UNDER : 'THE APPELLANT FIRM IN ITS WRITTEN SUBMISSION HAD P OINTED OUT THAT THERE IS NO BASIS IN MAKING THE AFORESAID ADDITION. IT WAS ALSO CATEGORICALLY STATED THAT SIN CE THE SOURCE FROM WHERE THE FIGURES HAVE BEEN DERIVED WAS NOT KNOWN, THE AO MAY KINDLY BE PROVIDED THE BASIS FOR MAKING THIS ADDITION AS UDI. WE HAD ALSO CATEGORICA LLY STATED THAT ON EXAMINATION OF THE NO.2 BOOKS AND SP ECIAL AUDIT REPORT, WE HAD NOT BEEN ABLE TO IDENTIFY THE SOURCE OF REASON FOR MAKING THE ADDITION. ALL THESE FACTS HAD BEEN CLEARLY STATED IN OUR WRITTEN SUBMISSION. THE APPEL LANT FIRM HAS ALSO POINTED OUT THAT THE AO HAS STATED TH AT THESE FIGURES WERE DERIVED FROM NO.2 LEDGER. IT WAS POINTED OUT THAT IF NO.2 LEDGERS ARE THERE, THE COP Y OF THE SAME MAY KINDLY BE MADE AVAILABLE TO THE APPELLANT FIRM AS PER OUR KNOWLEDGE, THERE ARE NO.2 LEDGER AS ALLE GED BY THE ASSESSING OFFICER. 8.2 FROM THIS, CIT(A) OBSERVED THAT ADDITIONS MADE BY THE ASSESSING OFFICER NEED TO BE CONFIRMED BECAUSE THES E AMOUNTS OF WITHDRAWALS OF ASSESSEE HIMSELF DECLARED AS ITS UNACCOUNTED INCOME BEFORE THE SETTLEMENT COMMISSION. HOWEVER, CIT(A) OBSERVED THAT ASSESSING OFFICER MADE A TOTAL DISAST ER OF FIGURES / ADDITIONS WHILE MAKING FURTHER ADDITIONS OF WITHD RAWALS BY THE ASSESSING OFFICER . THE ASSESSMENT ORDER DOES NOT GIVE ANY INDICATION FROM WHERE THE FIGURES HAVE BEEN LIFTED, HOWEVER DURING THE COURSE OF APPELLATE PROCEEDINGS, AUTHORI ZED REPRESENTATIVE INFORMED THAT THE INTENTION OF THE A SSESSING OFFICER WAS TO TAKE FIGURES FROM ANNEXURE-1 OF EACH AY OF SPECIAL AUDIT REPORT UNDER THE HEAD 'YADI' - THAT I S WITHDRAWALS BY PARTNERS AS PER NO.II CASH BOOK. BUT HE IGNORED THAT FIGURE AND ASSESSMENT YEARS. IN THE INTEREST OF JUSTICE AS PER SPECIAL AUDIT REPORT ANNEXURES PERTAINING TO CA SH IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 18 - WITHDRAWALS FOLLOWING POSITION EMERGE FOR RESPECTIV E YEARS ACCORDING TO CIT(A). : AY 1994-95 : THE ASSESSING OFFICER HAS MADE ADDITI ON OF RS. 10,23,220 BUT NO FIGURES AT ALL APPEAR IN SPECIAL A UDIT REPORT WITH RESPECT TO WITHDRAWALS OF PARTNERS. THEREFORE THE ASSESSING OFFICER WAS DIRECTED TO DELETE THIS ADDIT ION. AY.1995-96 : THE SPECIAL AUDIT REPORT MENTIONS FOLL OWING FIGURES: NAME AND NARRATION WITH AMOUNT AS PER SPECIAL AUDIT REPORT ON THE BASIS OF NO.II CASH BOOK AMOUNT DECLARED BEFORE THE SETTLEMENT COMMISSION AS PARTNERS' WITHDRAWALS BHAGVANBHAI KHODABHAI (LAND) RS.9,00,000 9,00,000 BHAGVANBHAI KHODABHAI (UPAD) RS. 16,308 16,308 ASHOKKUMAR (UPAD) - RS. 3 1 ,842 31,842 RAMESHBHAI (UPAD)- RS. 29,7 18 29,718 CHANDUBHAI (UPAD) - RS. 35,386 35,386 ARVINDBHAI (UPAD)- RS. 6,342 6,342 MANUBHAI (UPAD) - RS. 3,624 3,624 8.3 AUTHORIZED REPRESENTATIVE EXPLAINED THAT RS.9,0 0,000/- WAS WITHDRAWAL FROM ON-MONEY BY BHAGWANBHAI FOR THE PURCHASE OF LAND WHICH IS OBVIOUS FROM THE NARRATIO N GIVEN AGAINST HIS NAME IN THE TABLE ABOVE, AND THAT IS WH Y THIS AMOUNT WAS DECLARED BEFORE SETTLEMENT COMMISSION UN DER THE HEAD 'NET SURPLUS' IN AY 1995-96 BECAUSE IT WAS USE D FOR THE BUSINESS OF THE FIRM. WITH RESPECT TO THE TOTAL OF THE REMAINING AMOUNTS IN THE TABLE ABOVE WHICH COMES TO RS.1,23,2 20/- IT WAS EXPLAINED THAT THIS AMOUNT HAS ALSO BEEN OFFERE D BEFORE SETTLEMENT COMMISSION IN AY 1995-96 UNDER THE HEAD IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 19 - 'WITHDRAWALS BY PARTNERS' AND THUS IT WAS ARGUED TH AT THE ADDITION OF RS.1,23,220/- AND RS.8,50,996/- BY THE ASSESSING OFFICER SHOULD BE DELETED. IN APPEAL, CIT(A) CONFI RMED THE ADDITION OF RS.1,23,220/- AS SAME WAS DECLARED BY I NCOME TAX SETTLEMENT COMMISSION, BUT CIT(A) DELETED ADDITION OF RS.8,50,996/- BECAUSE SAME WAS FOUND WITHOUT ANY BA SIS. 8.4 AFTER GOING THROUGH RIVAL SUBMISSIONS THE ADDIT ION OF RS. 1,23,220/- IN AY 1995-96 BY THE ASSESSING OFFICER W AS CONFIRMED BECAUSE IT WAS DECLARED BEFORE THE SETTLE MENT COMMISSION BY ASSESSEE AND ADDITION OF RS.8,50,996/ - AS DETAILED ABOVE WAS RIGHTLY DIRECTED TO BE DELETED B ECAUSE IT WAS WITHOUT ANY BASIS. THIS REASONED FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. SAME IS UPHELD. 8.5 AY 1996-97 : IN AY 1996-97 AS PER SPECIAL AUDIT REPORT FOLLOWING AMOUNTS HAVE BEEN MENTIONED AS WITHDRAWAL S FROM NO.II CASH BOOK UNDER THE HEAD 'YADI': NAME AND NARRATION AMOUNT OLD BALANCE ACTUAL WITHDRAWAL BHAGVANBHAI KHODABHAI (LAND) 5,01,900 9,00,000 ASHOKKUMAR (UPAD)- 31,842 31,842 RAMESHBHAI (UPAD) - 1,78,718 29,718 1,49,000 CHANDUBHAI (UPAD) 2,99,386 35,386 2,64,000 ABOVE TABLE SHOWS THAT NO ADDITION COULD BE MADE IN THE FIRST TWO NAMES APPEARING IN THE TABLE. THE TOTAL OF WITH DRAWALS IN THE NAME OF RAMESHBHAI AND CHANDUBHAI IN THE TABLE ABOVE COME TO RS.4,13,000/- (RS. 1,49,000 + RS.2,64,000), WHEREAS ASSESSEE HAS OFFERED IN AY 1996-97 ONLY RS.3,70,000 /- AS UNACCOUNTED WITHDRAWALS OF PARTNERS, FOR BALANCE RS .43,000/- IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 20 - NO EXPLANATION WAS OFFERED. THEREFORE THE ADDITION MADE BY ASSESSING OFFICER IN A.Y. 1996-97 WAS CONFIRMED OF RS.3,70,000/- + RS.43,000/-. THIS REASONED FINDI NG OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 8.6 BROKEN PERIOD FROM 1.4.96 TO 21.1.97 : AS PER S PECIAL AUDIT REPORT FOLLOWING AMOUNTS HAVE BEEN MENTIONED AS WITHDRAWALS FROM NO.II CASH BOOK UNDER THE HEAD 'YA DI' NAME AND NARRATION AMOUNT OLD BALANCE ACTUAL WITHDRAWAL BHAGVANBHAI KHODABHAI (LAND) 1,09,06,000 56,06,000 53,00,000 RAMESHBHAI (UPAD) - 3,38,218 1,78,718 1,59,500 CHANDUBHAI (UPAD) 5,02,661 2,96,386 2,06,275 IN THE BROKEN PERIOD ASSESSEE DECLARED BEFORE THE S ETTLEMENT COMMISSION RS.3,21,775/- AS UNACCOUNTED WITHDRAWALS BY PARTNER. RS.53,00,000/- IT WAS EXPLAINED WAS DECLAR ED BEFORE SETTLEMENT COMMISSION AS NET SURPLUS NOT RECORDED I N THE BOOKS BECAUSE IT WAS WITHDRAWAL FROM ON MONEY FOR L AND PURPOSES. CIT(A) FOUND IT OBVIOUS FROM THE CHART A BOVE ACTUAL UNACCOUNTED WITHDRAWALS AS PER SPECIAL AUDIT REPORT COME TO RS.3,65,775/- ( RS. 1,59,500 + RS.2,06,275) THAT ME ANS RS.44,000/- (RS.3,65,775 -RS.3,21,775) WAS OFFERED LESS BEFORE SETTLEMENT COMMISSION. IN THIS REGARD, CIT(A) OBS ERVED THAT AUTHORIZED REPRESENTATIVE HAS BEEN PLEADING THAT TH E WITHDRAWALS MENTIONED IN YADI IN SPECIAL. AUDIT REP ORT HAVE BEEN OFFERED BEFORE SETTLEMENT COMMISSION, THEREFOR E FOR THE BROKEN PERIOD THE ADDITION MADE BY ASSESSING OFFICE R WAS CONFIRMED OF RS.3,21,775 + RS.44,000 (OFFERED LESS BEFORE SETTLEMENT COMMISSION) BY CIT(A) AND THE ADDITION O F IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 21 - RS.1,17,47,212/- MADE FOR THE BLOCK ORDER WAS RIGHT LY DIRECTED TO BE DELETED BECAUSE IT WAS FOUND WITHOUT ANY BASI S. THIS REASONED FINDING OF CIT(A) NEEDS NO INTERFERENCE FR OM OUR SIDE. SAME IS UPHELD. 9. IN RESULT, APPEAL OF REVENUE IS DISMISSED. 10. IN IT(SS)A NO.166/AHD/2009, IN CASE OF M/S. SH YAM DEVELOPERS, THE ASSESSEE HAS TAKEN THE FOLLOWING GR OUNDS OF APPEAL:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN PASSING AN ORDER WITHOUT GIVING A REASONABLE OPPORT UNITY OF BEING HEARD TO THE APPELLANT BEFORE ISSUING DIRE CTIONS IN RESPECT OF SPECIAL AUDIT U/S. 142(2A) OF THE INCOME TAX ACT, 1961. THE ORDER PASSED BY THE A.O. IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE, HENCE THE SAME IS BA D IN LAW AND LIABLE TO BE CANCELLED. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESS ING OFFICER FOR THE ALLEGED UNACCOUNTED WITHDRAWALS BY PARTNERS ASUNDER: A. YRS. AMOUNT IN RS. 1996-97 5,000/- 01.04.1996 TO 21.01.1997 99,250/- 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESS ING OFFICER FOR THE ALLEGED UNACCOUNTED DONATIONS OF RS.44,875/- IN THE BROKEN PERIOD. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITIONS MADE BY THE ASSES SING OFFICER FOR THE NET SURPLUS AS PER AUDIT REPORT U/S . 142(2A) OF THE ACT, THE DETAILS OF WHICH ARE AS UND ER: IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 22 - A. YRS. AMOUNT IN RS. 1996-97 1,51,000/- 01.04.1996 TO 21.01.1997 49,06,108/-(41,56,108+7,50,000/-) 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT GRANTING DEDUCTION OF EXPENSES/INVESTMENTS AGAINST THE UNDISCLOSED INCOME SO COMPUTED IN SPITE OF SPECIFIC EVIDENCES & OTHER MATERIAL FOUND & SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN NOT GRANTING DEDUCTION OF LAND AND OTHER EXPENDITUR E RELATED TO BUSINESS ACTIVITIES WHEN IT HAS BEEN ADM ITTED BY HIM THAT THERE IS UNACCOUNTED INVESTMENT THEREIN . 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS.10,99,160/- MADE FOR THE ALLEGED UNEXPLAINED INVESTMENT IN LAND IN A .YR. BROKEN PERIOD I.E. 01.04.1996 TO 21.01.1997. 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS ERRED IN PLACING RELIANCE ON THE ALLEGED PROFIT/SUR PLUS AS INDICATED IN THE PROFIT & LOSS A/C. OF THE DUPLICAT E BOOKS OF ACCOUNT AS PER SPECIAL AUDITOR'S REPORT IN SPITE OF SPECIFIC SHORTCOMINGS & DEFICIENCIES POINTED OUT TH EREIN. 9. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) OUGHT TO HAVE CONSIDERED THE FACT THAT BOOKING MONEY IN T HE DUPLICATE BOOKS OF ACCOUNT ALSO INCLUDES BOOKING MO NEY SHOWN IN THE REGULAR BOOKS OF ACCOUNTS. 11. IN IT(SS)A NO.185/AHD/2009, IN CASE OF M/S. SHY AM DEVELOPERS, THE REVENUE HAS TAKEN THE FOLLOWING GRO UNDS OF APPEAL:- 1) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.750000/- MADE ON ACCOUNT OF UNDISCLOSED INCOME O N ACCOUNT OF NET SURPLUS WHICH WAS DISCLOSED BY THE ASSESSEE IN THE STATEMENT OF FACT FILED BEFORE THE ITSC. IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 23 - 2) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.563037/- MADE ON ACCOUNT OF UNEXPLAINED CASH CRE DIT IN NO.II ACCOUNT. 3) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.248000/- MADE ON ACCOUNT OF UNEXPLAINED CASH CRE DIT IN NO.I ACCOUNT. 4) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.1003250/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN LAND PURCHASE / PARTNERS WITHDRAWAL. 5) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.8816303/- MADE ON ACCOUNT OF NET UNEXPLAINED INVESTMENT IN LAND PURCHASE. 6) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.115961/- MADE ON ACCOUNT OF UNEXPLAINED NEGATIVE CASH BALANCE. 7) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.219268/- MADE ON ACCOUNT OF UNDISCLOSED MISCELLANEOUS EXPENSES. 8) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS.100000/- MADE ON ACCOUNT OF UNDISCLOSED DALALI EXPENSES. 12. THIS FIRM DEVELOPED 'SHYAM VIHAR' RESIDENTIAL SCHEME OF SMALL RESIDENTIAL HOUSES (TENEMENTS) AS WELL AS SHO PS NEAR NAVA NARODA IN AHMEDABAD. ASSESSEE FIRM CAME INTO EXISTENCE VIDE PARTNERSHIP DEED DATED 10.02.1996, C ONSISTING OF FOLLOWING PARTNERS : 1. BHAGWANBHAI K.PATEL 30% IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 24 - 2. ARVINDBHAI PATEL 30% 3. BHIKABHAI VIRJIBHAI 20% 4. BHARATBHAI PARBATBHAI 20% IN THIS CASE, ALSO SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON 21.01.97. BHAGWANBHAI AND ARVINDBHAI WERE FOUND TO BE THE KINGPINS OF SHYAM GROUP. THE SEARCH ACTION REVE ALED THAT THE GROUP ENTITIES WERE : I. NOT ACCOUNTING FOR SUBSTANTIAL PART OF THE RECEI PTS ON ACCOUNT OF SALE OF HOUSES / SHOPS II. WERE HEAVILY INDULGING INTO UNACCOUNTED SALE AN D PURCHASE OF LAND, FOR WHICH TRANSACTIONS WERE CARRI ED OUT MOSTLY IN CASH. III. WERE MAINTAINING SEPARATE SET OF BOOKS OF ACCO UNTS (HEREINAFTER REFERRED TO AS NO.II BOOKS) IN RESPECT OF TRANSACTIONS NOT INCORPORATED IN THE REGULAR BOOKS OF ACCOUNTS (HEREINAFTER REFERRED TO AS NO.L BOOKS). THESE DUPLICATE SET OF BOOKS I.E. NO.II BOOKS SEIZE D REVEALED AMONG OTHER THINGS, THE DETAILS OF ON MONEY RECEIVE D ON ACCOUNT OF SALE OF HOUSES / SHOPS AND HUGE UNACCOUN TED CASH WITHDRAWALS MADE BY THE PARTNERS. 12.1 ASSESSING OFFICER STATED IN PARA 2 THAT SEARCH RESULTED INTO SEIZURE OF VARIOUS DOCUMENTS WHICH GAVE DETAIL S OF BUSINESS CARRIED ON BY THE ASSESSEE IN LAND, HUGE A MOUNT OF CASH INVESTED AND UNACCOUNTED PROFITS MADE IN THE L AND BUSINESS. IT HAS BEEN STATED THAT ALL THESE EVIDENC ES WERE CONFRONTED WITH THE ASSESSEE AND THE MAIN PERSONS O F THE ASSESSEE GROUP (SHRI BHAGWANBHAI K.PATEL, SHRI ARVI ND P.PATEL AND SHRI KALYAN K. PATEL ) UNAMBIGUOUSLY ADMITTED A LL THE SEIZED BOOKS OF ACCOUNTS AND DOCUMENTS AND CONTENTS THEREIN. IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 25 - 12.2 CHRONOLOGY OF EVENTS SUBSEQUENT TO THE SE ARCH HAVE BEEN SUMMARIZED BY THE ASSESSING OFFICER AS UNDER: A. NOTICE U/S.158BC ISSUED ON 27.2.97 ASKING THE AS SESSEE TO FILE RETURN FOR THE BLOCK PERIOD WITHIN 16 DAYS OF RECEIPT OF NOTICE. B. NOTICE RECEIVED BY THE ASSESSEE ON 28.02.1997 C. BLOCK RETURN FILED LATE ON 30TH NOVEMBER 98 DECL ARING UNDISCLOSED INCOME AT RS.2,63,970. D. ASSESSEE DIRECTED BY THE THEN AO DC IT.CENTRAL CIRCLE 2(3) VIDE LETTER DATED 5.10.98 TO GET ITS BO OKS OF ACCOUNTS AUDITED U/S.142(2A) BY NOMINATED AUDITORS VIZ. P.K.AJMERA AND COMPANY CAS. AND TO SUBMIT AUDIT REPORT BY 7.12.98. E. AUDIT REPORT U/S.142(2A) DATED 27.1.99 FILED BY THE ASSESSEE FOR THE PERIOD FROM 10.2.96 TO 31.3.96 AND FOR THE BROKEN PERIOD FROM 1.4.96 TO 21.1.97. FILED BEF ORE THE AO ON 17.6.99. F. ASSESSEE FILED APPLICATION - BEFORE SETTLEMENT COMMISSION, MUMBAI VIDE DATED 1.12.1998 G. SETTLEMENT COMMISSION ADMITTED APPLICATION OF TH E ASSESSEE ON 14TH MAY 1999 H. SETTLEMENT COMMISSION U/S.245HA ABATED THE SETTL EMENT APPLICATION FILED BY THE ASSESSEE BACK TO THE ASSES SING OFFICER BECAUSE THE ASSESSEE FAILED TO MAKE PAYMENT OF THE ENTIRE TAX LIABILITY AND INTEREST THEREON ARISI NG FROM THE INCOME ADMITTED BEFORE THE COMMISSION ON OR BEF ORE 31ST JULY 2007. AS PER THE ASSESSEE IT FAILED TO PA Y INTEREST ON THE TAX LIABILITY. VIDE ORDER PASSED U/ S. 245HA DATED 22ND OCTOBER 2007. IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 26 - I. THE SAID ORDER OF HONBLE ITSC WAS RECEIVED IN T HE OFFICE OF CIT IV, AHMEDABAD ON 5TH NOVEMBER 2007 J. BLOCK ASSESSMENT WAS PASSED BY DCIT (OSD) CIRCLE -9, AHMEDABAD - SHRI MJ.PAUL ON 31.12.2007 13. VARIOUS ADDITIONS WERE MADE IN THE BLOCK ASSESS MENT ORDER WHICH WERE DISPUTED BY ASSESSEE BEFORE CIT(A) , WHEREIN AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FILED WRI TTEN SUBMISSIONS FROM TIME TO TIME. REMAND REPORT OF TH E ASSESSING OFFICER WAS CALLED AND WAS MADE AVAILABLE TO THE ASSESSEE. COUNTER COMMENTS OF ASSESSEE WERE ALSO RE CEIVED IN RESPONSE. HAVING CONSIDERED THE SAME, CIT(A) GRANT ED PART RELIEF. BOTH PARTIES ARE IN APPEAL BEFORE US. 14. GROUND NOS. 1, 2, 3 & 7 OF ASSESSEES APPEAL WE RE NOT PRESSED BY LD. AUTHORIZED REPRESENTATIVE. SO, SAME ARE DISMISSED AS NOT PRESSED. LD. AUTHORIZED REPRESENT ATIVE FOR THE ASSESSEE ALSO POINTED OUT THAT GROUND NOS. 8, 9 & 10 ARE GENERAL IN NATURE. SO, SAME WILL BE TAKEN CARE AT APPROPRIATE PLACE. 15. SURVIVING ISSUE IN ASSESSEES APPEAL BEFORE US IS REGARDING ADDITION MADE BY ASSESSING OFFICER FOR NET SURPLUS AS PER AUDIT REPORT U/S.142(2A) OF THE ACT. THE DETAILS OF WHICH ARE AS UNDER: A. YRS. AMOUNT IN RS. 1996-97 1,51,000/- 01.04.1996 TO 21.01.1997 49,06,108/-(41,56,108+7,50,000/-) THE ASSESSEE OFFERED INCOME BEFORE SETTLEMENT COMMI SSION. IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 27 - AY 1996 - 97 ALLEGED UNDISCLOSED NET SURPLUS 1,51,000 BROKEN PERIOD COMPRISING FROM 01/ 04/1996 TO 21/01/1997 ALLEGED UNDISCLOSED NET SURPLUS 7,50,000 A.Y. 1996 - 97 FOR UNACCOUNTED WITHDRAWALS MADE BY PARTNERS 5,000 BROKEN PERIOD COMPRISING FROM 01/04/1996 TO 21/01/1997 FOR UNACCOUNTED WITHDRAWALS MADE BY PARTNERS 92,250 BROKEN PERIOD COMPRISING FROM 01/ 04/1996 TO 21/01/1997 FOR UNACCOUNTED DONATION 44,875 BROKEN PERIOD COMPRISING FROM 01/ 04/1996 TO 21/01/ 1997 FOR UNEXPLAINED EXPENDITURE ON PURCHASE OF LAND. 10,99,160 15.1 THE ASSESSING OFFICER MADE THE ADDITION BECAU SE THE AMOUNTS MENTIONED IN THE TABLE ABOVE WERE OFFERED B EFORE THE SETTLEMENT COMMISSION AS TRUE DISCLOSURE OF UNDISCL OSED INCOME BUT WERE NOT DECLARED IN THE BLOCK RETURN. A SSESSING OFFICER'S POINT WAS THAT THESE AMOUNTS SHOULD HAVE BEEN SHOWN IN THE BLOCK RETURN BECAUSE THE SAME HAD BEEN DECLARED BEFORE THE SETTLEMENT COMMISSION BY ASSESSEE HIMSEL F. IN THE COUNTER COMMENTS DATED 20.07.2009 GIVEN ON THE REMA ND REPORT FURNISHED BY ASSESSING OFFICER WHICH WAS MAD E AVAILABLE TO ASSESSEE, IT WAS STATED ON BEHALF OF ASSESSEE TH AT ASSESSING OFFICER HAD MADE MULTIPLE ADDITIONS. ' THE ATTITUDE OF THE AO IS THAT HE SHALL BE ADOPTI NG AS UDI THE AMOUNT ALREADY OFFERED BY THE APPELLANT BEF ORE THE HONBLE SETTLEMENT COMMISSION. HE THEREAFTER, W ANTS TO FURTHER IMPROVE UPON THE INCOME OFFERED BY MAKIN G A SEPARATE ADDITION OF SUCH ITEMS WHICH SHOULD BE CONSIDERED UDI BY HIM. ' 15.2 IN APPEAL, CIT(A) FOUND THAT FIRM HAS RECEIVE D CASH DEPOSITS I.E., ON MONEY ON THE RESIDENTIAL UNITS AN D SHOPS IT CONSTRUCTED. ITS TRANSACTIONS WERE NOT FOUND RECORD ED IN ITS IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 28 - REGULAR BOOKS OF ACCOUNTS. THE ADDITIONAL INCOME W AS OFFERED BY ASSESSEE ITSELF BEFORE THE SETTLEMENT COMMISSION BUT NOT IN THE BLOCK RETURN AND NEITHER WAS IT OFFERED FOR TAX ATION DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS WHEN THE CASE WAS SENT BACK TO THE ASSESSING OFFICER BY THE SETTLEMEN T COMMISSION. IN VIEW OF ABOVE, CIT(A) CONFIRMED THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INCOME OFFERED BY ASSESSEE BEFORE THE SETTLEMENT COMMISSION GIVEN IN THE TABLE ABOVE, HOWEVER, ADDITION OF RS.7,50,000 WAS DIRECTE D TO BE CONSIDERED IN NET SURPLUS ADDITION MADE AS PER AUDI T REPORT. THE ASSESSING OFFICER AS PER PARA 10 OF BLOCK ASSES SMENT ORDER HAS TAKEN NET SURPLUS AS DETERMINED BY THE SPECIAL AUDIT REPORT U/S 142(2A) FOR THE BROKEN PERIOD AT RS.49,0 6,108/-, BUT THE ASSESSING OFFICER HAS GIVEN SET OFF OF RS.7 ,50,000/- FROM THIS AMOUNT AND MADE ADDITION OF RS.41,56,108/ - ONLY. THE ADDITION OF RS.7,50,000/- MADE HERE WAS DIRECTE D TO BE DELETED HERE BUT TO BE CONSIDERED IN ADDITION TO RS .41,56,108/- NET SURPLUS ADDITION MADE BY ASSESSING OFFICER SO A S TO ARRIVE AT THE FIGURE OF RS.49,06,108/- (RS.41,56,108 + RS. 7,50,000) I.E, THE NET SURPLUS FIGURE AS PER SPECIAL AUDIT RE PORT. 15.3 IN THIS REGARD, THE STAND OF ASSESSEE HAS BEEN THAT THE AMOUNT OF RS. 151000/- HAS BEEN OFFERED BY WAY OF A DDITIONAL INCOME BEFORE THE HON. ITSC. THE SPECIAL AUDITOR H AS PREPARED A PROFIT & LOSS ACCOUNT IN WHICH THE INCOME OF RS.4 9,06,108/- HAS BEEN DETERMINED. SINCE THE APPELLANT HAS ALREAD Y DISCLOSED RS.7.50 LACS BY WAY OF ADDITIONAL INCOME THE GRIEVA NCE IS CONCERNED WITH THE BALANCE OF RS.41,56108/-. DETAIL ED WRITTEN SUBMISSIONS HAVE BEEN MADE ON PG.35 TO 44 OF THE PB DATED 12.08.2012. THE AO HAS BLINDLY RELIED UPON THE SPEC IAL AUDIT IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 29 - REPORT IN SUPPORT OF THE ADDITIONS MADE. THE FALLAC IES IN THE SPECIAL AUDIT REPORT HAVE BEEN POINTED OUT WHICH AR E SUMMARIZED BY ASSESSEE AS UNDER: I) THE NET PROFIT IN THE SPECIAL AUDIT REPORT IS 98 .73% WHICH IS ABNORMAL AND UNUSAL. FURTHERMORE, OPENING & CLOS ING STOCK ARE IDENTICAL ITEMWISE AS WELL AS AMOUNTWISE WHICH INDICATES THAT THERE IS NO CONSUMPTION OF MATERIAL, II) NO EXPENSES OF LAND HAVE BEEN INCLUDED IN THE SPECIAL AUDIT REPORT WHILE WORKING OUT UNDISCLOSED INCOME. III) THE METHOD OF RECORDING SALES IN THE NO.I & II BOOKS IS DIFFERENTLY ADOPTED BY THE SPECIAL AUDIT REPORT. IV) IF ENTIRE AMOUNT OF BOOKING MONEY IS TREATED AS SALES THEN ENTIRE AMOUNT PAID BY WAY OF LAND SHOULD BE AL LOWED AS DEDUCTION WHICH HAS NOT BEEN SO DONE BY THE ASSESSING OFFICER . V) LOANS FROM ASSOCIATE CONCERNS HAVE BEEN DISCLOS ED IN THE BALANCE SHEET IN THE SPECIAL AUDIT REPORT WHICH ITS ELF INDICATES THAT THE SAME DOES NOT GIVEN THE CORRECT STATE OF AFFAIRS. VI) THE RECEIPTS IN THE NO.II BOOKS OF ACCOUNTS INC LUDE TOTAL RECEIPTS I.E. THE AMOUNT RECEIVED BY CHEQUES AS WEL L AS CASH AND PART IS TRANSFERRED TO THE REGULAR BOOKS O F ACCOUNTS AND THEREFORE THE RECEIPTS IN QUESTION HAV E BEEN DUPLICATED AS REFERRED ON PAGE NOS.92 & 93 OF THE P APER BOOK FILED BY ASSESSEE. 15.4 WE FIND THAT THE MANNER AND METHODOLOGY OF WR ITING THE DUPLICATE BOOKS OF ACCOUNTS HAS BEEN EXPLAINED ON PAGE NOS. 38 TO 41OF THE PAPER BOOK FILED BY ASSESSEE. THE CREDIT SIDE OF THE DUPLICATE CASH BOOK INCLUDES THE BOOKIN G MONEY RECEIVED FROM THE MEMBERS (ACCOUNTED INCLUDING THAT RECEIVED BY CHEQUE AS WELL AS UNACCOUNTED), LOANS FROM GROUP CONCERNS, MISCELLANEOUS INCOME ETC. THE DEBIT SIDE OF THE CAS H BOOK INCLUDES THE PAYMENTS MADE TOWARDS VARIOUS EXPENSES , IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 30 - PERSONAL WITHDRAWALS, NON BUSINESS EXPENDITURE, CAS H DEPOSITED IN THE BANK ACCOUNT, REPAYMENT OF LOANS A ND AMOUNT GIVEN TO 'KAKA'. THE AMOUNT GIVEN TO KAKA IS THE NE T SURPLUS OF THE FIRM AFTER MEETING ALL THE EXPENDITURE. WHIL E OFFERING ADDITIONAL INCOME BEFORE THE INCOME TAX SETTLEMENT COMMISSION THESE AMOUNTS HANDED OVER TO KAKA HAVE B EEN CONSIDERED AS INCOME AND DISALLOWABLE EXPENSES AND PERSONAL WITHDRAWALS OF THE PARTNERS AS DEBITED IN THE DUPLI CATE BOOKS OF ACCOUNTS HAVE BEEN ADDED BACK. OUT OF THE MONEY HANDED OVER TO KAKA THE LAND PAYMENTS HAVE BEEN MADE BY HI M WHICH ARE RECORDED SEPARATELY IN THE DIARY. THIS DIARY WH ICH CONTAINED THE NOTINGS OF LAND PAYMENTS HAD ALSO BEE N FOUND AND SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS. WHILE OFFERING ADDITIONAL INCOME BEFORE INCOME TAX SETTLE MENT COMMISSION OUT OF THE TOTAL INCOME OFFERED THE CLAI M OF DEDUCTION FOR LAND EXPENSES HAVE BEEN MADE SINCE TH E SAME IS NOT RECORDED IN THE DUPLICATE CASH BOOK MAINTAINED. 15.5 GENERALLY ONE FIRM DEVELOPS/CONSTRUCTS ONE PARTICULAR SCHEME. THE SCHEME DEVELOPED BY THE ASSE SSEE IS 'SHYAMAL PARK' SCHEME. THE SURPLUS EARNED BY ONE FI RM IS USED FOR PURCHASING LAND WHICH IS SUBSEQUENTLY DEVE LOPED BY ANOTHER FIRM. 15.6 ASSESSEE EXPLAINED THE FLOW OF FUNDS. A DETA ILED CASH FLOW STATEMENT WAS ALSO PREPARED AND PRODUCED AT THE ASSESSMENT AND APPELLATE STAGE. THE SAME WAS ALSO F URNISHED DURING THE COURSE OF HEARING BEFORE US. THE CASH FL OW STATEMENT CONTAINS DAY TO DAY FLOW OF CASH TRANSACT IONS. THE RECEIPT COLUMN IN THE CASH FLOW STATEMENT IS THE AM OUNT IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 31 - HANDED OVER TO KAKA AFTER MEETING ALL EXPENDITURE. THE PAYMENT COLUMN INDICATES THE DISBURSEMENTS MADE FOR THE PURCHASE OF LAND. THE DETAILS OF LAND PAYMENTS HAVE BEEN NOTED IN THE DIARIES FOUND AND SEIZED FROM THE POSS ESSION OF KAKA. THE 'TRANSFER INWARD' COLUMN INDICATES THE DA TE, AMOUNT AND FROM WHERE THE FUNDS HAVE BEEN RECEIVED FOR MAKING LAND PAYMENTS. THE 'TRANSFER OUTWARD' COLUMN INDICATES THE DATE, AMOUNT AND WHERE THE MONEY HAS BEEN GIVEN FOR MAKING LAND PAYMENTS BY OTHERS. THE BALAN CE COLUMN INDICATES THE CASH AVAILABLE WITH THE RESPECTIVE FI RM. WHEREVER THE INVESTMENT HAS BEEN MADE IN EXCESS OF THE FUNDS AVAILABILITY THE BALANCE AMOUNT HAS BEEN OFFERED AS 'UNEXPLAINED INVESTMENT' IN THE HANDS OF THE ASSESS EE. THEREFORE, IN THE CASE OF THE ASSESSEE FIRM THE UNE XPLAINED INVESTMENT OF RS.10,99,160 HAS BEEN OFFERED BY WAY OF ADDITIONAL INCOME. 15.7 AS STATED EARLIER WHILE OFFERING ADDITIONAL IN COME BEFORE THE INCOME TAX SETTLEMENT COMMISSION THE NET SURPLU S IS THE AMOUNT GIVEN TO KAKA HAS BEEN CONSIDERED. THIS AMOU NT IS ALSO IN AGREEMENT WITH THE VERIFICATION DONE IN THE SAR. ATTENTION IS INVITED TO THE PB DATED 22.09.2015. TH E ADDITIONAL INCOME OFFERED FOR A.Y.I996-97 IS RS. 1,56,000 WHIC H INCLUDES NET SURPLUS OF RS. 1,51,000 AND WITHDRAWALS OF THE OTHER PARTNERS RS.5,000/-. AS REFERRED ON PAGE NO. 238, REVERSE PORTION OF THE PAPER BOOK DATED 25.07.2012 WHICH CO NTAINS THE NO.II BALANCE SHEET IN THE SPECIAL AUDIT REPORT. TH E PARTNER (MANUBHAI) DEBIT BALANCE OF RS.5000 AND BHAGWANBHAI K. PATEL (KAKA) OF RS. 1,51,000 ARE NOTED. THEREFORE, THE ACCURACY IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 32 - OF THE ADDITIONAL INCOME OFFERED CANNOT BE DOUBTED AND IS IN FACT VERIFIABLE WITH THE SPECIAL AUDIT REPORT. 15.8 SIMILARLY, ATTENTION WAS INVITED TO PAGE 12 O F THE PAPER BOOK DATED 22.09.2015, THE ADDITIONAL INCOME OFFERED COMPRISES OF NET SURPLUS (AMOUNT GIVEN TO KAKA) OF RS.7,50,000/- AND WITHDRAWALS BY PARTNERS RS.99,250 AND INADMISSIBLE EXPENSES I.E. DONATION OF RS.44,875/-. THIS COULD BE CROSS VERIFIED WITH NO.II BALANCE SHEET PREPARED BY THE SPECIAL AUDIT REPORT AND APPEARING ON PG.247 OF THE PB DATED 25.07.2012. THE PARTNERS DEBIT BALANCES AMOUNT TO 1 04250/-. THEREFORE, THE NET ACCRETION WAS RS.99,250(1,04,250 -5000 OF EARLIER YEAR) WHICH HAS BEEN OFFERED TO TAX. 15.9 SIMILARLY, DEBIT BALANCE OF SHRI BHAGWANBHAI K . PATEL (KAKA) IS RS.9,01,000/-. THEREFORE, THE NET ACCRETI ON TO THE ACCOUNT IS RS.7,50,000/- (90,10,000-1,51,000) WHICH IS IN COMPLETE AGREEMENT WITH THE SPECIAL AUDIT REPORT. S IMILARLY, DONATION EXPENSES ALSO APPEAR NO.II P&L ACCOUNT WHI CH APPEARS ON PAGE NO.247 OF THE PB WHICH HAS BEEN OFF ERED BY WAY OF ADDITIONAL INCOME AND VERIFIABLE WITH THE SP ECIAL AUDIT REPORT. THEREFORE, THE ACCURACY AND VERACITY OF THE ADDITIONAL INCOME OFFERED BY THE APPLICANT FIRM IS ALSO VERIFI ABLE WITH THE SPECIAL AUDIT REPORT. FURTHERMORE, THE CASH DEPOSIT ED IN THE BANK AS PER THE NO.II IS DULY REFLECTED IN THE BANK STATEMENT WHICH INDICATES THE FLOW OF CASH IN THE REGULAR BOO KS OF ACCOUNTS. THE BALANCE SHEET DRAWN ON THE NO.II BOOK S AS PLACED ON PAGE NOS.88 TO 91 OF THE PAPER BOOK INDIC ATES THE CASH DEPOSITED IN THE BANK ACCOUNT. CONFORMATION OF THE MEMBERS REGARDING THE BOOKING MONEY PAID TILL THE D ATE OF IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 33 - SEARCH, STATEMENT OF BOOKING MONEY AND BANK STATEME NT ON SAMPLE BASIS ARE PLACED ON PG. 114 TO 125 OF THE PA PER BOOK FILED BY ASSESSEE. THE ASSESSING OFFICER IN THE RE MAND REPORT ON PAGE NO.139 OF THE PAPER BOOK HAS MERELY REITERA TED WHAT HAS BEEN STATED IN THE BLOCK ASSESSMENT ORDER. THER EFORE, HE HAS NOTHING MORE TO OFFER ON THE SAME. THE COUNTER COMMENTS TO THE REMAND REPORT ARE ON PAGE NO. 179 OF THE PAP ER BOOK. THE CIT(A) HAS CONFIRMED THE ADDITION ON THE GROUND THAT ARVINDBHAI PATEL HAS CONFIRMED THAT CASH HAD BEEN P AID FOR THE PURCHASE OF LAND. IT HAS BEEN ADMITTED THAT ON MONE Y NOT RECORDED IN REGULAR BOOKS OF ACCOUNTS WAS TAKEN AS DEEMED SALES IN THE SPECIAL AUDIT REPORT. THIS IS NOT A F ACT AND IN FACT THE SPECIAL AUDIT REPORT INCLUDES SUCH SALES WHICH IS A PART ALREADY REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS AS WELL. THE CIT(A) HAS JUST RELIED THE OBSERVATIONS IN THE SPEC IAL AUDIT REPORT WHOSE RELIABILITY HAS BEEN QUESTIONED. EVEN IN THE CASE OF SHYAM ORGANIZER WHOSE MATTER HAS BEEN FINALIZED BEFORE THE INCOME TAX SETTLEMENT COMMISSION THE FINDINGS OF T HE SPECIAL AUDIT REPORT HAVE NOT BEEN SUBSTANTIATED BY THE DEP ARTMENT. THE MANNER OF COMPUTING UNDISCLOSED INCOME HAS BEEN ACCEPTED IN THE GROUP CONCERN M/S SHYAM ORGANIZERS BY THE INCOME TAX SETTLEMENT COMMISSION. IN THE ORDER PASS ED U/S 245D(4) BY THE INCOME TAX SETTLEMENT COMMISSION THE ACCURACY OF THE CASH FLOW STATEMENT WAS ALSO ACCEPT ED. (REFER PG.20 & PARA 7.1 OF THE ORDER). IN FACT, SEPARATE I NQUIRY WAS DIRECTED BY THE INCOME TAX SETTLEMENT COMMISSION U/S 245D(3) OF THE ACT AND NO ADVERSE FINDING REPORTED BY THE DEPARTMENT. THE WRITTEN SUBMISSIONS DATED 25.11.20 14 WERE CONFRONTED TO THE CONCERNED CIT , AHMEDABAD AND NO ADVERSE COMMENTS HAVE BEEN RECEIVED THEREON. IN VIEW OF ABO VE IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 34 - DISCUSSION, CIT(A) WAS NOT JUSTIFIED TO CONFIRM ADD ITION OF RS.1,51,000/- FOR A.Y. 1996-97 AND RS.49,06,108/- F OR BROKEN PERIOD MADE BY ASSESSING OFFICER. SAME IS DIRECTED TO BE DELETED. 16. AS A RESULT, ASSESSEES APPEAL IN IT(SS)A NO.16 6/AHD/ 2009 IS PARTLY ALLOWED. 17. IN IT(SS)A NO.185/AHD/2009, IN CASE OF M/S. SH YAM DEVELOPERS, REVENUES GROUND NO.1 IS WITH REGARD TO DELETION OF ADDITION MADE ON ACCOUNT OF NET SURPLUS WHICH WAS D ISCLOSED IN THE STATEMENT OF FACTS FILED BEFORE INCOME TAX S ETTLEMENT COMMISSION OF RS.7,50,000/-. 17.1 IN THIS REGARD, THE STAND OF ASSESSEE HAS BEEN THAT THE FINDING IS GIVEN ON PAGE NO.6 OF THE CIT(A) ORDER. THE ADDITION HAS BEEN DELETED SINCE THE SAME HAS ALREADY BEEN OF FERED AS ADDITIONAL INCOME BEFORE THE INCOME TAX SETTLEMENT COMMISSION. FURTHERMORE, THE LD.CIT(A) HAS CONFIRME D RS.4906108 OF WHICH RS.7,50,000 IS A PART AND WOULD TANTAMOUNT TO DOUBLE ADDITION. MOREOVER, THIS HAS BEEN TAKEN CARE BY OUR FINDING IN MAIN ISSUE IN ASSESSEES APP EAL VIDE PARA 15 OF THIS ORDER. 18. NEXT ISSUE IN REVENUES APPEAL IS WITH REGARD TO DELETION OF ADDITION OF RS.5,63,037/- MADE ON ACCOUNT OF UNE XPLAINED CASH CREDIT IN NO.I BOOKS. 18.1 IN THIS REGARD, THE STAND OF ASSESSEE HAS BEEN THAT ASSESSING OFFICER HAS STATED AS PER THE SPECIAL AUD IT REPORT FRESH CAPITAL WAS INTRODUCED IN THE NO.I BOOKS OF A CCOUNTS & IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 35 - RS.248000 IN THE NO.II BOOKS FOR WHICH CONFIRMATION S HAVE NOT BEEN FURNISHED WHILE COMPLETING THE BLOCK ASSESSMEN T PROCEEDINGS. IN THE WRITTEN SUBMISSION ON PAGE NOS. 30 & 31 OF THE PAPER BOOK, IT WAS POINTED OUT THAT ONLY UNACCO UNTED TRANSACTIONS CAN BE COVERED IN THE BLOCK ASSESSMENT PROCEEDINGS. VARIOUS JUDICIAL PRONOUNCEMENTS WERE A LSO RELIED UPON IN SUPPORT OF THE CONTENTION. IT WAS ALSO POI NTED OUT THAT NO P&L ACCOUNT HAD BEEN PREPARED IN THE SAR FOR NO. II BOOKS OF ACCOUNTS. THE ASSESSING OFFICER IN THE COUNTER C OMMENTS HAS MERELY REITERATED THE CONTENTIONS IN THE BLOCK ASSESSMENT ORDER ON PAGE NO.137 OF THE PAPER BOOK. IN THE COUN TER COMMENTS THIS FACT WAS POINTED THAT THE ASSESSING O FFICER HAS NOT REBUTTED THE ARGUMENTS EXTENDED BY THE APPELLAN T. THE CIT(A) ACCEPTED BOTH THE ARGUMENTS THAT NO P&L ACCO UNT WAS DRAWN FOR NO.II BOOKS AS WELL AS THE FACT THAT REGU LAR TRANSACTIONS CANNOT BE CONSIDERED WHILE DETERMINING UNDISCLOSED INCOME THEREFORE THE ADDITIONS HAVE BEE N DELETED. THIS REASONED FINDING OF CIT(A) NEEDS NO INTERFEREN CE FROM OUR SIDE. SAME IS UPHELD. 19. NEXT ISSUE IN REVNUES APPEAL IS WITH REGARD T O DELETION OF RS.2,48,000/- MADE ON ACCOUNT OF UNEXPLAINED CASH C REDIT IN NUMBER 1 ACCOUNT. 19.1 IN THIS REGARD, THE STAND OF ASSESSEE HAS BEEN THAT THE ASSESSING OFFICER HAS STATED AS PER THE SPECIAL AUD IT REPORT FRESH CAPITAL WAS INTRODUCED IN THE NO.I BOOKS OF A CCOUNTS & RS.248000 IN THE NO.II BOOKS FOR WHICH CONFIRMATION S HAVE NOT BEEN FURNISHED WHILE COMPLETING THE BLOCK ASSESSMEN T PROCEEDINGS. IN THE WRITTEN SUBMISSION ON PAGE NOS .30 & 31 OF IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 36 - THE PAPER BOOK IT WAS POINTED OUT THAT ONLY UNACCOU NTED TRANSACTIONS CAN BE COVERED IN THE ASSESSMENT PROCE EDINGS. VARIOUS JUDICIAL PRONOUNCEMENTS WERE ALSO RELIED UP ON IN SUPPORT OF THE CONTENTION. IT WAS ALSO POINTED OUT THAT NO P&L ACCOUNT HAD BEEN PREPARED IN THE SPECIAL AUDIT REPO RT FOR NO.II BOOKS OF ACCOUNTS. THE ASSESSING OFFICER IN THE COU NTER COMMENTS HAS MERELY REITERATED THE CONTENTIONS IN T HE BLOCK ASSESSMENT ORDER ON PAGE NO. 137 OF THE PAPER BOOK. IN THE COUNTER COMMENTS THIS FACT WAS POINTED THAT THE ASS ESSING OFFICER HAS NOT REBUTTED THE ARGUMENTS EXTENDED BY THE APPELLANT. THE CIT(A) ACCEPTED BOTH THE ARGUMENTS THAT NO P&L ACCOUNT WAS DRAWN FOR NO.II BOOKS AS WELL AS TH E FACT THAT REGULAR TRANSACTIONS CANNOT BE CONSIDERED WHILE DET ERMINING UNDISCLOSED INCOME AND THEREFORE THE ADDITIONS HAVE BEEN DELETED. THIS REASONED FINDING OF CIT(A) NEEDS NO I NTERFERENCE FROM OUR SIDE. SAME IS UPHELD. 20. NEXT ISSUE IN REVENUES APPEAL IS WITH REGARD TO DELETION OF ADDITION OF RS.10,03,250/- MADE ON ACCOUNT OF UN EXPLAINED INVESTMENT IN LAND PURCHASED/PARTNERS WITHDRAWAL. 20.1 IN THIS REGARD, THE STAND OF ASSESSEE HAS BEEN THAT THE ASSESSING OFFICER HAS REFERRED TO THE WITHDRAWALS O F RS.9,00,000/- AND RS.1,04,250 BEING FROM THE ACCOUN TED RECEIPT OF SHYAM VIHAR SCHEME. THE ASSESSING OFFIC ER HAS REFERRED TO THE LAST PAGE OF ANN. A-27 FOR RS.9.00 LACS & RS. 1,04,250 BEING WITHDRAWAL OF SHRI MANUBHAI. INFACT , THESE AMOUNTS HAVE ALREADY BEEN OFFERED BY WAY OF ADDITIO NAL INCOME BEFORE THE INCOME TAX SETTLEMENT COMMISSION AND SE PARATELY ADDED. PAYMENTS TO BHAGWANBHAI PATEL BEING RS. 9,01 ,000 IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 37 - (7,50,000+1,51,000). WITHDRAWALS BY MANUBHAI BEING RS. 1,04,250 (99,250 +5000). THE ASSESSING OFFICER IN THE REMAND REPORT ON PAGE NO.146 OF THE PAPER BOOK HAS EXPLAIN ED THE ABOVE AMOUNTS WHICH ARE IN FACT OFFERED BY WAY OF A DDITIONAL INCOME BY THE APPELLANT. THE CIT(A) THOUGH HAS DEL ETED THE ADDITION MADE BY THE AO HE HAS PRESUMED THAT THESE AMOUNTS ARE PART OF THE LAND INVESTMENT OF RS.10,99,160 DIS CLOSED BEFORE THE INCOME TAX SETTLEMENT COMMISSION AND THE ADDITION GETS TELESCOPED IN THE AMOUNT OFFERED AND HENCE THE SAME HAS BEEN DELETED. AGAIN THIS REASONED FACTUAL FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM SIDE. SAME IS UPHELD. 21. NEXT ISSUE IN REVENUES APPEAL IS WITH REGARD TO DELETION OF ADDITION OF RS.88,16,303/- MADE ON ACCOUNT OF UN EXPLAINED INVESTMENT IN LAND PURCHASE. 21.1 IN THIS REGARD, THE STAND OF ASSESSEE HAS BEEN THAT ADDITIONS HAVE COME TO BE MADE ON THE BASIS OF THE STATEMENT RECORDED U/S 132(4) THAT 71.00 LACS (APP.) HAD BEEN PAID IN CASH FOR PURCHASE OF LAND ON THE SCHEME ORGANIZED B Y THE APPELLANT SINCE THE CONFIRMATION HAD NOT BEEN FURNI SHED AND THE AMOUNTS WERE NOT RECORDED IN THE BOOKS OF ACCOU NTS THE ADDITIONS HAD COME TO BE MADE. ALTERNATIVELY, IT WA S ALSO PROPOSED THAT DISALLOWANCE U/S 40A(3) OF THE ACT SH OULD BE MADE. WHERE THE APPELLANT DOES NOT DISPUTE THE AMO UNT OR THE PAYMENTS OUTSIDE THE BOOKS OF ACCOUNTS THE QUE STION OF OBTAINING THE CONFIRMATION DOES NOT ARISE. EVEN OTHERWISE THE CASH FLOW STATEMENT HAS BEEN FURNISHED WHICH EX PLAINS THE SOURCE OF INVESTMENT IN LAND. WHERE THE EXPENSES HA VE NOT BEEN CLAIMED BY WAY OF DEDUCTION THE QUESTION OF DI SALLOWANCE IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 38 - U/S 40A(3) DOES NOT ARISE. THE EXPLANATION HAS BEEN FURNISHED IN THE COUNTER COMMENTS ON PAGE NOS.193 TO 195 OF T HE PAPER BOOK. THE CIT(A) HAS ON PAGE NO.19 STATED THAT THE ADDITIONAL INCOME OFFERED BY THE GROUP CONCERNED BEFORE THE IN COME TAX SETTLEMENT COMMISSION HAS BEEN UTILIZED FOR MAKING THIS INVESTMENT IN LAND. IN VIEW OF THE ABOVE FACTS AND AFTER EXAMINING THE STATEMENT OF FACTS FILED BEFORE THE I TSC THE ADDITION HAS COME TO BE DELETED. THIS REASONED FACT UAL FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. SAM E IS UPHELD. 22. NEXT ISSUE IN REVENUES APPEAL IS WITH REGARD TO DELETION OF RS.1,15,961/- MADE ON ACCOUNT OF UNEXPLAINED NEG ATIVE CASH BALANCE. 22.1 IN THIS REGARD, THE STAND OF ASSESSEE HAS BEEN THAT THE ASSESSING OFFICER HAS MADE AN ADDITION ON ACCOUNT OF ALLEGED NEGATIVE CASH BALANCE IN THE NO.II BOOKS OF ACCOUNT S. THE SPECIAL AUDITOR HAS STATED THAT AFTER ELIMINATING T HE COMMON ENTRIES APPEARING IN BOTH THE BOOKS THE DAILY CASH BALANCES ARE WORKED OUT AND THERE IS A DEFICIT APPEARING THEREIN . THE DETAILED EXPLANATION HAS BEEN FURNISHED ON PAGE NO. 44 OF THE PAPER BOOK. THE ASSESSING OFFICER IN THE REMAND RE PORT AS DETAILED ON PAGE NOS.143 & 144 OF THE PAPER BOOK HA S MERELY REPEATED THE CONTENTIONS RAISED IN THE BLOCK ASSESS MENT ORDER. IN THE COUNTER COMMENT TO THE REMAND REPORT AS DETA ILED ON PAGE NO.190 OF THE PAPER BOOK, IT WAS POINTED OUT T HAT THE BOOKS OF ACCOUNTS ARE UNDER SEIZURE AND CUSTODY OF THE ASSESSING OFFICER. IN FACT, FROM THE PERUSAL OF TH E CASH BOOK IT WAS SEEN THAT THERE IS NO SUCH NEGATIVE CASH BALANC E WHICH IS THE SUBJECT MATTER OF ADDITION. THE CIT(A) HAS DELE TED THE IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 39 - ADDITION ON ACCOUNT OF THE FACT THAT THE ADDITION O F NET SURPLUS AS PER AUDIT REPORT COVERS THE UNACCOUNTED INCOME A ND FURTHER ADDITIONS OF SUCH PETTY AMOUNT WITHOUT PROPER JUSTI FICATION WOULD AMOUNT TO MULTIPLE ADDITIONS. ACCORDINGLY NO INTERFERENCE IS CALLED FROM OUR SIDE. WE UPHOLD THE SAME. 23. NEXT ISSUE IN REVENUES APPEAL IS WITH REGARD TO DELETION OF RS.2,19,268/- ON ACCOUNT OF UNDISCLOSED MISCELLA NEOUS EXPENDITURE. 23.1 IN THIS REGARD, THE STAND OF ASSESSEE HAS BEEN THAT THE ASSESSING OFFICER HAS DISALLOWED THESE EXPENSES ONL Y ON THE GROUND THAT THE VOUCHERS WERE NOT PRODUCED EITHER A T THE SPECIAL AUDIT STAGE OR DURING THE BLOCK ASSESSMENT PROCEEDINGS. ALL THESE EXPENSE HAD BEEN NOTED IN N O. 2 BOOKS OF ACCOUNTS. THE EXPENSES ARE ALLOWABLE U/S. 37(1) OF THE ACT. THE ASSESSING OFFICER HAS BEEN SELECTED IN PLACING RELIANCE ON THE SEIZED BOOKS OF ACCOUNTS. FURTHERMORE, ON E CANNOT ADOPT THE RECEIPTS IN THE SEIZED BOOKS AND IGNORE T HE EXPENSES NOTED THEREIN. THE SEIZED RECORDS HAVE BEEN CONS IDERED IN ENTIRETY. THE ASSESSING OFFICER HAS NOTHING TO OF FER BY WAY COMMENT IN THE REMAND REPORT. REFERENCE INVITED TO PAGE NO. 144 OF THE PAPER BOOK. THE CIT HAVING ADOPTED THE SURPLUS AS PER THE P&L ACCOUNT OF THE NO. 2 BOOKS HAS ALLOWED THESES EXPENSES BY WAY OF DEDUCTION. UNDER FACTS AND CIRC UMSTANCES, THIS FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM O UR SIDE. SAME IS UPHELD. 24. NEXT ISSUE IN REVENUES APPEAL IS WITH REGARD TO DELETION OF RS.1,00,000/- ON ACCOUNT OF UNDISCLOSED DALALI E XPENSES. IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 40 - 24.1 IN THIS REGARD, THE STAND OF ASSESSEE HAS BEEN THAT THE ASSESSING OFFICER HAS DISALLOWED THESE EXPENSES ONL Y ON THE GROUND THAT THE VOUCHERS WERE NOT PRODUCED EITHER A T THE SPECIAL AUDIT STAGE OR DURING THE BLOCK ASSESSMENT PROCEEDINGS. ALL THESE EXPENSE HAD BEEN NOTED IN N O. 2 BOOKS OF ACCOUNTS. THE EXPENSES ARE ALLOWABLE U/S. 37(1) OF THE ACT. THE ASSESSING OFFICER HAS BEEN SELECTIVE IN PLACING RELIANCE ON THE SEIZED BOOKS OF ACCOUNTS. FURTHERMORE, ON E CANNOT ADOPT THE RECEIPTS IN THE SEIZED BOOKS AND IGNORE T HE EXPENSES NOTED THEREIN. THE SEIZED RECORDS HAVE BEEN CONSI DERED IN ENTIRETY. THE ASSESSING OFFICER DID NOT OFFER BY W AY OF COMMENT IN THE REMAND REPORT. REFERENCE IS INVITED TO PAGE NO.144 OF THE PAPER BOOK. THE CIT HAVING ADOPTED THE SURPLUS AS PER THE P&L ACCOUNT OF THE NO. 2 BOOKS HAS ALLOWED THESES E XPENSES BY WAY OF DEDUCTION. THIS REASONED FACTUAL FINDING OF CIT(A), NEEDS NO INTERFERENCE FROM OUR SIDE. SAME IS UPHEL D. 24.2 IN RESULT, REVENUES APPEAL IN IT(SS)A NO.185 /AHD/2009 IS DISMISSED. 25. AS A RESULT, BOTH ASSESSEES APPEALS ARE PARTL Y ALLOWED WHILE BOTH APPEALS OF REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 29/07/ 2016 AT AH MEDABAD. SD/- SD/- SD/- SD/- MANISH BORAD SHAILENDRA KUMAR YADAV (ACCOUNTANT MEMBER) ( JUDICIAL MEMBER) AHMEDABAD; DATED 29/07/2016 S. K. SINHA ! '! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT IT(SS)A NOS. 144 & 156, 166 & 185/AHD/2009 M/S.SHYAM CORPORATION & M/S. SHYAM DEVELOPERS - 41 - 2. / THE RESPONDENT. 3. ! / CONCERNED CIT 4. ! ( ) / THE CIT(A), 5. '#$ %% , , &'(( / DR, ITAT, AHMEDABAD 6. $)* + / GUARD FILE. # / BY ORDER, $ / %& (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION- . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER.. OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.-. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH FAIR ORDER COMES BACK TO SR. PS/PS. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER