The ACIT, 5(1), Indore V. Shri Deepak Panjwani, Indore

ITSSA 147/IND/2011

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 8862 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-02-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 11-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MRIDULA BAJPAI
• Keywords: Unexplained cash credit; Unexplained investment; Gift; Business income; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Share purchase agreement; Principle of natural justice; Earning of tax free income; Source of fund; Additional evidence; Corroborative evidences; Validity of assessment; Penny stocks; Documents seized
• Section: 44AD; 143(3); 54F; 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. : ACLPP1191L I.T(SS).A.NOS. 95 & 96/IND/2011 A.Y. : 2003-04 & 2005-06 ACIT, SHRI NEERAJ PANJWANI, 5(1), VS 115,JANKI NAGAR EXTN, INDORE INDORE. APPELLANT RESPONDENT PAN NO. : ACLPP1191L I.T(SS).A.NOS. 98 TO 101/IND/2011 A.Y. : 2003-04 TO 2007-08 SHRI NEERAJ PANJWANI, ACIT, 115,JANKI NAGAR EXTN, VS 5(1), INDORE. INDORE APPELLANT RESPONDENT PAN NO. : ACLPP1191L I.T(SS).A.NOS. 140 TO 143/IND/2011 A.Y. : 2005-06 TO 2008-09 ACIT, SHRI NEERAJ PANJWANI, 5(1), VS 115,JANKI NAGAR EXTN, INDORE INDORE. APPELLANT RESPONDENT 2 2 PAN NO. : AIGPP2788L I.T(SS).A.NOS. 66 TO 69/IND/2011 A.Y. : 2002-03 TO 2006-07 SMT.KAVITA PANJWANI, ACIT, 115,JANKI NAGAR EXTN, VS 5(1), INDORE. INDORE APPELLANT RESPONDENT PAN NO. : ADUPP1149E I.T(SS).A.NOS. 97/IND/2011 A.Y. : 2003-04 SHRI HIRALAL PANJWANI, ACIT, 115,JANKI NAGAR EXTN, VS 5(1), INDORE. INDORE APPELLANT RESPONDENT PAN NO. : AMQPP1461N I.T(SS).A.NOS. 144 TO 146/IND/2011 A.Y. : 2005-06 TO 2007-08 ACIT, SHRI DEEPAK PANJWANI , 5(1), VS 115,JANKI NAGAR EXTN, INDORE INDORE. APPELLANT RESPONDENT PAN NO. : AMOPP1461N I.T(SS).A.NOS. 102 & 103/IND/2011 A.Y. : 2007-08 & 2008-09 SHRI DEEPAK PANJWANI, ACIT, 115,JANKI NAGAR EXTN, VS 5(1), INDORE. INDORE 3 3 APPELLANT RESPONDENT PAN NO. : AMOPP1461N I.T(SS).A.NO. 147/IND/2011 A.Y. : 2008-09 ACIT, SHRI DEEPAK PANJWANI, 5(1), VS 115,JANKI NAGAR EXTN, INDORE INDORE. APPELLANT RESPONDENT PAN NO. : AIUPP0119R I.T(SS).A.NOS. 62 & 63/IND/2011 A.Y. : 2002-03 & 2003-04 SMT.SUNITA PANJWANI, ACIT, 115,JANKI NAGAR E XTN, VS 5(1), INDORE. INDORE APPELLANT RESPONDENT PAN NO. : AHLPP7275N I.T(SS).A.NOS. 64 & 65/IND/2011 A.Y. : 2002-03 & 2003-04 SMT.CHANDNI PANJWANI, ACIT, 115,JANKI NAGAR EXTN, VS 5(1), INDORE. INDORE APPELLANT RESPONDENT 4 4 PAN NO. : ABJFS7642E I.T(SS).A.NO. 202/IND/2011 A.Y. : 2008-09 ACIT, M/S.SUNDARAM ENTERPRISES, 5(1), VS 115,JANKI NAGAR EXTN, INDORE INDORE. APPELLANT RESPONDENT ASSESSEES BY : SHRI ANIL KAMAL GARG, C.A. RESPONDENT BY : SMT . MRIDULA BAJPAI, CIT DR DATE OF HEARING : 22 . 0 1 .201 3 DATE OF PRONOUNCEMENT : 28 . 0 2 .201 3 O R D E R PER R. C. SHARMA, A.M. THESE ARE CROSS APPEALS FILED BY THE ASSESSEES AND REVENUE AGAINST THE ORDERS OF CIT(A) FOR THE ASSESS MENT YEARS 2002-03 TO 2008-09. 2. ALL THE ASSESSEES BELONG TO A GROUP KNOWN AS PANJWANI GROUP WHERE SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CONDUCTED ON 14.12.2007 WHEREIN VARIOUS BOOKS OF ACCOUNT AND DOCUMENTS WERE FOUND BESIDES CASH AMOUNT. 5 5 3. CONSEQUENT TO SEARCH ASSESSMENTS WERE FRAMED U/S 153A AS WELL AS U/S 153C OF THE INCOME-TAX ACT, 196 1. COMMON ISSUES HAVE BEEN RAISED IN ALL THE APPEALS, THEREFORE, THEY WERE HEARD TOGETHER AND ARE NOW DEC IDED BY THIS CONSOLIDATED ORDER. 4. IN CASE OF KAVITA PANJWANI, SUNITA PANJWANI, CHANDN I PANJWANI, NEERAJ PANJWANI, DEEPAK PANJWANI, HIRALAL PANJWANI, ASSESSMENTS WERE FRAMED U/S 153C. JURISDI CTION ASSUMED U/S 153C, WERE CONFIRMED BY THE LD.CIT(A). THE ASSESSEE IS AGGRIEVED WITH REGARD TO VALIDITY OF AS SESSMENT PROCEEDINGS U/S 153C IN ALL THESE CASES. THE ASSESS EE HAS ALSO TAKEN GROUND WITH REGARD TO THE ABATEMENT OF ASSESSMENT PROCEEDINGS IN SO FAR AS TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) WAS COMPLETED IN SOME OF THE C ASES. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFI CER MADE ADDITION BY DISREGARDING TRANSACTION OF LONG T ERM CAPITAL GAIN AND TREATING THE ENTIRE SALE PROCEEDS OF SHARES IN MEDIA MATRIX WORLD WIDE LIMITED (IN SHORT MMWWL) , CREDITED IN THE BANK ACCOUNT AS UNEXPLAINED INCOME. GRIEVANCE OF THE ASSESSEE IS ALSO THAT COST OF ACQU ISITION OF SHARES WAS ALSO NOT ALLOWED AS A DEDUCTION. THE ASS ESSING 6 6 OFFICER HAS ALSO MADE ADDITION U/S 68 ON ACCOUNT OF ALLEGED UNEXPLAINED DEPOSIT IN THE BANK. 5. IN CASE OF NEERAJ PANJWANI, IN ASSESSMENT YEAR 2003-04, TH E ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN OF RS.13,28,352/-ON SALE OF 30,000 SHARES OF MMWWL AND PAID TAX @ 10%. IN THE COMPUTATION SALE REALIZATION ON 15.01.03 HAS BEEN SHOWN AS RS. 14,24,552/- AND COST OF PURCHASE ON 03.07.01 AT RS. 96,200/-. AGAINST TH IS IN SUMMARY OF SAVING ACCOUNT WITH SBI ATTACHED WITH TH E RETURN THE ASSESSEE HAS SHOWN AS AMOUNT DEPOSITED O UT OF SALE OF SHARES OF MMWWL AT RS. 14,39,362/-. ON B EING ASKED TO SUBSTANTIATE THE TRANSACTION THE ASSESSEE HAS FILED COPIES OF BROKER NOTE AS ANNEXURE A-4.01 TO 4 .10 WITH REPLY DATED 14.10.09 AND ANOTHER EXPLANATION V IDE LETTER DATED 08.12.09. ON PERUSAL OF THE EXPLANATION AND THE DOCUMENT FILED, THE ASSESSING OFFICER HAS CONSI DERED FOLLOWING ISSUES :- I) THE ASSESSEE HAS STATED THAT 3,000 SHARES OF MMWWL WERE PURCHASED IN A. Y 2002-03 IN CASH FOR RS. 96,200/- WHICH WAS SHOWN IN THE STATEMENT OF AFFAIRS AS ON 31.03.02. THESE 7 7 SHARES HAVE BEEN STATED TO HAVE PURCHASED FROM ONE CAPITIALINE SECURITIES, MUMBAI. THE ASSESSEE HAS FILED THE RELEVANT BROKER NOTE. HOWEVER, THE ASSESSEE HAS NOT FILED ANY OTHER DOCUMENT EVIDENCING THE DELIVERY OF THE SAID SHARES BY THE BROKER TO THE ASSESSEE NOR THE MODE OF DELIVERY HAS BEEN SHOWN THE ASSESSEE HAS ALSO NOT FLIED THE COPY OF PHYSICAL SHARE CERTIFICATE RECEIVED FROM THE BROKER AND HAS ALSO NOT FILED THE COPY OF SHARE TRANSFER DEED. IN FACT THE ASSESSEE HAS NOT FILED ANY DOCUMENT EVIDENCING THE TRANSFER OF THESE SHARES IN THE NAME OF THE ASSESSEE SUCH AS THE DETAILS OF SHARES SENT FOR TRANSFER TO THE COMPANY OR THE DETAILS/ DOCUMENTS EVIDENCING THE DISPATCH OF THESE SHARES AFTER TRANSFER BY THE COMPANY. II) THE ASSESSEE HAS FILED A COPY OF PHYSICAL SHARE CERTIFICATE ISSUED ON 26.11.02 FOR 30,000 SHARE FOR MMWWL. THE SHARES HAVE BEEN SOLD BY THE ASSESSEE ON 1 5.01.03. THE ASSESSEE HAS NOT FILED ANY DOCUMENT EVIDENCING THE HOLDING OF SHARES OR 8 8 PROVING THE OWNERSHIP OF SHARES PRIOR TO ONE YEAR FROM THE DATE OF SALE. THE SALE DOCUMENT, WHICH THE ASSESSEE IS RELYING ON, FOR THIS PURPOSE IS THE PURCHASE BILL OF THE BROKER. SINCE, THE PAYMENT HAS BEEN STATED TO MADE IN CASH, THE SAID PURCHASE BILL AND THE ENTIRE CASH TRANSACTION IS NOT ACCEPTABLE. THE ASSESSEE HAS NOT EXPLAIN AS TO' WHY HE WAS REQUIRED TO PAY THE PURCHASE PRICE IN CASH OF RS. 96,200/- THAT TOO, TO A BROKER OF MUMBAI, WHAT WAS THE METHOD OF PAYMENT, WHO COLLECTED THE/CASH AND SO MANY THINGS. AS PER THE SUBSEQUENT DISCUSSION IN THE ORDER THIS TRANSACTION HELD TO BE BOGUS AND A COLORFUL DEVICE TO CONVERT HIS UNACCOUNTED INCOME IN THE FORM OF LONG TERM CAPITAL GAIN WHICH ARE TAXED AT A LOWER RATE. IN MAY BE POINTED OUT THAT THE ASSESSEE AND HIS OTHER FAMILY MEMBERS HAVE BEEN REGULARLY FOLLOWING THIS TACTICS AND HAVE SHOWN LONG TERM CAPITAL GAINS IN OWN CASE FOR A. Y 2D04-05, IN SHRI HEERALAL PANJWANI A. Y 2003-04, IN SMT. SUNITA PANJWANI A. Y 2002-03 & 2003-04 AND SMT. 9 9 CHANDANI PANJWANI IN A, Y 2002-03 & 2003-04 AND SMT. KAVITA PANJWANI IN A.Y 2002-03, 2003- 04, 2004-05 & 2006-07, WERE IN ALL CASES IT HAS BEEN HELD THAT THE CAPITAL GAINS 'ARE NOT GENUINE, IT MAY ALSO BE POINTED OUT THAT IN ALL THESE YEARS THE ASSESSEE COME UP WITH SOME STORY OF GETTING SOME ADVICE EITHER FROM SOME RELATIVE OR SOME BROKER, I. E. THE ASSESSEE HAS STATED THAT THEY HAVE ACTED ON THE BASIS OF SOME 'TIP', IT IS SURPRISING TO NOTE THAT IN THE CASE OF ASSESSEE AND HIS FAMILY MEMBERS, EACH AND EVERY TIME SUCH 'TIP' HAS RESULTED HUGE PROFIT AND THEY HAVE NOT SUFFERED A SINGLE LOSS ON THIS ACCOUNT IN ALL THESE FILES IN A LL THESE YEARS, IN ALL THE CASES PAYMENTS FOR PURCHASE OF SHARES HAVE EITHER BEEN MADE IN CASH OR BY WAY OF ADJUSTMENT AGAINST ARTIFICIALLY CREATE D SHORT TERM CAPITAL GAIN. THE ASSESSEE AND HIS FAMILY MEMBERS ARE RESIDING IN INDORE AND IN ALL THE CASES OF CAPITAL GAIN THE MAXIMUM BROKERS ARE FROM KALKOTTA AND FEW ARE MUMBAI. ALL THESE FACTS MAKE THE CASE OF THE ASSESSEE AS NOT CONVINCING. 10 10 III) COMING TO THE SALE EXPECT IT MAY BE POINTED OUT AS PER THE BROKER NOTE FILED THE ASSESSEE HAS SOLD 20,500 SHARES 017 10,01.03 AT RS. 46.58 PER SHARE, 1,000 THOUSAND SHARES ON 14.01.03 FOR RS. 48.18 PER SHARE AND 8,500 SHARES ON 16.01.03 AT RS. 49,63 PER SHARE. AS PER THE BILLS OF THE BROKER THE ASSESSEE WAS TO RECEIVE RS. 9,54,638/- + RS. 4,21,747.01 + RS. 48,167.49 TOTALLING TO RS. 14,24,552.50 WHICH IS ALSO SHOWN IN THE COMPUTATION AS SALE CONSIDERATION. AGAINST WHICH THE ASSESSEE HAS STATED TO HAVE RECEIVED THE PAYMENTS ON 21. 01.03 OF RS. 9,54,638/- AND ON 27.01.03 OF RS.4,84,724/- TOTALING TO RS. 14,39,362/- ALSO REFLECTING IN THE SUMMARY OF SAVING BANK ACCOUNT OF SBI FILED WITH THE RETURN AND ALSO IN THE COPY OF BANK'S STATEMENT FILED VIDE SUBMISSION DATED 14.10,09. VERY INTERESTINGLY THE BROKER HAS PAID EXCESS AMOUNT OF RS. 14,809.5 FOR' WHICH THERE IS NO EXPLANATION. THIS FACT ALSO PROVE S THAT THE TRANSACTION IS A MANAGED AFFAIR. HAVING SOLD THE SHARES ON 10.01.03 AND TILE PAYMENT 11 11 COMING AS LATE AS ON 21.01.03 IS ALSO NOT EXPLAIN. IV) COMING TO THE DELIVERY OF SHARES TO THE BROKER AT THE TIME OF SHARES, THE ASSESSEE HAS FILED A DELIVE RY INSTRUCTION SLIP DATED 09.01. 03 ANNEXED AT ANNEXURE B-7 OF SUBMISSION DATED 08.12.09. IN THIS CONNECT ION, TWO IMPORTANT ISSUES ARE WORTH MENTIONING. FIRSTLY, THE DELIVERY INSTRUCTION IS FO R 'OFF MARKET TRADES' AND NOT FOR 'MARKET TRADES '. THIS CLEARLY SHOWS THAT THE SAID TRANSACTION WAS NOT CARRIED OUT THROUGH THE STOCK. EXCHANGE. THAT THE CMBPID OF THE BROKER THROUGH WHOM THE SHARES HAVE BEEN SOLD, AS PER THE BROKER NOTE IS IN 602044 WHERE AS THE CLIENT ID MENTIONED IN THE DELIVERY INSTRUCTION IS 10996290. SECONDLY, INSPITE OF REPEATED REQUEST THE ASSESSEE HAS NOT FILED HIS D-MAT STATEMENT. THE SHARES HAVE BEEN DELIVERED FROM THE D-MAT ACCOUNT AS PER THE DELIVERY INSTRUCTION 09.01.03. AS PER THE SHARES CERTIFICATE THESE 30,000 SHARES WERE RECEIVED BY THE ASSESSEE AFTER 26. 11. 02 (AS PER THE DATE ON THE SHARE CERTIFICATE). THEREFORE, THESE SHARES WERE FOR JUST A 12 12 FEW DAYS IN THE D-MAT ACCOUNT. V) THEREFORE, THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE LONG TERM CAPITAL GAINS. MERELY FILING OF BROKERS NOTE AND RECEIVING THE SALE P ROCEEDINGS THROUGH CHEQUE WOULD NOT SUFFICE. IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD THAT THE CREDIT OF RS. 14,39,362/- IN THE ACCOUNTS OF THE ASSESSEE, IN THE FORM OF SALE PROCEEDS CANNOT BE ACCEPTED AT GENUINE AND IS BEING ADDED U/S 68. SINCE THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND ALSO CONCEALED THE PARTICULARS THEREOF, IT IS A FIT CASE FOR IMPOSITION OF PENALTY AND THEREFORE PENALTY PROCEEDINGS U/S 271(1)(C) IS BEING INITIATED S EPARATELY. 6. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED TH E ADDITION BY OBSERVING THAT FACTS OF THE CASE ARE SI MILAR TO THE ONE DECIDED IN I.T.A.NO. 239/IND/2009-10 IN THE CASE OF SMT. KAVITA PANJWANI BY THE SAME CIT(A). 13 13 7. THE RELEVANT FINDING RECORDED IN THE ABOVE REFERRE D CASE OF KAVITA PANJWANI IN APPEAL NO. IT-239/09-10 ARE EXTRACTED, AS UNDER :- 4.2.1 THE APPELLANT IN WRITTEN SUBMISSION FILED HA S INCLUDED A SET OF VARIOUS DOCUMENTS WHICH ACCORDING TO APPELLANT FULLY SUPPORT THE CLAIM OF LONG TERM CAPI TAL GAIN. THE APPELLANT IN WRITTEN SUBMISSION HAS ALSO TRIED TO MEET THE VARIOUS DISCREPANCIES AND FINDING S NOTED BY ASSESSING OFFICER IN THIS BEHALF AS HAS BE EN EXTRACTED ABOVE, AND HAS ALSO RELIED ON SEVERAL TRIBUNAL DECISIONS TO SUPPORT THE CLAIM OF LONG TER M CAPITAL GAIN. ON CAREFULLY CONSIDERING THE COPY OF DOCUMENTS FILED AND THE DETAILED FINDING RECORDED BY AO AND CONSIDERING THE APPELLANTS FACTUAL AND LEGAL CONDITIONS IN THIS BEHALF THE FOLLOWING FACTS CLEARLY EMERGE: (1) SHARES IN BOTH THESE COMPANIES ARE NOT WIDELY TRADE D AND NOT OTHERWISE THESE COMPANIES ARE NOT KNOWN TO BE COMPANIES OF SOUND FINANCIAL 'AND BUSINESS ANTECEDE NTS AND SHARES IN BOTH THESE COMPANIES APPARENTLY FALL I N THE CATEGORY OF SPECULATIVE SHARES KNOWN AS PENNY STOCKS. 14 14 (2) THERE WAS MULTI/AID RISE IN THE PRICE OF SUCH SHARE S FROM THE DATE OF PURCHASE BY THE APPELLANT AND DATE OF SALE AFTER A PERIOD OF ONE YEAR AGAINST OVERALL INCREASE IN SHARE PRICES OF MOST WIDELY TRADED SHARES, WHICH DEFIES NORMAL COMMON SENSE. (3) THE ASSESSEE/APPELLANT AND OTHER MEMBERS OF SEA RCH GROUP DO NOT REGULARLY DEAL IN SHARES OR HAD THE EXPERIENC E OR EXPERTISE OF INVESTING IN SHARE MARKET, NO OTHER WORTHWHILE INVESTMENT IN EQUITY SHARES IN ANY OTHER COMPANY YIELDING DIVIDEND INCOME HAS BEEN DISCLOSED IN ANY OF THE CASE OF SEARCH GROUP. (4) VARIOUS ASSESSES OF THE SEARCH GROUP AS NOTED BY AO HAVE SIMULTANEOUSLY TRADED IN THE SAME SCRIP AT THE SAME TIME RESULTING IN SIMILAR CAPITAL GAIN IN VARIOUS C ASES. THE APPELLANT HAS MISERABLY FAILED TO REBUT THAT VARIOU S CONTENTIONS AND FINDINGS RECORDED BY AO ABOUT SERIO US DISCREPANCIES, CAUSING SERIOUS DOUBTS ON THE GENUINENESS OF THESE TRANSACTIONS. 4.2.2 THE APPELLANTS EMPHASIS AND RELIANCE ON THE S ET OF DOCUMENTS TO SUPPORT SUCH TRANSACTION IS ENTIRELY MISPLACED AS COOKED UP SUPPORTING DOCUMENTS HAVE BE EN 15 15 PREPARED WITH THE HELP OF CONNIVING BROKERS WHO HAV E ACTIVE INTEREST IN EXECUTION OF SUCH DUBIOUS TRANSA CTION AND CONSEQUENTLY THEY CANNOT BE GIVEN ANY IMPORTANCE, RELIANCE CAN BE PLACED TO THE THREE AUTHORITATIVE D ECISIONS OF HON'BLE SUPREME COURT IN THIS BEHALF LAYING DOWN PREPOSITION THAT WITHOUT APPRECIATING THE GENUINENE SS OF TRANSACTION SALE RELIANCE CANNOT BE PLACED ON DOCUM ENTS AND THE SAME ARE TO BE EXAMINED IN THE LIGHT OF SURROUNDING CIRCUMSTANCES AND HUMAN PROBABILITIES. (I) CIT VS. DURGA PRASAD MORE, 82 ITR 540 (SC) (II) SUMATI DAYAL. VS. CIT, 214 ITR 801 (SC) (III) CIT VS. P. MOHANKALA, (2007) 291 ITR 278 (SC) 4.2.3 IT HAS TO BE APPRECIATED THAT THE VENUE AUTHO RITIES ARE FUNCTIONING IN A DEMOCRATIC SET-UP AND ARE NOT DISCHARGING THEIR DUTIES IN A POLICE STATE, WHEREBY THEY CAN FORCE THE ASSESSEE/APPELLANT AND CO,-CONSPIRATO RS TO ADMIT THE TRUTH OF THE TRANSACTIONS THOUGH THE SAME APPEARS TO BE OBVIOUS AND APPARENT AND IT IS USUAL ON THE PART OF THE APPELLANT/ASSESSEE AND THERE ARE CO-CONSPIRATORS/ABETTOR AND THEN FOR THE AR TO CLAIM AND CONTEND THAT THERE IS NO DIRECT EVIDENCE 16 16 THAT SUCH TRANSACTIONS WERE NOT GENUINE AND THE TRANSACTIONS WERE SUPPORTED BY VALID DOCUMENTS AND WERE CARRIED OUT THROUGH BANKING CHANNEL AND HENCE SHOULD BE ACCEPTED AS GENUINE KNOWING FULLY WELL THAT SUCH TRANSACTIONS WERE NOT GENUINE. THE AFORESAID FACTS HAVE TO BE AGAIN EXAMINED AND ANALYZED WITH APPRECIATION OF THE CONSTRAINTS AND LIMITATIONS WITHIN WHICH THE AO HAS TO FUNCTION AND OPERATE. FIRSTLY, THESE TRANSACTIONS WHICH ARE NORMALLY WELL-DOCUMENTED AND ARE SECRETLY NEGOTIATED ARE SCRUTINIZED BY THE A 0 AFTER A SUFFICIENT GAP OF TIME I. E. NEARLY TWO YEARS FROM THE END OF THE RELEVANT F. Y. AND THEN WHEN THE APPELLANT/ASSESSEE AND THE OTHER PERSONS ABETTING THE ASSESSEE IN SUCH MANIPULATION ARE CONFRONTED BY THE A 0, THERE IS USUAL TENDENCY TO EVADE THE REPLIES OR IN THE LEAST TO DELAY THE REPLIES. THE A O AGAIN HAS TO FINALIZE THE PROCEEDINGS WITHIN THE STATUTORY LIMITATION INVOLVED AND THEN HE ' CANNOT DEVOTE THE ENTIRE TIME AVAILABLE AT HIS DISPOSAL TO A PARTICULAR CASE. HERE; IT WILL' BE PERTINENT TO MAK E 17 17 REFERENCE TO. THE OBSERVATION OF THE HON'BLE SUPREME COURT IN 'THE CASE OF SUMATI DAYAL V. CIT, 214 ITR 801 (SC) MADE IN THE CONTEXT OF SALE AND PURCHASE TRANSACTIONS OF PRIZE WINNING LOTTERY TICKETS WHICH ARE VERY MUCH APPLICABLE TO THE FACTS OF THE CASE. THE SAME ARE AS EXTRACTED HERE UNDER : 'THE MATTER HAS TO BE CONSIDERED IN THE LIGHT OF HUMAN PROBABILITIES. THE CHAIRMAN OF THE SETTLEMENT COMMISSION HAS EMPHASISED THAT THE APPELLANT DID POSSESS THE WINNING TICKET WHICH WAS SURRENDERED TO THE RACE CLUB AND IN RETURN A CROSSED CHEQUE WAS OBTAINED. IT IS, IN OUR VIEW, A NEUTRAL CIRCUMSTANCE, BECAUSE IF THE APPELLANT HAD PURCHASED THE WINNING TICKET AFTER THE EVENT SHE WOULD BE HAVING THE WINNING TICKET WITH HER WHICH SHE COULD SURRENDER TO THE RACE CLUB. THE OBSERVATION BY THE CHAIRMAN OF THE SETTLEMENT COMMISSION THAT 'FRAUDULENT SALE OF WINNING TICKET IS NOT AN USUAL 18 18 PRACTICE BUT IS VERY MUCH OF AN UNUSUAL PRACTICE' IGNORES THE PREVALENT MALPRACTICE THAT WAS NOTICED BY THE DISTRICT TAXES ENQUIRY COMMITTEE AND THE RECOMMENDATIONS MADE BY THE SAID COMMITTEE WHICH LED TO THE AMENDMENT OF THE ACT BY THE FINANCE ACT OF 1972 WHEREBY THE EXEMPTION FROM TAX THAT WAS AVAILABLE IN RESPECT OF WINNINGS FROM LOTTERIES, CROSSWORD PUZZLES, RACES, ETC. WAS WITHDRAWN. SIMILARLY THE OBSERVATION BY THE CHAIRMAN THAT IF IT IS ALLEGED THAT THESE TICKETS WERE OBTAINED THROUGH FRAUDULENT MEANS, IT IS UPON THE ALLEGER TO PROVE THAT IT IS SO, IGNORES THE REALITY. THE TRANSACTION ABOUT PURCHASE OF WINNING, TICKET TAKES PLACE IN SECRET AND DIRECT EVIDENCE ABOUT SUCH PURCHASE WOULD BE RARELY AVAILABLE. AN INFERENCE ABOUT SUCH A PURCHASE HAS TO BE DRAWN ON THE BASIS OF THE CIRCUMSTANCES AVAILABLE ON THE RECORD. 19 19 HAVING REGARD TO THE CONDUCT OF THE APPELLANT AS DISCLOSED IN HER SWORN STATEMENT AS WELL AS OTHER MATERIAL ON THE RECORD AN INFERENCE COULD REASONABLY BE DRAWN THAT THE WINNING TICKETS WERE PURCHASED BY THE APPELLANT AFTER THE EVENT. WE ARE, THEREFORE, UNABLE TO AGREE WITH THE VIEW OF THE CHAIRMAN IN HIS DISSENTING OPINION. IN OUR OPINION, THE MAJORITY OPINION AFTER CONSIDERING SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES HAS RIGHTLY CONCLUDED THAT THE APPELLANTS CLAIM ABOUT THE AMOUNT BEING HER WINNING FROM RACES IS NOT GENUINE. IT CANNOT BE SAID THAT THE EXPLANATION OFFERED BY THE APPELLANT IN RESPECT OF THE SAID AMOUNTS HAS BEEN REJECTED UNREASONABLY AND THAT THE FINDING THAT THE SAID AMOUNTS ARE INCOME OF THE APPELLANT FROM OTHER SOURCES IS NOT, BASED ON EVIDENCE.' SO ALSO, REFERENCE CAN BE MADE TO THE OBSERVATION O F THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. DURGA PRASAD MORE, 82 ITR 540 (SC) ON PAGE 545 TO 20 20 THE EFFECT THAT THE CONTENTS IN THE DOCUMENTS CANNO T BE GIVEN UNDUE IMPORTANCE AND, THE REALITY AND SUBSTANCE OF THE TRANSACTION IS TO BE CONSIDERED. 4.2.4 FURTHER STILL, WHEN THE APPELLANT HAD NO EXPERIENCE IN THE LINE OF INVESTMENT IN STOCK MARKET, AND YET SHE WAS ABLE TO EARN A FORTUNE BY MULTIPLYING HER INVESTMENT BY OVER 100 TIMES IN A SHORT SPAN OF LESS THAN 2 YEARS THEN A HEAVY ONUS IS CAST ON HER TO EXPLAIN AND SUBSTANTIATE THAT ALL SUCH TRANSACTIONS WERE GENUINE TRANSACTIONS WHICH THE APPELLANT HAS MISERABLE FAILED IN THE PRESENT CASE AS DISCUSSED ABOVE IN DETAIL AND HERE IN AFTER ALSO. 4.2.5 FURTHER JUDICIAL NOTICE IN THE AFORESAID FACTS IS REQUIRED TO BE TAKEN OF PREVAILING MALPRACTICE I N THE FIELD OF MANIPULATION OF STOCK PRICES OF SUCH DUBIOUS COMPANIES BY THE OPERATOR AND MANIPULATORS WITH OR WITHOUT THE 'ACTIV E HELP AND ASSISTANCE OF MANAGEMENT TO SPREAD RUMOURS OR HIGHLY EXAGGERATED GROWTH/PROFIT PROSPECTS OF SUCH COMPANIES LEADING TO SUCH PHENOMENAL PRICE 21 21 RISE. REFERENCE CAN BE MADE TO THE FOLLOWING DECISIONS: (A) CWT V. ROHTAS INDUSTRIES LTD., 67 ITR 283 (SC), WHEREIN IT WAS HELD THAT : - 'IN THE ABSENCE OF ANY DIRECT EVIDENCE, A JUDICIAL OR QUASI-JUDICIAL TRIBUNAL CAN BASE ITS CONCLUSIONS ON THE BASIS OF WHAT ARE KNOWN AS NOTORIOUS FACTS BEARING IN MIND THE PRINCIPLES OF SECTION 144 OF THE EVIDENCE ACT. (B) ATTAR SINGH GURMUKH SINGH V. ITO 191 ITR 667 (SC) WHEREIN, WHILE INTERPRETING THE PROVISIONS OF SECTI ON 40A(3), IT WAS HELD THAT 'IN INTERPRETING A TAXING STATUTE, THE COURT CANNOT BE OBVIOUS OF THE PROLIFERATION OF BLACK MONEY WHICH IS UNDER CIRCULATION IN OUR COUNTRY. 4.2.6 AO'S FINDING THAT IT IS A CASE OF DUBIOUS TAX PLANNING, IT HAS TO BE NECESSARILY UPHELD FOR THE SIMPLE REASONS THAT: I) THE APPELLANT HAD NO GENUINE OR BONA FIDE ECONOMIC OR FINANCIAL BACKGROUND WHILE, ENTERING INTO SUCH DUBIOUS 22 22 TRANSACTIONS, AND II) THE ONLY OBJECT OF THE. APPELLANT IN SO ENTERING INTO SUCH DUBIOUS TRANSACTIONS WAS EVADING/AVOIDING INCIDENTS OF TAX BY BRINGING UNACCOUNTED CASH NEEDED FOR INVESTMENT IN THE FORM OF .EXEMPT INCOME. IN THE RESULT, THE A O'S ACTION IS FULLY SUPPORTED BY THE APEX COURT'S JUDGMENT IN THE CASE OF MCDOWELL V. CTO, (1985) 154 ITR 148 (5C) AND THE APPELLANT'S CASE CAN NOT DERIVE ANY BENEFIT FROM THE SERIOUS OF JUDGMENTS LIKE CWT V. ARVIND NAROTTAMDAS, (1988) 173 ITR 479 (SC) AND UNION OF INDIA V. PLAYWORLD ELECTRONICS P. LTD. (1990) I84 ITR 308 (SC), IN VIEW OF DETAILED DISCUSSION BELOW. 4.2.7 THE RELIANCE PLACED BY APPELLANT ON OTHER TRIBUNAL DECISIONS TO SUPPORT SUCH DUBIOUS TRANSACTIONS IS AGAIN OF NO AVAIL AS IT IS SETTLED PROPOSITION OF LAW THAT EACH AND EVERY DECISION IS RENDERED ON THE PREMISES OF ENTIRE SET OFF ACTS AND CIRCUMSTANCES OF THE CASE AND ANY SLIGHT VARIATION IN ANYONE OF THE MATERIAL FACTS OR PARTICULARS MAY RENDER THE DECISION INAPPLICABLE TO OTHER CASES. 23 23 REFERENCE CAN BE MADE TO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SUN ENGINEERING PVT. LTD. VS. CIT 198 ITR. FURTHER SINCE THAT APPELLANT HAS REFERRED TO DECISIONS OF VARIOUS BENCHES OF THE TRIBUNAL IN HIS SUPPORT IT WOULD BE WORTHWHILE TO REFER THAT IN THE CASE CITED BELOW TRIBUNAL ON APPRECIATION OF FACTS AND SURROUNDING CIRCUMSTANCES OF THE CASE UPHELD THE AO'S ACTION IN NOT ACCEPTING THE CLAIM OF ASSESSEE IN LONG TERM CAPITAL GAIN ON SALE OF SHARES: I) ITO VS. SHANTILAL MUNNALAL (2009), 31 DTR (BANG)(TRIB)388. II) ACIT VS. RAMESHCHAND R. PATEL (2005) 94 TTJ (AHD) 361. THUS, IN VIEW OF DETAILED DISCUSSION ABOVE, THE AO' S ACTION IS FOUND TO BE FULLY JUSTIFIED IN THIS BEHAL F AND GROUND NO. 3 IS ALSO REJECTED BEING DEVOID OF ANY MERIT AND SUBSTANCE. 8. AGAINST THE ABOVE ORDER OF CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 24 24 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW AND FOUND FROM RECORD THAT THE ASSESSEE HAD SHOWN L ONG TERM CAPITAL GAIN ON SALE OF SHARES OF MMWWL. THE ASSESSING OFFICER FOUND THAT TRANSACTION SO ENTERED FOR PURCHASE AND SALE WAS BOGUS. THE SHARES OF COMPANY WERE NOT WIDELY TRADED AND THE COMPANY WAS NOT OF SOUND FINANCIAL MEANS. A FINDING WAS ALSO RECORDED BY THE LOWER AUTHORITIES TO THE EFFECT THAT THESE SHARES FALL IN THE CATEGORY OF SPECULATIVE SHARES KNOWN AS PENNY STOCKS. THE AS SESSEE HAD SHOWN MULTIPLE RISE IN THE PRICE OF SUCH SHARES WITHIN A VERY SHORT PERIOD. IT WAS ALSO FOUND THAT THE ASSES SEE AND OTHER MEMBER OF THE GROUPS DO NOT DEAL IN SHARES AN D IT WAS ONLY WITH A VIEW TO BOOK A LONG TERM CAPITAL GAIN, TRANSACTIONS WERE ARRANGED THROUGH A BROKER. AFTER CONSIDERING ASSESSEES CONTENTION AND THE DOCUMENTS PLACED ON RECORD, THE CIT(A) FOUND THAT SHOWING THE LONG TERM CAPITAL GAIN WAS A COOKED UP AND THE SUPPORTIN G DOCUMENTS WERE PICKED UP WITH THE HELP CONNIVING BR OKERS, WHO, HAVE ACTIVE INTEREST IN SUCH DUBIOUS TRANSACTI ON. AFTER APPLYING THE PROPOSITION OF LAW LAID DOWN BY THE HO N'BLE 25 25 SUPREME COURT IN THE CASES REPORTED AT 82 ITR 540, 214 ITR 801 AND 291 ITR 278, TO THE FACTS OF THE INSTANT CA SE, THE CIT(A) REACHED TO THE CONCLUSION THAT THE ENTIRE CA PITAL GAIN BOOKED BY THE ASSESSEE WAS BOGUS. THE DETAILED FIND ING RECORDED BY THE LOWER AUTHORITIES ARE AS PER MATERI AL ON RECORD, WHICH COULD NOT BE CONTROVERTED BY THE ASSE SSEE BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDING LY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS RE CORDED BY THE LOWER AUTHORITIES AND CONFIRM THE ADDITION MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN. IN THE CASE OF O THER ASSESSEES, THE FACTS ARE SIMILAR, THEREFORE, WE CON FIRM THE ACTION OF LOWER AUTHORITIES IN CASE OF ALL THE ASSE SSEES AND IN RESPECT OF ALL THE ASSESSMENT YEARS UNDER CONSIDERA TION. 10. IN THE RESULT, GROUND TAKEN BY ALL THE ASSESSEES IN THIS GROUPS FOR ALL THE YEARS UNDER CONSIDERATION A RE HEREBY DISMISSED. 11. IN THE CASE OF NEERAJ PANJWANI IN THE A.Y. 2003-04, THE ASSESSING OFFICER HAS ALSO MADE ADDITION OF RS. 6,37,000/- AS UNEXPLAINED DEPOSIT IN THE BANK ACCOU NT. RELEVANT FINDINGS OF THE ASSESSING OFFICER ARE RECO RDED AT PAGE 4 OF THE ASSESSMENT ORDER, WHEREIN ASSESSING O FFICER 26 26 HAS TAKEN NOTE OF POST SEARCH INQUIRY CONDUCTED IN THE INVESTIGATION WING. AS THERE WAS NO COMPLIANCE ON T HE PART OF THE ASSESSEE, THE ASSESSING OFFICER HAS MADE AD DITION OF THE ENTIRE AMOUNT DEPOSITED IN THE BANK ACCOUNT. BY CONSIDERING DETAILED EXPLANATION FILED BY THE ASSES SEE, THE CIT(A) HAS DELETED ENTIRE ADDITION AFTER HAVING THE FOLLOWING OBSERVATIONS :- 4.3.2 THE VARIOUS CONTENTIONS OF THE APPELLANT IN THIS BEHALF IN WHICH VARIOUS SERIOUS ISSUES HAVE BEEN RAISED REQUIRES DETAILED DELIBERATIONS. THE APPELLANT HAS RAISED A VERY SERIOUS OBJECTION THAT THE AO MADE THIS ADDITION WITHOUT APPLICATION OF HI S OWN MIND ON THE BASIS OF POST SEARCH ENQUIRIES CONDUCTED BY INVESTIGATION WING AND THUS SUCH ADDITION WAS MADE AT THE DICTATE OF THE INVESTIGATION WING WITHOUT THERE BEING ANY INDEPENDENT EXAMINATION AND APPLICATION OF MIND AND DISCRETION ON THE PART OF AO. IT IS ALSO CHALLENGED BY WAY SUB GROUND 3(C) THAT SUCH ADDITION SERIOUSLY VIOLATED THE PRINCIPLES OF NATUR AL JUSTICE AS THE AO HAS MADE SUCH ADDITION WITHOUT 27 27 RECORDING ANY WORTHWHILE REASON FOR MAKING SUCH ADDITION MUCH LESS THAN OF ASSIGNING ANY SPECIFIC REASON FOR REJECTING THE EXPLANATION OFFERED IN THI S BEHALF. GROUND 3(D) IS AGAIN TECHNICAL IN NATURE TO THE EFFECT THAT NO ADDITION U/S 68 CAN BE MADE IN RESPECT OF BANK DEPOSITS. 4.3.3 IT HAS TO BE NECESSARILY HELD ON EXAMINATION OF THE FINDING RECORDED BY AO IN THE ASSESSMENT YEAR UNDER CONSIDERATION THAT WHILE HE HAS RECORDED VERY DETAILED AND DELIBERATE FINDINGS FOR REJECTING THE CLAIM OF LONG TERM CAPITAL GAIN ON BEHALF OF THE APPELLANT BUT HAD DONE PRECIOUS LITTL E TO REJECT THE CONTENTION OF THE APPELLANT IN BEHALF OF BANK DEPOSITS. HE HAS FAILED TO RECORD ANY FINDING AS TO HOW SUCH DEPOSITS IN BANK ACCOUNT WERE LIABLE TO BE TREATED AS UNEXPLAINED. THUS, THE APPROACH OF ASSESSING OFFICER IN MAKING SUCH ADDITION WITHOUT CONSIDERING CONTENTIONS OF APPELLANT AND IN SUMMARILY REJECTING SUCH CONTENTIONS AND MAKING SUCH ADDITION STRENGTHEN TO THE APPELLANTS CONTENTION THAT SUCH ADDITION WERE MADE ON THE 28 28 BASIS OF ENQUIRY REPORT PREPARED BY INVESTIGATION WING IN APPRAISAL REPORT. THE AO FAILED TO APPRECIATE THAT EVEN IF FOR ANY REASON NO COMPLIANC E WAS MADE OR NO DETAILS OR DOCUMENTS WERE FURNISHED IN POST SEARCH ENQUIRY BEFORE INVESTIGATION WING THE APPELLANT COULD NOT BE PREVENTED IN LAW IN OFFERING PROPER DETAILS AND DOCUMENTS IN SUPPORT OF SUCH TRANSACTIONS IN COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER, WAS DUTY BOUND IN LAW TO EXAMINE SUCH FINDINGS WITHOUT BEING GUIDED BY THE FACT THAT WHY SUCH EXPLANATION 'WAS NOT GIVEN BEFORE INVESTIGATIO N WING AND WAS REQUIRED TO GIVE A DEFINITE FINDING BY APPLYING HIS MIND AND DISCUSSION BUT THE SAME HAS NOT BEEN DONE. SUCH ADDITION HAS TO BE ACCORDINGLY NECESSARILY HELD TO BE ARBITRARY IN NATURE. THUS, THERE IS A MERIT IN GROUNDS 3(B) AND 3(C) RAISED BY APPELLANT IN THIS BEHALF. 4.3.4 NOW COMING TO THE SPECIFIC FACTS SURROUNDED AND TRANSACTION THE SAME ARE FOUND TO BE EXPLAINED IN DETAIL IN LIGHT OF SUBMISSIONS ON GROUND 3(E). T HE 29 29 APPELLANT HAS MADE A VERY DETAILED EXPLANATION ALONG WITH THE DOCUMENTARY EVIDENCES TO EXPLAIN THE SOURCES OF VARIOUS BANK DEPOSITS. THE EXPLANATION OF THE APPELLANT HAS ALREADY BEEN EXTRACTED ABOVE. 4.3.5 THE CONTENTIONS OF THE APPELLANT ALONG WITH THE DOCUMENTARY EVIDENCES HAVE BEEN CONSIDERED CAREFULLY. THE APPELLANT HAS SUBSTANTIATED SOURCES OF CASH DEPOSIT OF RS. 50,OOO/- IN HIS BANK ACCOUNT WITH STATE BANK OF INDIA ON 24-01-2003 BY DEMONSTRATING THAT HE HAD MADE A CASH WITHDRAWAL OF RS. 4,OO,OOO/- FROM THE SAME BANK ACCOUNT ON 24-12-2002 AND OUT OF SUCH CASH WITHDRAWAL, CASH AMOUNTING TO RS. 50,000/- WAS DEPOSITED BY HIM. IT IS NOT THE CASE OF THE REVENUE THAT THE ENTIRE CASH WITHDRAWAL FROM BANK WAS UTILIZED BY THE APPELLANT FOR SOME OTHER PURPOSES AND HE WAS NOT HAVING THE ABOVE SAID CASH OF RS. 50,000/- WITH HIM FOR MAKING THE IMPUGNED DEPOSIT. THUS, THERE IS APPARENTLY NO REASON NOT TO ACCEPT SUCH CASH DEPOSIT AS DULY EXPLAINED IN VIEW OF THE CLEAR FACT S 30 30 AND EVIDENCE FILED. 4.3.6 AS REGARD THE REMAINING BANK DEPOSITS OF RS. 5,87,000/- MADE BY THE APPELLANT IN HIS BANKS THROUGH ACCOUNT PAYEE CHEQUE, THE APPELLANT HAS PRIMA FACIE EXPLAINED THE SOURCES OF ALL THE DEPOSITS. FROM THE STATEMENT OF AFFAIRS OF THE APPELLANT AS OF 31-03-2002, IT TRANSPIRED THAT THE APPELLANT WAS HAVING ONE 12 BORE GUN AND IT WAS STATED AT RS. 7000/-. THE APPELLANT HAS CLAIMED TO HAVE SOLD SUCH GUN FOR A SUM OF RS. 11,000/- AND THE CONSIDERATION WAS DULY DEPOSITED IN HIS BANK ACCOUNT WITH STATE BANK OF INDORE ON 27-022002. THE EXPLANATION OF THE APPELLANT IS VERIFIABLE FROM THE DOCUMENTS FILED ON RECORD. 4.3.7 THE EXPLANATION OF THE APPELLANT FOR RECEIPT OF ADVANCE OF RS. 4,51,000/- FROM SHRI GERILAL SEN THROUGH ACCOUNT PAYEE CHEQUE AGAINST SALE OF SHOP AT 33, WARE HOUSE ROAD, INDORE, ALSO APPEARS TO BE REASONABLE AS THE, APPELLANT HAS SHOWN INCOME FROM BUSINESS OF CONSTRUCTION UNDER S. 44AD OF THE ACT IN THE SUBSEQUENT ASSESSMENT YEARS. 31 31 4.3.8 AS REGARD DEPOSIT OF RS. 5000/- WITH HDFC BANK LTD., THE EXPLANATION OF THE APPELLANT THAT SUCH DEPOSIT WAS MADE THROUGH ACCOUNT PAYEE CHEQUE BY GETTING FUNDS TRANSFERRED FROM ANOTHER BANK I.E. STATE BANK 'OF INDORE HAS ALSO MERIT. 4.3.9 THE APPELLANT HAS EXPLAINED THE SOURCE OF DEPOSIT OF RS. 50,000/- STATE BANK OF INDORE BY CLAIMING THAT SUCH DEPOSIT WAS MADE BY HIM BY GETTING REFUND OF LOAN GRANTED EARLIER TO HIS OWN BROTHER NAMELY SHRI DEEPAK PANJWANI. THE APPELLANT HAS FILED CONFIRMATION LETTER FROM THE LENDER. IT IS WORTH NOTING THAT IN THE CASE OF SHRI DEEPAK PANJWANI, ASSESSMENT U/S 153A WAS CARRIED OUT BY THE SAME ASSESSING OFFICER, SIMULTANEOUSLY. IN SUCH A SITUATION, THERE IS ABSOLUTELY NO REASON FOR NOT ACCEPTING THE SOURCE O F SUCH DEPOSIT. 4.3.10 AS REGARD DEPOSIT OF RS. 70,000/-, CLAIMED TO HAVE BEEN RECEIVED AS LOAN FROM SHRI LEKHRAJ HEMWANI, THE APPELLANT HAS FILED ALL THE 'NECESSARY DOCUMENTS SUCH AS LETTER OF 32 32 CONFIRMATION, COPY OF I.T RETURN, COMPUTATION OF INCOME, CAPITAL ACCOUNT AND STATEMENT OF AFFAIRS OF THE CREDITOR FOR THE RELEVANT PERIOD. FROM THE COPY OF THE STATEMENT OF AFFAIRS OF THE CREDITOR AS OF 31-0 3- 2003, IT IS SEEN THAT THE CREDITOR HAS SHOWN LOAN O F RS. 88,000/- IN THE NAME OF THE CREDITOR WHICH GETS TALLIED WITH THE SAME SHOWN BY THE APPELLANT. 4.3.11 IN VIEW OF THE ABOVE FINDINGS, THERE IS ABSOLUTELY NO MERIT FOUND IN THE ACTION OF THE ASSESSING OFFICER IN MAKING THE ADDITION OF RS. 6,37,000/- BY HOLDING THE VARIOUS BANK DEPOSITS AS UNEXPLAINED. ACCORDINGLY, SUCH ADDITIONS ARE DELETED AND GROUND NOS. 3(A) TO 3 (E) OF THE APPELLANT ARE ALLOWED. 12. AGAINST THE ABOVE DELETION, THE REVENUE IS IN FURTH ER APPEAL BEFORE US. 13. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. AFTER RECORDING DETAILED FINDING, THE LD. CIT(A) HAS DELETED VARIOUS ADDITIONS IN RESPECT OF CASH DEPOSI T IN THE BANK ACCOUNT. HOWEVER, THE CIT(A) HAS ALSO DELETED THE ADDITION IN RESPECT OF DEPOSIT OF CHEQUE OF RS. 4.5 1 LAKHS 33 33 RECEIVED AS ADVANCE FROM SHRI GERILAL SEN. THE REAS ONING GIVEN BY THE LD.CIT(A) IS THAT THE ASSESSEE HAD SHO WN INCOME FROM BUSINESS OF CONSTRUCTION U/S 44AD IN TH E SUBSEQUENT YEARS, THEREFORE, RECEIPT OF ADVANCE OF RS. 4.50 LAKHS FROM SHRI GERILAL SEN APPEARS TO BE REASONABL E. HOWEVER, NO FINDING HAS BEEN RECORDED BY THE LD.CIT (A) WITH REGARD TO CREDITWORTHINESS OF SHRI GERILAL SEN AS W ELL AS GENUINENESS OF TRANSACTION. MERELY ON THE PLEA THAT THE ASSESSEE HAS SHOWN INCOME FROM BUSINESS OF CONSTRUC TION U/S 44AD IN THE SUBSEQUENT ASSESSMENT YEARS UNDER CONSIDERATION, IS NOT A VALID JUSTIFICATION FOR TRE ATING THE ADVANCE RECEIPT OF RS. 4.51 LAKHS AS GENUINE. SINCE IT WAS A TRANSACTION OF LOAN, THE ASSESSEE IS REQUIRED TO PR OVE NOT ONLY IDENTITY AND GENUINENESS BUT ALSO CREDITWORTHI NESS OF THE LOAN CREDITORS. IN THE INTEREST OF JUSTICE DELE TION OF ADDITION OF RS. 4.51 LAKHS IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER FOR DECIDING AFRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. WITH RESPECT TO THE RE MAINING AMOUNT DEPOSITED IN THE BANK AND WHICH HAS BEEN DEL ETED BY THE LD.CIT(A), WE CONFIRM THE ACTION OF THE CIT( A). 34 34 14. THE ASSESSING OFFICER HAS ALSO MADE ADDITION OF RS. 2,59,085/-IN THE ASSESSMENT YEAR 2002-03 IN RESPECT OF VARIOUS DEPOSITS MADE IN HIS SAVING BANK ACCOUNT BY TREATING THE SAME AS UNEXPLAINED. BY THE IMPUGNED O RDER, THE LD. CIT(A) DELETED THE ADDITION AFTER RECORDING FOLLOWING FINDINGS :- 5.3.1 THE CONTENTIONS OF THE APPELLANT WHICH ARE SELF EXPLANATORY HAVE BEEN EXAMINED CAREFULLY IN THE LIGHT OF DOCUMENTARY EVIDENCES. THE APPELLANT HAD EXPLAINED THAT THE ENTIRE DEPOSIT OF RS.2,59,085/- WAS MADE BY HIM THROUGH ACCOUNT PAYEE CHEQUE ONLY. 5.3.2 AS REGARD THE SOURCE OF TWO DEPOSITS OF RS.1,00,000/- EACH ON 01-06-2001 AND 10-07- 2001, THE APPELLANT HAS EXPLAINED THAT SUCH DEPOSITS WERE MADE OUT OF SALE PROCEEDS OF HIS ONE SHOP SITUATED AT 3-4, GOLDEN POINT, MANORAMAGANJ, INDORE. THE APPELLANT HAS FILED A COPY OF THE SALE DEED IN EVIDENCE OF SALES WHICH IS PLACED AT PAGE NO. 27 TO 40 OF THE COMPILATION. FURTHER, IT IS SEEN THAT THE APPELLANT HAS SHOWN 35 35 SHORT-TERM CAPITAL GAIN 'FROM SALE OF SUCH SHOP IN HIS RETURN OF INCOME WHICH HAS DULY BEEN ACCEPTED AND ASSESSED BY THE AO. IN SUCH CIRCUMSTANCES, THERE REMAINS NO DOUBT FOR THE EXPLANATION OF THE APPELLANT. 5.3.3 AS REGARD DEPOSIT RS. 59,085/-, THE EXPLANATION OF THE APPELLANT TO THE EFFECT THAT SUCH DEPOSIT REPRESENTS REFUND OF INTEREST' BEARING LOAN GIVEN BY HIM TO SOME M/S. JAY SACHCHIDANAND & COMPANY IN EARLIER YEARS DESERVES TO BE ACCEPTED. IT IS SEEN THAT THE APPELLANT HAS SHOWN INTEREST INCOME OF RS. 2803/- F ORM THE ABOVE NAMED PARTY. IT HAS ALSO CLAIMED TDS ON SUCH INTEREST AT RS. 259/- WHICH HAS BEEN ALLOWED BY THE ASSESSING OFFICER. IN SUCH CIRCUMSTANCES, THE SOURCE OF DEPOSIT REMAINS EXPLAINED. 3.4 IN VIEW OF THE ABOVE FINDINGS, THERE IS ABSOLUT ELY NO MERIT IN THE ASSESSING OFFICERS ACTION IN MAKIN G ADDITION OF RS. 2,59,085/-, IN THE APPELLANT'S INCO ME BY HOLDING VARIOUS BANK DEPOSITS AS UNEXPLAINED. 36 36 ACCORDINGLY, SUCH ADDITIONS ARE HEREBY DELETED AND GROUND NO. 2(E) OF THE APPELLANT IS ALSO ALLOWED. 15. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOU ND FROM RECORD THAT AFTER GIVING DUE OPPORTUNITY TO TH E ASSESSING OFFICER, THE CIT(A) HAS RECORDED DETAILED FINDING WITH REGARD TO SOURCE OF DEPOSIT OF RS. 1 LAKH EACH ON 1.6.2001 AND 10.7.2001. THE LD. CIT(A) ALSO RECORDE D A FINDING THAT DEPOSIT OF RS. 59,085/- REPRESENT DEPO SIT OF REFUND OF INTEREST BEARING LOAN GIVEN BY THE ASSESS EE TO M/S. JAY SACHIDANAND & CO. IN EARLIER YEARS. IN VIE W OF THE DETAILED FINDING RECORDED AT PARA 3 IN HIS APPELLAT E ORDER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR DELETING ADDITION OF RS. 2,59,085/- MADE ON ACCOUNT OF VARIOUS DEPOSITS IN THE BANK ACCOUNT. 16. IN THE ASSESSMENT YEAR 2005-06, THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS. 9,52,125/- ON A CCOUNT OF VARIOUS DEPOSITS IN THE SAVING BANK ACCOUNT. BY THE IMPUGNED ORDER, THE CIT(A) DELETED ADDITION AFTER R ECORDING FOLLOWING FINDINGS :- 37 37 6.3.1 THE CONTENTIONS OF THE APPELLANT ALONG WITH THE DOCUMENTARY EVIDENCES HAVE BEEN CONSIDERED CAREFULLY. THE APPELLANT HAS SUBSTANTIATED SOURCES OF CASH DEPOSIT OF RS. 1,96,500/- IN HIS BANK ACCOUNT WITH HDFC, BANK, ON VARIOUS DATES BY DEMONSTRATING THAT HE HAD MADE A CASH WITHDRAWAL OF RS. 2,00,000/- FROM THE SAME BANK ACCOUNT ON 06-04-2004 AND OUT OF SUCH CASH WITHDRAWAL, CASH AMOUNTING TO RS. 1,96,500/- WAS DEPOSITED BY HIM FROM TIME TO TIME. THE APPELLANT HAS ALSO CLAIMED TO HAVE AVAILABILITY OF CASH OUT OF HIS RENTAL INCOME AS SHOWN IN THE RETURN. IT IS NOT THE CASE OF THE REVENUE THAT THE ENTIRE CASH WITHDRAWAL FROM BANK WAS UTILIZED BY THE APPELLANT FOR SOME OTHER PURPOSES AND THE SAME WAS NOT AVAILABLE WITH HIM FOR MAKING THE IMPUGNED DEPOSITS. THUS, THERE IS APPARENTLY NO REASON NOT TO ACCEPT-SUCH CASH DEPOSIT AS DULY EXPLAINED IN VIEW OF THE CLEAR FACTS AND EVIDENCE FILED. 6.3.2 AS REGARD THE REMAINING BANK DEPOSITS OF 38 38 RS. 7,55,625/- MADE BY THE APPELLANT IN HIS BANKS THROUGH ACCOUNT PAYEE CHEQUES, THE APPELLANT HAS PRIMA-FACIE EXPLAINED THE SOURCES OF ALL THE DEPOSITS. THE APPELLANT HAS EXPLAINED SOURCE OF DEPOSIT OF RS. 43,700/- BY SHOWING THAT IT WAS REFUND OF SHARE APPLICATION MONEY IN ONE IPO OF BANK OF MAHARASHTRA MADE BY HIM ON 03-03-2004. HE D EMONSTRATED THAT HE HAD MADE APPLICATION FOR ALLOTMENT OF SHARES FOR RS. 48,300/- AND AGAINST SUCH APPLICATION 200 SHARES FOR RS. 4600/- ONLY WERE ALLOTTED TO HIM AND REMAINING SUM OF RS. 43,700/- WAS REFUNDED THROUGH ACCOUNT PAYEE CHEQUE, WHICH IN ITS TURN, WAS DEPOSITED IN HIS BANK ACCOUNT. THERE IS MERIT IN THE EXPLANATION OF THE APPELLANT AND IT IS VERIFIABLE FROM THE DOCUMENTS FILED ON RECORD. 6.3.3 THE EXPLANATION OF THE APPELLANT FOR RECEIPT OF RS. 7,11,925/- FROM SHRI ANOOP GURBANI THROUGH ACCOUNT PAYEE CHEQUE AGAINST SALE OF APPELLANT'S PROPRIETORSHIP BUSINESS NAMELY M/S. KALYAN SEWA SADAN HAS ALSO BEEN FOUND SHRI 39 39 NEERAJ PANJWANI WORTH ACCEPTING IN VIEW OF THE CIRCUMSTANCES OF THE CASE AND DOCUMENTS ON RECORD. IT HAS BEEN EXPLAINED BY THE A.R. OF THE APPELLANT THAT THE APPELLANT HAD SOLD HIS PROPRIETORSHIP BUSINESS TO ONE MR. ANOOP KUMAR S/O SHRI PARMANAND GURBANI OF 32-A, JAIRAMPUR COLONY, INDORE, UNDER A SALE AGREEMENT. A COPY OF SUCH AGREEMENT WAS DULY RECOVERED DURING THE COURSE OF SEARCH OPERATIONS. IT WAS FURTHER SUBMITTED THAT SIMULTANEOUS ASSESSMENT PROCEEDINGS WERE CARRIED OUT BY THE SAME AO IN RESPECT OF THE ABOVE NAMED MR. GURBANI AND NO ADVERSE INFERENCE IN RESPECT OF SUCH BUSINESS TRANSACTIONS WERE NOTICED IN CASE OF MR. GNRBANI. THE ENTIRE AMOUNT WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUE WHICH ALSO GOES TO ESTABLISH GENUINENESS OF THE TRANSACTION. IN VIEW OF SUCH FACT, THE ADDITION MADE BY THE AO ON THIS COUNT IS FOUND TO BE DEVOID OF ANY MERIT AND THEREFORE THE SAME IS HEREBY DELETED. 6.3.4 IN VIEW OF THE ABOVE FINDINGS, THE GROUND 40 40 NO 2(E) OF THE APPELLANT IS ALLOWED AND THE ADDITION OF RS. 9,52,125/- MADE BY THE ASSESSING OFFICER IS REJECTED. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND THAT THE ADDITION OF RS. 95,62,125/- MADE IN THE ASSESSMENT YEAR 2005-06, FOR THE VARIOUS DEPOSIT IN THE BANK ACCOUNT WAS DELETED BY THE LD.CIT(A) AFTER REC ORDING A DETAILED FINDING AT PARA 6.3. DETAILED JUSTIFICATIO N HAS BEEN GIVEN FOR THE SOURCE OF FUND, ACCORDINGLY, WE DO NO T FIND ANY REASON TO INTERFERE IN THIS PART OF THE ORDER OF CI T(A). 18. IN THE ASSESSMENT YEAR 2004-05, THE ASSESSING OFFICER HAS ALSO MADE ADDITION OF RS. 6,69,626/- ON ACCOUNT OF GIFT OF RESEARCH & RESURGENT INDIA BOUNDS (RIBS ) DURING COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER HAS FOUND THAT THE ASSESSEE HAS SHOWN A CREDIT OF RS. 6,69,626/- IN THE CAPITAL ACCOUNT FILED ALONG WITH THE RETURN NOW FILED U/S 153A. ON BEING ENQUIRED AND THE ASSESSEE VIDE LETTER DATED 14.10.09 FILED A EXPLANATION STATING T HAT THE SAID RIBS OF USD 10,000/- WERE RECEIVED BY THE ASSESSEE FROM HIS NRI FIEND SMT. BEENA W/O SHRI GOPALDAS GAUBA OF 41 41 DUBAI, HOW HAS GIFTED THE BOND TO THE ASSESSEE BY H ANDING OVER THE POSSESSION OF THE BONDS ALONGWITH LETTER D ATED 25.06. 03 ADDRESSED TO THE MANAGER STATE BANK OF IN DIA NRI BRANCH. MUMBAI. LATER ON THESE BONDS WERE TRANSFERR ED IN THE NAME OF THE ASSESSEE ON 16.07.03 AND ON 01.10.0 3 THE ASSESSEE SURRENDERED THESE BONDS AND RECEIVED AN AM OUNT OF RS. 6,69,626/- BY CHEQUE WHICH WAS DEPOSITED IN HIS BANK ACCOUNT WITH HDFC BANK ON 20.10.03. IN SUPPORT THE ASSESSEE HAS FILED PHOTO COPY OF PASS PORT OF BEENA GOPALDAS ISSUED BY UNITED KINGDOM OF GREAT BRITAIN, SHOWING THE SAID BEENA GOPALDAS AS A BRITISH CITIZEN. A COPY OF RIB BOND IN THE NAME OF BEENA GOPALDAS HAS ALSO BEEN FILED AT A NNEXURE A-10.02. THIS TRANSACTION OF THE ASSESSEE CAN NOT B E ACCEPTED AS GENUINE TRANSACTION FOR THE FOLLOWING R EASONS: I) THE ASSESSEE IN THE REPLY DATED 14.10.09 HAS SIMPLY STATED THAT THE GIFT HAS BEEN RECEIVED FROM HIS NRI FIEND. HOWEVER, THERE IS NO DISCUSSION AS TO HOW THE ASSESSEE BECAME THE FRIEND OF THE SAID BEENA OF DUBAI. THERE IS NO EXPLANATION AS TO WHEN AND WHERE THEY HAVE 42 42 MET AND HOW THEIR FRIENDSHIP DEVELOPED. THERE IS NO MENTION AS TO HOW SMT. BEENA WAS SO OBLIGED BY THE ASSESSEE SO THAT SHE HAS GIFTED A HUGE SUM OF RS. 6,69,626/- TO THE ASSESSEE AND ALSO SIMILAR AMOUNT TO THE ASSESSEE'S WIFE. II) THE ASSESSEE HAS ALSO NOT FILED ANY OTHER DOCUMENT TO SUBSTANTIATE THE IDENTITY OF THE SAID DONOR. ON BEI NG. ASKED TO PRODUCED THE DONOR THE ASSESSEE EXPRESSED HIS INABILITY STATING THAT THE DONOR IS NRI AND THE REFORE IT IS NOT PRACTICALLY POSSIBLE TO COME FROM ABROAD TO MAKE PERSONAL PRESENCE AND THE ASSESSEE PRAYED THAT NECESSARY ENQUIRY MAY BE DIRECTLY DONE THROUGH THE INDIAN EMBASSY. HOWEVER THE ASSESSEE DID NOT PROVIDED ANY DETAILS REGARDING THE PRESENT ADDRESS AND WHERE ABOUT OF THE DONOR. EVEN THE COPY OF PASSPORT GIVEN BY THE ASSESSEE DOES NOT MENTION THE ADDRESS OF THE DONOR. THEREFORE, THE DONORS VERY IDENTITY IS QUESTIONABLE. III) THE ASSESSEE HAS STATED THAT THE DONOR IS AN NRI HOWEVER THE PASSPORT STATES THAT THE DONOR IS A BRI TISH 43 43 CITIZEN. THE ASSESSEE NOT SUBSTANTIATED AS TO HOW THE DONOR IS AN NRI. IT MAY BE POINTED OUT THAT AS PER CLAUSE OF THE TERMS AND CONDITIONS PRINTED AT THE B ACK OF THE BOND, THESE RIBS ARE TRANSFERABLE BETWEEN NR IS ON BEHALF OF NRI'S AND THAT THE RESIDENT PERSONS WI LL NOT BE ELIGIBLE TO TRANSFER. THE STATUS OF THE SAID DON OR AS ON THE DATE OF TRANSFER IS ALSO NOT AVAILABLE ON RE CORD. FURTHER CLAUSE TEN OF THE TERMS CLEARLY STATE THAT IN REGARD TO TAXES IMPLICATION OUT SIDE INDIA, INTERES T ON RIBS AND SALE OR GIFT MAY BE SUBJECT TO TAXATION LA WS OF THE RESPECTIVE COUNTRY. IT IS NOT ON RECORD AS TO W HERE THE SAID GIFT WAS MADE TO THE ASSESSEE. (IV) THE ASSESSEE HAS PLACED HEAVY RELIANCE ON THE LETTER ANNEXED AT ANNEXURE A-IO.3 DATED 25.06.03 WRITTEN TO MANAGER, STATE BANK OF INDIA, NRI BRANCH IN CONNECTION WITH THE TRANSFER OF BONDS FROM SAID BEENA GOPALDAS TO THE ASSESSEE AND THE ASSESSEE IN THE SUBMISSION STATED THAT IN THIS LETTER THE DONOR HAD INTIMATED THE FACT OF MAKING THE GIFT. HOWEVER ON PERUSAL OF THE SAID LETTER IT IS FOUND THAT IT STATES THAT THE SAID BONDS HAVE BEEN TRANSFERRED/GIFTED TO THE 44 44 ASSESSEE. HERE THE WORD GIFTED HAS NOT BEEN TICKED. WHICH IMPLIES THAT IT IS NOT NECESSARY THAT THE BON DS HAVE BEEN GIFTED. THE ASSESSEE FURTHER STATED THAT THIS LETTER IS COUNTER SIGNED BY THE ASSESSEE. VERY IMPORTANT THE ASSESSEE'S SIGNATURE ON THIS LETTER IS IN HINDI AND NOT TALLYING WITH HIS SIGNATURE ON HIS RETURN OF IN COME WHICH IS IN ENGLISH. IT MAY BE POINTED OUT THAT THE SIGNATURE OF THE ASSESSEE ON THIS LETTER AND THE SIGNATURE OF THE ASSESSEE'S WIFE ON THE SIMILAR LET TER, IN HER CASE, BOTH SIGNATURE HAVE BEEN DONE BY THE SAME PERSON IN HINDI. OTHER THAN THIS LETTER THERE IS NO DOCUMENT SIGNED BY THE ASSESSEE ACCEPTING THE SAID ALLEGED GIFT. V) THERE IS NOT A SINGLE DOCUMENT ON RECORD TO ESTABLI SH THE CREDITWORTHINESS OF THE DONOR. EXCEPT FOR THE COPY OF PASSPORT AND THE DOCUMENTS RELATED TO THE BOND AND ITS TRANSFER, THERE IS NO OTHER DOCUMENTS ON RECORD. THEREFORE, THE CREDITWORTHINESS OF THE DONOR HAS AL SO NOT BEEN ESTABLISHED. VI) IT IS WORTH NOTING THAT A SIMILAR AMOUNT HAS B EEN RECEIVED BY SMT. CHANDANI PANJWANI WIFE O F THE 45 45 ASSESSEE, FROM THE SAME SMT. BEENA GOPALDAS. THIS FACT MAKES THE ENTIRE TRANSACTIONS FURTHER QUESTIO NABLE FOR THE REASON THAT HOW CAN A PERSON AT A SAME TIME HAVE EQUAL LOVE AND AFFECTION TOWARDS TWO DIFFERENT PERSONS. . THEREFORE, THE GIFT OF RIB'S AND THE CREDIT APPEARI NG IN THE CAPITAL ACCOUNT OF THE ASSESSEE OF RS. 6,69,626/- CANNOT NOT BE ACCEPTED AS A GENUINE GIFT AND IS BEI NG TREATED AS UNEXPLAINED CREDIT AND ACCORDINGLY ADDED TO THE TOTAL INCOME U/S 68. 19. BY THE IMPUGNED ORDER, THE CIT(A) DELETED THE ADDITION ON ACCOUNT OF GIFT OF RESEARCH AND RESURGE NT INDIA BOND AFTER HAVING THE FOLLOWING OBSERVATIONS :- 4.3 GROUND NO. 3 IS DIRECTED AGAINST AO'S ACTION IN MAKING ADDITION OF RS. 6,69,626/- FOR GIFT OF RESURGENT INDIA BONDS, IN SHORT - RIBS. THE RELEVAN T FACTS HAVE BEEN NOTED BY THE AO IN THE ASSESSMENT ORDER. THE AO DID NOT ACCEPT THE APPELLANT'S CONTENTION ABOUT SUCH GIFT OF RIBS, RECEIVED FROM O NE NRI FRIEND OF HIS WIFE, FOR WANT OF NECESSARY AND VERIFIABLE DETAILS ABOUT THE ACQUAINTANCE AND 46 46 FRIENDSHIP OF DONOR SMT. BINA GOPALDAS GOUBA OF DUBAI AO ALSO HELD THAT NEITHER THE DONOR WAS PRODUCED NOR ANY DOCUMENT WAS FILED TO SUBSTANTIATE THE IDENTITY OF THE DONOR. FURTHER, CREDITWORTHINES S OF DONOR HAS ALSO NOT BEEN ESTABLISHED. THE AO ALSO NOTED THAT THE LETTER WRITTEN TO MANAGER, STATE BAN K OF INDIA, NRI BRANCH IN RESPECT OF TRANSFER OF SUCH BONDS DO NOT SPECIFICALLY STATE THAT THESE BONDS HA VE BEEN GIFTED TO' THE APPELLANT. HE ALSO HELD THAT APPELLANT'S SIGNATURE ON THE LETTER IN HINDI DOES N OT TALLY WITH THE SIGNATURE OF THE APPELLANT ON RETURN OF INCOME WHICH IS IN ENGLISH. THE AO HAS ALSO NOTED THAT GIFT OF SIMILAR AMOUNT WAS ALSO RECEIVED BY WI FE OF THE APPELLANT SMT. CHANDNI PANJWANI FROM THE SAME DONOR WHICH MADE THE ENTIRE TRANSACTION QUESTIONABLE. 4.4 THE APPELLANT HAS INCLUDED NECESSARY SUPPORTING DOCUMENTS IN COMPILATION STARTING FROM P AGE 59 TO 65 BEING PHOTOCOPY OF THE PASSPORT. OF , DONO R SMT. BINA GOPALDAS GOUBA AND COPY OF RIBS STANDING- IN THE NAME OF DONOR (PAGE 61) AND COPY OF LETTER 47 47 ADDRESSED TO MANAGER, STATE BANK OF INDIA, NIH BRANCH AS REFERRED BY AO AND LETTER FROM STATE BANK OF INDIA TO THE APPELLANT ON PAGE 62, WHEREIN MODE OF TRANSFER IS SPECIFICALLY STATED AS GIFT, BESIDES TR ANSFEREE AND TRANSFEROR'S NAME, REGISTERED FOLIO AND OTHER' DETAILS AND OTHER DOCUMENTS RELATING TO REDEMPTION OF THE BONDS. THE APPELLANT HAS ALSO INCLUDED A COPY O F DECISION OF HON'BLE ITAT, INDORE BENCH, INDORE IN T HE CASE OF DARPAN ANAND IN ITA NO.218/INDORE/2009 , DECIDED ON 30.6.2010 AND FURTHER RELIANCE WAS PLACE D ON THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF KANCHAN SINGH VS. CIT 221 CTR (ALL.) 45 6. AO'S OBSERVATION TO THE EFFECT THAT MODE OF TRANSFE R WAS NOT CATEGORICALLY STATED AS GIFT STANDS REBUTTE D BY THE LETTER FROM STATE BANK OF INDIA IN THIS BEHALF WHERE MODE IS SPECIFICALLY STATED AS 'GIFT'. THE IDENTITY OF THE DONOR IS ESTABLISHED BY COPY OF PASSPORT BESIDES TH E NRI BONDS ALSO ESTABLISHES THE CREDITWORTHINESS OF THE DONOR WITH REFERENCE TO THE AMOUNT GIFTED AS SUCH BONDS STOOD IN HIS NAME SINCE 1998. THUS, THE AO'S OBSERVATIONS AS FAR AS THESE ISSUES ARE CONCERNED A S 48 48 NOTED ABOVE HAVE NO MERIT AND SUBSTANCE. THE ONLY QUESTION WHICH REMAINS FOR CONSIDERATION IS WHETHER THERE WAS REAL ACQUAINTANCE OR FRIENDSHIP AS CLAIME D IN, SUPPORT OF SUCH GIFT. THE AO HAS NOWHERE REFERR ED TO ANY DOCUMENT FOUND IN COURSE OF SEARCH WHERE FROM I T CAN BE INFERRED OR ESTABLISHED THAT SUCH BOND WAS OBTAINED BY APPELLANT AGAINST PAYMENT OF ANY UNACCOUNTED MONEY. IN THESE FACTS, THE ASSESSEE'S CASE IS CLEARLY SUPPORTED BY THE DECISION OF HON'BL E ALLAHABAD HIGH COURT IN THE CASE OF KANCHAN SINGH (SUPRA) WHERE IN ON NEAR IDENTICAL FACTS IT WAS HEL D THAT ADDITION MADE FOR GIFT AND RIB BONDS AGGREGATING AMOUNT OF RS. 26.78 LAKH WAS NOT FOUND TO BE JUSTIF IED. SIMILAR VIEW IS HELD BY ITAT, INDORE BENCH, INDORE IN THE CASE OF DARPAN ANAND PLACING RELIANCE ON THE AFORESAID DECISION OF HON'BLE ALLAHABAD HIGH COURT. IT WILL BE APPROPRIATE TO REPRODUCE PARA 7 OF THE AFORESAID DECISION AS UNDER: 'IT IS NOTED THAT THE ASSESSEE HAS RECEIVED GIFTS OF TWO RESURGENT INDIA BONDS FROM AN NRI 49 49 AND SUCH BONDS ARE TRANSFERABLE BY WAY OF GIFTS ONLY ONCE AND THAT TO A RESIDENT INDIAN AS PER THE SCHEME OF RESURGENT INDIA BONDS, THE IMMUNITY FROM TAXATION IN THE HANDS OF THE DONEE IS ALSO AVAILABLE, WE ALSO FIND THAT THE RELEVANT DOCUMENTARY EVIDENCES HAVE BEEN FILED, SO AS TO ESTABLISH THE FACT OF GENUINENESS GIFT. WE ARE FURTHER OF THE VIEW THAT THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF KANCHAN SINGH VS. CIT (SUPRA) STRONGLY SUPPORTS THE CASE OF THE ASSESSEE. IN THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT THERE IS NO MERIT IN ALL THE GROUNDS RAISED BY THE REVENUE. THEREFORE, THE SAME ARE DISMISSED' IN VIEW OF THE ABOVE DISCUSSION THE ADDITION MADE BY ASSESSING OFFICER AT RS. 6,69,626/- FOUND TO BE NOT JUSTIFIED AND ACCORDINGLY DIRECTED TO BE DELETED. 20. AGAINST THE ABOVE ORDER OF CIT(A), THE REVENUE IS I N APPEAL BEFORE US. 50 50 21. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOUND THAT THE ADDITION OF RS. 6,69,626/- WAS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT YEAR 2004-05 BY OBSERVING THAT THERE WAS CREDIT IN THE CAPITAL ACCO UNT FILED ALONGWITH THE RETURN NOW FILED U/S 153A. BEING NOT SATISFIED WITH THE ASSESSEES CONTENTION, THE ADDITION WAS MA DE BY THE ASSESSING OFFICER, WHICH WAS DELETED BY THE LD. CIT(A) AFTER RECORDING DETAILED FINDING AT PARA 4.4. THE L D. CIT(A) FOUND THAT THE ASSESSEE HAS RECEIVED RIBS OF US$ 10 ,000 FROM HIS NRI FRIEND SMT. BEENA OF DUBAI, WHO HAS GI FTED THE BOND TO THE ASSESSEE BY HANDING OVER THE POSSESSION OF THE BOND TO THE ASSESSEE ALONGWITH LETTER DATED 25.6.20 03 ADDRESSED TO THE MANAGER, STATE BANK OF INDIA, NRI BRANCH, MUMBAI. THE LD. CIT(A) ALSO RECORDED A FINDING TO T HE EFFECT THAT MODE OF TRANSFER WAS CATEGORICALLY STATED AS G IFT. THE IDENTITY OF THE DONOR WAS ESTABLISHED BY COPY OF PA SS PORT AND THAT CREDITWORTHINESS WAS ALSO ESTABLISHED THRO UGH NRI BONDS AS THE BONDS WERE STOOD IN HER NAME SINCE 198 8. THE LD. CIT(A) ALSO FOUND THAT NOWHERE ASSESSING OFFICE R HAS REFERRED TO ANY DOCUMENTS FOUND IN THE COURSE OF SE ARCH WHERE FROM IT COULD BE INFERRED THAT SUCH BOND WAS OBTAINED 51 51 BY THE ASSESSEE AGAINST PAYMENT OF ANY UNACCOUNTED MONEY. AFTER CONSIDERING THE DECISION OF I.T.A.T., INDORE BENCH IN THE CASE OF DARPAN ANAND IN I.T.A.NO. 218/IND/2009 DATED 30 TH JUNE, 2010, AND THE DECISION OF THE ALLAHABAD HIGH COURT IN THE CASE OF KANCHAN SIN GH, 221 CTR 456, THE CIT(A) HAS DELETED THE ADDITION. T HE FINDING SO RECORDED BY THE LD.CIT(A) IS AS PER MATE RIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO I NTERFERE IN THE ORDER OF CIT(A) FOR SUCH DELETION. 22. SIMILAR ADDITIONS HAVE BEEN MADE BY THE ASSESSING OFFICER IN THE CASE OF OTHER ASSESSEES AND AFTER GI VING DETAILED REASONING, THE CIT(A) HAS DELETED THE ADDI TION. AS THE FACTS ARE SAME IN THE CASE OF ALL THE ASSESSEES , IN RESPECT OF ASSESSMENT YEARS UNDER CONSIDERATION, WE CONFIRM THE ACTION OF THE CIT(A) FOR DELETING ADDITIONS MADE ON ACCOUNT OF RESURGENT INDIA BONDS. 23. IN THE ASSESSMENT YEAR 2004-05, THE ASSESSING OFFIC ER HAS ALSO MADE ADDITION OF RS. 6 LAKHS IN RESPECT OF VARIOUS AMOUNT DEPOSITED IN THE SAVING BANK ACCOUNT TREATIN G THE SAME AS UNEXPLAINED. BY THE IMPUGNED ORDER, THE CIT (A) DELETED ADDITION AFTER HAVING THE FOLLOWING OBSERVA TIONS :- 52 52 4.6.1 THE CONTENTIONS OF THE APPELLANT ALONG WITH T HE DOCUMENTARY EVIDENCES HAVE BEEN CONSIDERED CAREFULLY. THE APPELLANT HAS SUBSTANTIATED SOURCES OF CASH DEPOSIT OF RS.1,00,000/- MADE BY HIM ON 13-02- 2004 IN HIS BANK ACCOUNT WITH HDFC BANK BY DEMONSTRATING THAT SUCH CASH DEPOSIT WAS MADE BY HIM BY MAKING CASH WITHDRAWAL OF RS.3,20,000/- FROM THE SAME BANK ACCOUNT ON 10-01-2004. THE APPELLANT HAS FILED THE COPY OF BANK STATEMENT OF HDFC BANK FOR THE RELEVANT PERIOD WHICH IS PLACED A T PAGE NO. 91 OF THE COMPILATION AND FROM SUCH BANK STATEMENT THE CLAIM OF THE APPELLANT REGARDING CASH WITHDRAWAL WAS FOUND VERIFIABLE. IT IS NOT THE CASE OF THE AO THAT THE CASH OF RS. 3,20,000/- WITHDRAWN BY THE APPELLANT ON 10-01-2004 FROM HIS BANK ACCOUNT WAS FULLY/PARTLY UTILIZED BY THE APPELLANT FOR SOME OTHER PURPOSES AND ON THE DATE OF IMPUGNED DEPOSIT OF RS.1,00,000/- SUCH CASH NOT AVAILABLE WITH HIM. ON SUCH CIRCUMSTANCES IT HAS TO BE NECESSARILY HELD TH AT THE CASH DEPOSIT OF RS.1,00,000/- WAS FROM EXPLAINE D SOURCES. 53 53 4.6.2 OUT OF THE REMAINING BANK DEPOSITS OF RS. 5,00,000/- MADE BY THE APPELLANT IN HIS BANKS THROUGH ACCOUNT PAYEE CHEQUES, THE APPELLANT HAS EXPLAINED SOURCE OF DEPOSITS OF RS. 3,00,000/- ON 25-08-2003 WITH HDFC BANK AND OF RS.1,OO,OOO/- ON 15-09-2003 WITH STATE BANK OF INDORE BY FURNISHING DOCUMENTARY EVIDENCE IN FORM OF A BUSINESS SALE AGREEMENT UNDER WHICH THE APPELLANT HAD SOLD HIS PROPRIETORSHIP BUSINESS CARRIED OUT UNDER THE NAME AND STYLE OF M/S. KALYAN SEWA SADAN TO SOME MR. ANOOP KUMAR S/O. SHRI PARMANAND GURBANI OF 132, JAIRAMPUR COLONY, INDORE. THE APPELLANT HAS STATED THAT UNDER SUCH AGREEMENT THE APPELLANT HAD SOLD HIS ENTIRE BUSINESS FOR A LUMP-SUM CONSIDERATION OF RS. 5,51,OOO/- AND AFTER DEDUCTING BOOK VALUE OF THE BUSINESS AT RS. 5,08,640/- HE HAD SHOWN NET SURPLUS ON SUCH TRANSACTION AT RS. 42,360/- IN HIS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR AND SUCH INCOME WAS DULY ACCEPTED AND ASSESSED BY THE AO. THE APPELLANT SUBMITTED THAT 54 54 THE GENUINENESS OF THE BUSINESS SALE AGREEMENT WAS NOT QUESTIONED BY THE AO. IT WAS FURTHER SUBMITTED THAT SIMULTANEOUS ASSESSMENT UNDER THE PROVISIONS OF SECTION 153C WERE CARRIED OUT BY THE SAME AO IN RESPECT OF THE PURCHASER OF BUSINESS NAMELY MR. ANOOP KUMAR GURBANI AND IN THE ASSESSMENT OF THE PURCHASER, THE TRANSACTIONS OF MAKING PAYMENTS BY MR. GURBANI TO THE APPELLANT FROM TIME TO TIME WERE FOUND GENUINE. CONSIDERING THE FACTS AND CIRCUMSTANCES AND DOCUMENTARY EVIDENCES PLACED ON RECORD, I FIND ABSOLUTELY NO MERIT IN AO'S ACTION IN NOT ACCEPTING THE RECEIPTS OF AMOUNT AGGREGATING TO RS. 4,OO,OOO/- FROM MR. ANOOP KUMAR GURBANI, THROUGH ACCOUNT PAYEE CHEQUES, UNDER BUSINESS PURCHASE AGREEMENT, AS EXPLAINED. 4.6.3 OUT OF THE REMAINING TWO BANK DEPOSITS OF RS. 50,000/- EACH, THE APPELLANT HAS CLAIMED THAT ONE BANK DEPOSIT OF RS. 50,000/- WAS MADE BY HIM OUT OF SALE OF HIS PERSONAL 32 BORE GUN WHICH WAS PURCHASED BY HIM IN EARLIER YEARS FOR RS. 55 55 19,800/-. THE APPELLANT HAS SHOWN INVESTMENT IN SUCH GUN AND IN THE STATEMENT OF AFFAIRS FOR THE IMMEDIATELY PRECEDING YEAR RELEVANT TO A.Y. 2003- 04 THE APPELLANT HAD SHOWN SUCH INVESTMENT. IT HAS I BEEN NOTICED THAT THE APPELLANT HAS MADE A DUE DISCLOSURE OF SUCH FACT IN THE COMPUTATION OF INCOME ITSELF. THE ASSESSING OFFICER HAS NOT DOUBTED EITHER THE POSSESSION OF THE GUN WITH THE APPELLANT OR THE SALE THEREOF IN THE YEAR UNDER CONSIDERATION. ALTHOUGH, THE APPELLANT DID NOT FURNISH ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CONTENTION BY TAKING THE PLEA THAT THE TRANSACTION BEING QUITE OLD, THE NECESSARY LETTER OF SALE WAS NOT PRESERVED BY HIM BUT LOOKING TO THE SURROUNDING CIRCUMSTANCES, THE CONTENTION OF THE APPELLANT APPEARS TO BE ACCEPTABLE. 4.6.4 FOR THE OTHER BANK DEPOSIT OF RS. 50,000/- MADE BY THE APPELLANT ON 0303-2004 WITH THE HDFC BANK, THE APPELLANT HAS CLAIMED THAT SUCH DEPOSIT WAS MADE OUT OF ADVANCE RENT DEPOSIT 56 56 RECEIVED THROUGH CHEQUE. THE APPELLANT NEITHER DURING THE COURSE OF ASSESSMENT PROCEEDING NOR DURING THE COURSE OF APPELLATE PROCEEDING, COULD PRODUCE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM. HE COULD NOT EVEN PROVIDE THE NAME AND ADDRESS OF THE PERSON FROM WHOM SUCH AMOUNT WAS RECEIVED BY HIM. IT IS A SETTLED LAW THAT -THE ONUS LIES ON AN ASSESSEE TO PRIMA-FACIE DISCHARGE HIS BURDEN OF PROVING SOURCE OF ANY DEPOSIT WITH ANY BANK. SINCE, THE APPELLANT FAILED TO DISCHARGE SUCH BURDEN, THE DEPOSIT OF RS.50,000/- MADE BY THE APPELLANT ON 03-03-2004 CANNOT BE CONSIDERED TO BE EXPLAINED. 4.6.5 ACCORDINGLY, OUT OF TOTAL ADDITIONS OF RS. 6,00,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CREDIT/LOAN UNDER S. 68, ADDITION TO THE EXTENT OF RS. 50,000/- IS CONFIRMED AND THE BALANCE ADDITION OF RS. 5,50,000/- IS HEREBY DELETED. 24. AGAINST THE ABOVE ORDER OF CIT(A), THE REVENUE IS I N FURTHER APPEAL BEFORE US. WE HAVE CONSIDERED THE RI VAL SUBMISSIONS AND FOUND THAT ADDITION OF RS. 6 LAKHS WAS 57 57 MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT YEA R 2004- 05 IN RESPECT OF VARIOUS AMOUNT DEPOSITED IN THE SA VING BANK ACCOUNT OF THE ASSESSEE. THE CIT(A) HAS GIVEN DETAILED REASONING AFTER CONSIDERING THE CASH FLOW STATEMENT OF THE ASSESSEE, WHICH CLEARLY PROVE THE AVAILABILITY OF C ASH ON THE RESPECTIVE DATES OF DEPOSIT. HOWEVER, WITH RESPECT TO ADDITION OF RS. 4 LAKHS MADE ON ACCOUNT CHEQUE RECE IVED FROM MR. ANOOP KUMAR GURBANI, WE FOUND THAT THE CIT (A) HAS DELETED THE ADDITION JUST BY OBSERVING THAT THE CHEQUE WAS RECEIVED BY THE ASSESSEE UNDER BUSINESS PURCHAS E AGREEMENT. HOWEVER, NO FINDING HAS BEEN RECORDED WI TH REGARD TO GENUINENESS OF TRANSACTION AND CREDITWORT HINESS OF THE LOAN CREDITORS. NOTHING WAS ALSO BROUGHT ON RECORD BY THE LD.CIT(A) TO EXPLAIN THE NATURE OF TRANSACTION AND HOW IT WAS CRYSTALLIZED IN SUBSEQUENT YEAR. IN THE INTERES T OF JUSTICE TO THE LIMITED EXTENT OF EXAMINING THE GENUINENESS OF TRANSACTION OF RS. 4 LAKHS RECEIVED THROUGH THE CHE QUE FROM ANOOP KUMAR GURBANI, THE MATTER IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER, FOR EXAMINING AFRESH AFT ER GIVING DUE OPPORTUNITY TO THE ASSESSEE. WITH RESPECT TO TH E BALANCE 58 58 DELETION, WE DO NOT FIND ANY REASON TO INTERFERE AN D UPHOLD THE ACTION OF CIT(A). 25. SIMILARLY, IN THE ASSESSMENT YEAR 2006-07, THE ASSESSING OFFICER HAS MADE ADDITION OF RS. 6,95,833 /- BY TREATING VARIOUS DEPOSITS MADE IN HIS SAVINGS BANK ACCOUNT AS UNEXPLAINED. 26. BY THE IMPUGNED ORDER, THE CIT(A) DELETED THE ADDITION AFTER RECORDING FOLLOWING FINDINGS :- 5.3.1 THE CONTENTIONS OF THE APPELLANT ALONG WITH T HE DOCUMENTARY EVIDENCES HAVE BEEN CONSIDERED CAREFULLY. THE APPELLANT HAS SUBSTANTIATED SOURCES OF CASH DEPOSITS OF RS.98,000/- AND RS. 1O,OOO/- IN HIS BANK ACCOUNTS RESPECTIVELY WITH HDFC BANK AND BANK OF INDIA, ON VARIOUS DATES BY DEMONSTRATING THAT SUCH CASH DEPOSITS WERE MADE BY HIM EITHER OUT OF THE OPENING CASH BALANCE OF RS . 4,04,122/- AVAILABLE AS PER STATEMENT OF AFFAIRS AS OF 31-03-2005 OR OUT OF SALES PROCEEDS OF ONE CAR. IT IS SEEN FROM THE STATEMENT OF AFFAIRS OF THE APPELL ANT AS OF 31-03-2005 THAT HE WAS HAVING SUFFICIENT CASH 59 59 BALANCE AMOUNTING TO RS. 4,04,122/-. IT IS NOT THE CASE OF THE REVENUE THAT SUCH CASH BALANCE WAS UTILIZED BY THE APPELLANT FOR SOME OTHER PURPOSES THAN CLAIMED BY THE APPELLANT. IT IS ALSO SEEN THAT DURING THE RELEVANT PREVIOUS YEAR, THE APPELLANT HA S SOLD TWO CARS. PARTIAL SALES CONSIDERATION OF CARS WAS RECEIVED BY THE APPELLANT THROUGH CHEQUE AND PARTIALLY THROUGH CASH. IN SUCH CIRCUMSTANCES, THE SOURCES OF CASH DEPOSITS AGGREGATING TO RS. 1,08,000/- ARE FOUND TO BE EXPLAINED. 5.3.2 OUT OF THE REMAINING BANK DEPOSITS OF RS. 25,87,833/- MADE BY THE APPELLANT IN HIS BANKS THROUGH ACCOUNT PAYEE CHEQUES, THE APPELLANT HAS EXPLAINED SOURCE OF DEPOSIT OF RS. 2,00,000/- ON 17 - 06-2005 WITH HDFC BANK BY SHOWING THAT HE HAD RECEIVED A CHEQUE OF RS.2,00,000/- FROM HIS FATHER NAMELY SHRI SHRICHAND PANJWANI [ADUPP1148F). THE APPELLANT HAD FURNISHED A COPY OF LOAN CONFIRMATION LETTER OF MR. SHRICHAND PANJWANI. IT I S ALSO NOTEWORTHY THAT SIMULTANEOUS ASSESSMENT 60 60 PROCEEDINGS U/S. 153A WERE CARRIED OUT BY THE SAME AO IN RESPECT OF THE CREDITOR SHRI SHRICHAND PANJWANI AND THEREFORE, IDENTITY AND CAPACITY OF THE CREDITOR CANNOT BE DOUBTED. IN THESE CIRCUMSTANCES, THERE IS ABSOLUTELY NO JUSTIFICATION IN HOLDING THE DEPOSIT OF RS. 2,00,000/- MADE ON 17- 06-2005 AS UNEXPLAINED. 5.3.3 THE EXPLANATION OF THE APPELLANT FOR RECEIPT OF RS. 2,23,520/- AND RS.9313/-, AGGREGATING TO RS.2,32,833/-, FROM M/S. VIVID VISION EXIM PVT. LTD . ALSO DESERVES TO BE ACCEPTED. FROM THE COPY OF COMPUTATION OF INCOME OF THE APPELLANT, ACCOMPANYING THE RETURN, IT HAS BEEN NOTICED THAT T HE APPELLANT HAS ALREADY SHOWN GROSS COMMISSION INCOME OF RS. 2,45,410/-, WHICH HAS BEEN ACCEPTED BY THE AO. THE AO HAS ALSO GRANTED CREDIT FOR T.D.S . OF RS.12,577/- TO THE APPELLANT. IN THESE CIRCUMSTANCES, THE ADDITION OF NET RECEIPT OF RS.2,32,833/- IS ABSOLUTELY UNJUSTIFIED, AS IT WOUL D TANTAMOUNT ADDITION OF THE SAME INCOME TWICE WHICH IS NOT PERMISSIBLE. 61 61 5.3.4 FOR THE SOURCE OF DEPOSIT OF RS. 2,00,000/- AND RS. 3,20,000/- RESPECTIVELY, ON 21-07-2005 AND 02-02-2006 WITH HDFC BANK, I FIND FORCE IN THE SUBMISSION OF THE APPELLANT. THE APPELLANT HAS DEMONSTRATED THAT ON 03-08-2005 HE HAD MADE A WITHDRAWAL OF RS. 3,87,268/- FOR PURCHASE OF SWIFT CAR AND DUE TO ACCIDENT THE SAME SOLD BY HIM IN THE SAME YEAR FOR RS. 3,20,OOO/- BY RECEIVING SALES CONSIDERATION THROUGH CHEQUE. LIKEWISE, THE APPELLANT HAD RECEIVED A SUM OF RS.2,00,OOO/- ON SALE OF HIS MARUTI ZEN CAR. THE APPELLANT HAD DULY SHOWN THE EXISTENCE OF SUCH CAR IN HIS STATEMENT OF AFFAIRS FOR EARLIER YEARS. IN SUCH CIRCUMSTANCES, T HE DEPOSITS AGGREGATING TO RS.5,20,000/- BEING SALES PROCEEDS OF TWO CARS ARE FOUND TO BE EXPLAINED. 5.3.5 NOW COMING TO THE TWO DEPOSITS OF RS. 8,00,000/- AND RS. 8,35,000/-MADE BY THE APPELLANT IN HIS BANK ACCOUNT WITH BANK OF INDIA, RESPECTIVELY ON 06-11-2005 AND 29-03-2006, THE APPELLANT'S EXPLANATION TO THE EFFECT THAT SUCH DEPOSITS WERE MADE BY HIM OUT OF SALES PROCEEDS OF 62 62 HIS WARE HOUSE PROJECT HAS BEEN CONSIDERED CAREFULLY. FROM THE COMPUTATION OF INCOME, ACCOMPANYING THE RETURN, IT HAS BEEN OBSERVED THAT AS AGAINST THE GROSS RECEIPTS OF RS.16,35,000/-, TH E APPELLANT HAS SHOWN GROSS RECEIPTS OF RS. 4,25,000/- ONLY BEING THE HALF SHARE IN THE PROJECT . IN OTHER WORDS, THE APPELLANT HAS SHOWN GROSS SALES REALIZATION FROM THE PROJECT SALES AT RS. 8,50,000/- ONLY. THE APPELLANT HAS TRANSFERRED A SUM OF RS. 7,36,000/- TO OTHER CO-OWNER FROM THE SAME BANK IN CONSIDERATION OF HIS SHARE IN THE PROJECT. IN SUCH CIRCUMSTANCES, THE EXPLANATION OF THE APPELLANT CANNOT BE ACCEPTED IN TOTALITY. IN MY VIEW OUT OF RS. 16,35,000/- ONLY A SUM OF RS.11,61,000/- [I.E. RS. 4,25,000/- APPELLANT'S HAL F SHARE + RS. 7,36,000/TRANSFERRED TO CO-OWNER CAN BE CONSIDERED AS EXPLAINED AND REMAINING DEPOSIT OF RS. 4,74,000/- REMAINED UNEXPLAINED. ACCORDINGLY, OUT OF TOTAL DEPOSIT OF RS. 16,35,000/ - CLAIMED BY THE APPELLANT FROM SALES PROCEEDS OF PROJECT, DEPOSIT OF RS. 4,74,000/- IS HELD AS 63 63 UNEXPLAINED AND THE ADDITION TO THIS EXTEND IS CONFIRMED. 5.3.6 IN NUTSHELL, OUT OF TOTAL BANK DEPOSITS OF RS . 6,95,833/-, BANK DEPOSITS TO THE EXTENT OF RS. 2,21,833/- ARE FOUND EXPLAINED AND REMAINING BANK DEPOSITS TO THE EXTENT OF RS. 4,74,000/- ARE FOUND UNEXPLAINED AND TO THE EXTENT OF UNEXPLAINED DEPOSITS THE ACTION OF THE ASSESSING OFFICER IS CONFIRMED AND BALANCE ADDITION IS DELETED. 27. WE HAVE CONSIDERED THE CONTENTIONS OF LD. AUTHORIZE D REPRESENTATIVE AND LD. SENIOR DR WITH RESPECT TO D ELETION OF ADDITION OF RS. 6,95,833/- MADE IN THE ASSESSMENT Y EAR 2006-07 ON ACCOUNT OF VARIOUS DEPOSITS MADE IN THE SAVING BANK ACCOUNT. FROM THE RECORD, WE FOUND THAT AFTER GIVING DETAILED REASONING AND JUSTIFICATION, THE CIT(A) HA S DELETED ADDITION TO THE EXTENT OF RS. 2,21,833/-, WHICH WAS FOUND TO BE EXPLAINED. HOWEVER, THE CIT(A) HAS CONFIRMED THE ADDITION OF RS. 4,74,000/-, WHICH THE ASSESSEE COUL D NOT EXPLAIN. THE DETAILED FINDING RECORDED BY THE LD.CI T(A) BOTH WITH REGARD TO DELETION AND CONFIRMING THE ADDITION COULD NOT BE CONTROVERTED BOTH BY LD. AUTHORIZED REPRESEN TATIVE 64 64 AND LD. SENIOR DR. ACCORDINGLY, WE CONFIRM THE ACT ION OF CIT(A) ON THIS GROUND. 28. IN THE ASSESSMENT YEAR 2007-08, THE ASSESSING OFFIC ER HAS MADE ADDITION OF RS. 23,17,678/- BY TREATING VA RIOUS DEPOSITS MADE IN SAVING BANK ACCOUNT AS UNEXPLAINED . 29. AFTER RECORDING FOLLOWING FINDINGS, THE LD. CIT(A) DELETED THE ADDITION OF RS. 21,13,618/- AND CONFIR MED THE BALANCE ADDITION OF RS. 2,04,000/- :- 6.3.1 THE CONTENTIONS OF THE APPELLANT ALONG WITH THE DOCUMENTARY EVIDENCES HAVE BEEN CONSIDERED CAREFULLY. THE APPELLANT HAS SUBSTANTIATED SOURCES OF CASH DEPOSIT OF RS.3,55,000/- IN HIS BANK ACCOUNT WITH HDFC BANK, ON 02-062006 BY DEMONSTRATING THAT SUCH CASH DEPOSITS WERE MADE BY HIM OUT OF THE OPENING CASH BALANCE OF RS.3,01,715/- AVAILABLE AS PER STATEMENT OF AFFAIRS AS OF 31-03-2006 AS WELL A S FROM THE AGRICULTURAL INCOME AND RENTAL INCOME DERIVED DURING THE YEAR. IT IS SEEN FROM THE STATEM ENT OF AFFAIRS OF THE APPELLANT AS OF 31-03-2006 THAT H E WAS HAVING SUFFICIENT CASH BALANCE AMOUNTING TO RS. 3,01,715/-. IT IS NOT THE CASE OF THE REVENUE THAT SUCH 65 65 CASH BALANCE WAS UTILIZED BY THE APPELLANT FOR SOME OTHER PURPOSES THAN CLAIMED BY THE APPELLANT. IT IS ALSO SEEN THAT DURING THE RELEVANT PREVIOUS YEAR, T HE APPELLANT HAS DERIVED RENTAL INCOME OF RS. 48,000/- AND AGRICULTURAL INCOME OF RS. 42,400/-. DURING THE COURSE OF HEARING, A QUERY WAS PUT BEFORE THE AR OF THE APPELLANT REGARDING ACTUAL RECEIPT OF SUCH INCO ME IN CASH TILL THE DATE OF THE IMPUGNED DEPOSIT. THE AR OF THE APPELLANT HAS EXPLAINED THAT THE APPELLANT WAS IN RECEIPT OF MONTHLY RENT OF RS. 4,OOO/- ON ADVANCE BASIS AND, THEREFORE, RENTAL INCOME FOR THE MONTH OF APRIL TO JUNE AMOUNTING TO RS. 12,000/- WAS RECEIVED BY THE APPELLANT IN CASH. IT WAS FURTH ER SUBMITTED THAT THE AGRICULTURAL PRODUCE BEING WHEAT AND GRAMS WERE SOLD BY THE APPELLANT IN, THE MONTH OF APRIL, 2006 AND FROM THE SALE OF SUCH AGRICULTUR AL PRODUCE THE APPELLANT HAD RECEIVED CASH AMOUNTING TO NEARLY RS.30,000/-. THE AR OF THE APPELLANT FURTHER SUBMITTED THAT IN THE MONTH OF MAY, 2006, WITHDRAWAL TO THE EXTENT OF RS.18,000/- WAS ALSO MADE FROM THE PROPRIETORSHIP BUSINESS CARRIED OUT 66 66 UNDER THE NAME AND STYLE OF M/S. HEERA GRAHA UDYOG. AFTER CONSIDERING THE EXPLANATION OF THE APPELLANT AND DOCUMENTARY EVIDENCES, I AM OF THE VIEW THAT SO FAR AS THE AVAILABILITY OF OPENING CAS H BALANCE OF RS. 3,01,715/- IS CONCERNED, THE EXPLANATION OF THE APPELLANT IS ACCEPTABLE, BUT FOR THE REMAINING AMOUNT, THE APPELLANT'S EXPLANATION IS NO T SUPPORTED BY ANY DOCUMENTARY EVIDENCES. IT CANNOT TIC ASSUMED THAT THE APPELLANT HAD DERIVED AGRICULTURAL INCOME IN CASH TO THE EXTENT OF RS.30,000/- IN JUST TWO MONTHS WHEN THE INCOME FOR THE ENTIRE YEAR HAS BEEN SHOWN IN THE RETURN AT RS.42,400/- ONLY. LIKEWISE, IN ABSENCE OF ANY DOCUMENTARY EVIDENCE, THE APPELLANT'S EXPLANATION REGARDING WITHDRAWAL OF CASH FROM HIS PROPRIETORSHI P FIRM CANNOT BE ACCEPTED. IN VIEW OF SUCH FINDINGS, OUT OF CASH DEPOSITS OF RS.3,55,000/- BY THE APPELLANT IN HIS BANK ACCOUNT ON 02-06-2006, CASH DEPOSIT TO THE EXTENT OF RS.3,05,000/- ONLY IS FOUND EXPLAINED AND REMAINING CASH DEPOSIT OF RS.50,OOO/- IS FOUND UNEXPLAINED. 67 67 6.3.2 OUT OF THE REMAINING BANK DEPOSITS OF RS.19,62,618/- MADE BY THE APPELLANT IN HIS BANKS THROUGH ACCOUNT PAYEE CHEQUES, THE APPELLANT HAS EXPLAINED SOURCE OF DEPOSIT OF RS. 5,73,000/- ON 17 - 07-2006 WITH HDFC BANK BY SHOWING THAT HE HAD RECEIVED BACK LOAN OF RS. 5,73,000/- FROM HIS BROTHER NAMELY SHRI DEEPAK PANJWANI [AMQPP1461A]. IT IS ALSO NOTEWORTHY THAT SIMULTANEOUS ASSESSMENT PROCEEDINGS U/S. 153A WERE CARRIED OUT BY THE SAME AO IN RESPECT OF THE CREDITOR SHRI DEEPAK PANJWANI AND THEREFORE, IDENTITY AND CAPACITY OF THE CREDITOR CANNOT BE DOUBTED. FURTHER, THE AO, VIDE HIS REMAND REPORT DATED 03-06-2011, HAS ALSO COMMENTED THAT THE EXPLANATION OF THE APPELLANT ON THIS COUNT SEEMS TO BE JUSTIFIED. IN THESE CIRCUMSTANCES, THERE IS ABSOLUTELY NO JUSTIFICATION IN HOLDING THE DEPOSIT OF RS. 5,73,000/- MADE ON 17-07-2006 AS UNEXPLAINED. 6.3.3 THE EXPLANATION OF THE APPELLANT FOR RECEIPT OF RS. 2,75,618/- FROM M/S. AUTOMATION INDIA PVT. LTD. 68 68 ALSO DESERVES TO BE ACCEPTED. FROM THE COPY OF COMPUTATION OF INCOME OF THE APPELLANT, ACCOMPANYING THE RETURN, IT HAS BEEN NOTICED THAT THE APPELLANT HAS SHOWN NET BUSINESS INCOME OF RS. 2,54,309/- FROM HIS PROPRIETORSHIP CONCERN M/S. HEERA GRAHA UDYOG, INDORE. ON A FURTHER PERUSAL OF THE PROFIT & LOSS ACCOUNT OF M/S. HEERA GRAHA UDYOG, IT HAS BEEN OBSERVED THAT THE APPELLANT HAS SHOWN GROSS COMMISSION INCOME OF RS. 2,92,000/-, WHICH HAS BEEN ACCEPTED BY THE AO. THE AO HAS ALSO GRANTED CREDIT FOR T.D.S. OF RS. 16,382/- TO T HE APPELLANT ON THE GROSS RECEIPT OF COMMISSION OF RS. 2,92,000/-. IN THESE CIRCUMSTANCES, THE ADDITION OF NET RECEIPT OF RS.2,75,618/- IS ABSOLUTELY UNJUSTIFIED, AS IT WOULD TANTAMOUNT ADDITION OF THE SAME INCOME TWICE WHICH IS NOT PERMISSIBLE. 6.3.4 FOR THE SOURCE OF DEPOSIT OF RS. 1,54,000/- ON 29-03-2006 WITH HDFC BANK, I DID NOT FIND ANY FORCE IN THE SUBMISSION OF THE APPELLANT. THE APPELLANT HAS NOT FURNISHED ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM THAT 69 69 A SUM OF RS. 1,54,000/- WAS RECEIVED BY HIM FROM THE INSURANCE COMPANY. ACCORDINGLY, SUCH DEPOSIT IS HELD TO BE UNEXPLAINED. 6.3.5 NOW COMING TO THE TWO DEPOSITS OF RS. 5,00,000/- AND RS. 4,50,00,000/- MADE BY THE APPELLANT IN HIS BANK ACCOUNT WITH BANK OF INDIA, RESPECTIVELY ON 06-09-2006 AND 06-11-2006, THE APPELLANT'S EXPLANATION IS WORTH ACCEPTABLE. THE APPELLANT HAS DEMONSTRATED THAT FIRST HE HAD GIVEN A LOAN OF RS. 5,00,000/- TO SCOTTISH INTERNATIONAL EDUCATION SOCIETY THROUGH AN ACCOUNT PAYEE CHEQUE HEARING NO.907230 DRAWN ON THE SAVINGS BANK ACCOUNT OF THE APPELLANT WITH BANK OF INDIA ON 30-06-2006 AND SUCH LOAN WAS RECEIVED BACK BY HIM ON 06-09-2006. THE EXPLANATION OF THE APPELLANT WAS FOUND VERIFIABLE FROM THE COPY OF THE SAVING BANK PASS-BOOK FILED BY THE APPELLANT AT PAGE NO.33 OF THE COMPILATION. AS REGARD THE SECOND DEPOSIT OF RS.4,50,000/-, IT HAS BEEN OBSERVED THAT THE APPELLANT HAD OBTAINED A CHEQUE FROM HIS OWN HUF WHICH IS SEPARATELY ASSESSED TO 70 70 INCOME-TAX. THE APPELLANT HAS FURNISHED A COPY OF THE LETTER OF CONFIRMATION AND HAS ESTABLISHED THAT SUCH HUF WAS SEPARATELY ASSESSED TO INCOME-TAX. IN THESE CIRCUMSTANCES, I FIND ABSOLUTELY NO MERIT IN NOT ACCEPTING SUCH DEPOSITS HAVING BEEN MADE FROM THE ESTABLISHED SOURCES. 6.3.6 IN NUTSHELL, OUT OF TOTAL BANK DEPOSITS OF RS . 23,17,618/-, BANK DEPOSITS TO THE EXTENT OF RS. 21,13,618/- ARE FOUND EXPLAINED AND REMAINING BANK DEPOSITS TO THE EXTENT OF RS. 2,04,000/- ARE FOUND UNEXPLAINED AND TO THE EXTENT OF UNEXPLAINED DEPOSITS THE ACTION OF THE AO IS CONFIRMED AND BALANCE ADDITION IS DELETED. 30. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. IN THE ASSESSMENT YEAR 2007-08, OUT OF ADD ITION OF RS. 23,17,678/-, THE LD. CIT(A) HAS DELETED ADDITIO N TO THE EXTENT OF RS. 21,13,618/-, WHEREAS CONFIRMED THE BA LANCE OF RS. 2.04 LAKHS. THE JUSTIFICATION FOR THE SAME HAS BEEN RECORDED BY THE LD.CIT(A) AT PARA 6.3. SO FAR AS DE POSIT OF CASH IS CONCERNED, WE FOUND THAT AS PER CASH FLOW S TATEMENT THE ASSESSEE HAS DEMONSTRATED AVAILABILITY OF FUNDS . THUS, 71 71 DELETION OF CASH DEPOSIT BY THE LD.CIT(A) IS CONFIR MED. DEPOSIT OF CHEQUE OF RS. 5,73,000/- DATED 17.7.2006 WAS EXPLAINED THROUGH RECEIPT FROM BROTHER SHRI DEEPAK PANJWANI. THE CIT(A) HAS RECORDED THAT ALL THE THRE E INGREDIENTS OF LOAN CREDITOR HAS BEEN SATISFIED. AC CORDINGLY, NO INTERFERENCE IS REQUIRED. AS PER RECORD, THE ASS ESSEE HAS ALSO EXPLAINED DEPOSIT OF TWO CHEQUES OF RS. 5 LAKH S AND OF RS. 4.50 LAKHS WITH BANK OF INDIA ON 6.9.2006 AND 6.11.2006. DETAILED FINDING HAS BEEN RECORDED BY TH E LD.CIT(A) AT PARA 6.35, WHICH DO NOT REQUIRE ANY INTERFERENCE, AS THE SAME IS AS PER MATERIAL ON REC ORD. ACCORDINGLY, WE CONFIRM THE ACTION OF CIT(A) FOR DE LETING ADDITION OF RS. 21,13,618/- OUT OF TOTAL DEPOSIT OF RS. 23,17,618/-. HOWEVER, THE ADDITION OF RS. 2.04 LAKH S HAS BEEN CONFIRMED BY THE LD.CIT(A). DURING THE COURSE OF HEARING BEFORE US, THE LD. AUTHORIZED REPRESENTATIV E COULD NOT PRODUCE ANY POSITIVE EVIDENCE ON RECORD TO PERS UADE US TO DEVIATE FROM THE FINDING RECORDED BY THE LD.CIT( A) FOR CONFIRMING ADDITION OF RS. 2.04 LAKHS. ACCORDINGLY, WE CONFIRM THE ACTION OF THE CIT(A) IN TOTALITY. 72 72 31. IN THE ASSESSMENT YEAR 2008-09, THE ASSESSING OFFIC ER HAS MADE ADDITION OF RS. 53,09,970/- BY TREATING VA RIOUS DEPOSITS MADE IN HIS SAVING BANK ACCOUNT AS UNEXPLA INED. 32. BY THE IMPUGNED ORDER, AFTER RECORDING DETAILED FINDING WITH RESPECT TO EACH AND EVERY DEPOSIT, THE LD. CIT(A) DELETED THE ADDITION :- DURING THE COURSE OF THE PROCEEDINGS, THE APPELLANT FILED CERTAIN ADDITIONAL EVIDENCES UNDER RULE 46A OF THE IT RULES, 1962. SUCH EVIDENCES ARE BASICALLY IN THE NATURE OF COPY OF ACKNOWLEDGEMENT OF RETURN, BANK STATEMENT AND BALANCE-SHEET ETC. OF THE CREDITOR FROM WHOM THE APPELLANT HAS CLAIMED TO HAVE RECEIVED LOANS. A COPY OF SUCH DOCUMENTS WERE FILED BY THE APPELLANT WITH THE CONCERNING AO ALSO 'UNDER THE DIRECTION OF THIS OFFICE. THE ADDITIONAL EVIDENCES DESERVES TO BE ADMITTED IN VIEW OF THE FACTUAL POSITION THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT WAS NOT GIVEN SUFFICIENT OPPORTUNITY TO PRODUCE SUCH DOCUMENTS BEFORE THE AO AS DISCUSSED IN RESPECT OF 73 73 GROUND NO. 2(A) TO 2(D). 7.4.1 THE AO HAD MADE HIS COMMENTS ON THE ADDITIONAL EVIDENCES FILED BY THE APPELLANT VIDE LE TTER DATED 28-07,-2011. IN THE COMMENTS, THE AO HAS OBJECTED THE VERACITY AND RELIABILITY OF THE ADDITI ONAL EVIDENCES TILED BY THE APPELLANT FOR ADJUDICATING T HE ISSUE OF BANK DEPOSITS. 7.4.2 A COPY OF THE REMAND REPORT OF THE APPELLANT WAS PROVIDED TO THE A.R. OF THE APPELLANT AND IN RESPONSE, THE A.R. FILED HIS COUNTER COMMENTS VIDE LETTER DATED 16-08-2011 WHICH IS PLACED OIL RECORD. 8.1 THE CONTENTIONS OF THE APPELLANT ALONG WITH THE DOCUMENTARY EVIDENCES, ADDITIONAL EVIDENCES, COMMENTS OF THE AO AND COUNTER COMMENTS OF THE APPELLANT HAVE BEEN CONSIDERED CAREFULLY. THE APPELLANT HAS SUBSTANTIATED SOURCES OF CASH DEPOSITS AGGREGATING TO RS.75,OOO/- IN HIS BANKS ACCOUNT WITH BANK OF INDIA, ON VARIOUS DATES BY DEMONSTRATING THAT SUCH CASH DEPOSITS WERE MADE 74 74 BY HIM OUT OF THE OPENING CASH BALANCE OF RS.6,62,644/-, AVAILABLE AS PER STATEMENT OF AFFAIR S AS OF 31-03-2007 AS WELL AS FROM THE ADDITIONAL INCOME OF RS.5,00,000/- SHOWN BY HIM IN HIS RETURN OF INCOME ,OR THE ASSESSMENT YEAR UNDER CONSIDERATION. IT IS SEEN FROM THE STATEMENT OF AFFAIRS OF THE APPELLANT AS OF 31-03-2007 THAT HE WAS HAVING SUFFICIENT CASH BALANCE AMOUNTING TO RS.6,62,644/-. IT IS NOT THE CASE OF THE REVENUE TH AT SUCH CASH BALANCE WAS UTILIZED BY THE APPELLANT FOR SOME OTHER PURPOSES THAN CLAIMED BY THE APPELLANT. IT IS ALSO SEEN THAT IN THE RETURN FOR THE RELEVANT ASSESSMENT YEAR, THE APPELLANT HAS ALSO SHOWN AN ADDITIONAL INCOME OF RS. 5,00,000/-. THUS, THE CASH DEPOSITS AGGREGATING TO RS. 75,000/- CANNOT BE SAID TO BE UNEXPLAINED. ACCORDINGLY, THE ADDITION MADE ON THIS COUNT HEREBY DELETED. 8.2.1 OUT OF THE REMAINING BANK DEPOSITS OF RS. 52,28,970/- MADE BY THE APPELLANT IN HIS TWO BANKS ACCOUNTS THROUGH ACCOUNT PAYEE CHEQUES, THE APPELLANT HAS EXPLAINED SOURCE OF DEPOSIT OF 75 75 RS. 6,25,000/- ON 16-04-2007 WITH HDFC BANK BY SHOWING THAT HE HAD AVAILED ONE OVERDRAFT FACILITY FROM BANK OF INDIA IN JOINT NAMES OF HIMSELF AND HIS TWO OTHER FAMILY MEMBERS AND OUT OF SUCH OVERDRAFT ACCOUNT, HE HAD TRANSFERRED THE SUBJECT SUM OF RS. 6,25,000/- IN HIS ANOTHER BANK ACCOUNT WITH HDFC BANK. THE APPELLANT HAD FURNISHED THE SUMMARY OF TRANSACTIONS IN OVERDRAFT ACCOUNT IN THE COMPUTATION OF INCOME ITSELF AND FROM SUCH SUMMARY, THE EXPLANATION OF THE APPELLANT HAS BEEN FOUND CORRECT. ACCORDINGLY, THE DEPOSIT OF RS. 6,25,000/- HAS TO HE HELD AS OUT OF EXPLAINED SOURCES ONLY. 8.2.3 AS REGARD THE SOURCE OF DEPOSIT OF RS. 10,00,000/- MADE BY THE APPELLANT WITH HDFC BANK ON 03-12-2007, THE APPELLANT HAS EXPLAINED THAT SUCH SUM WAS RECEIVED BY HIM BY WAY OF' LOAN, THROUGH ACCOUNT PAYEE CHEQUE FROM SOME M/S. SPS JEWELLERS OF 7/8, APOLLO SQUARE, NEW PALASIA, INDORE. THE APPELLANT SUBMITTED THAT THE LOAN CREDITOR IS SEPARATED ASSESSED TO INCOME-TAX 76 76 WITH THE ITO-2(2)1 INDORE UNDER PAN-AANFS131F. IN ORDER TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS THE APPELLANT HAS FURNISHED LETTER OF CONFIRMATION DULY GIVEN BY THE LOAN CREDITOR. THE APPELLANT IN ORDER TO, ESTABLISH THE CREDITWORTHINESS OF M/S. SPS JEWELLERS ALSO FURNISHED COPY OF BANK ACCOUNT OF THE CREDITOR WITH CITIBANK FOR THE RELEVANT PERIOD. THE APPELLANT CLAIMED THAT HE HAD RECEIVED A SUM OF RS. 10,00,000/- VIDE CHEQUE NO. 31368 DRAWN BY M/S. SPS JEWELLERS AND SUCH CHEQUE GOT CLEARED FROM THE BANK ACCOUNT OF M/S. SPS JEWELLERS ON 03-12-2007 AND THE CREDIT FOR CHEQUE WAS GIVEN TO THE APPELLANT ON THE VERY SAME DAY. FRORN A PERUSAL OF THE COPY OF THE BANK STATEMENTS OF M/S. SPS JEWELLERS AND OF THE APPELLANT, HAS BEEN NOTICED THAT CHEQUE NO. 81368 IS APPEARING IN BOTH THE STATEMENTS. IN SUCH CIRCUMSTANCES, THE DOUBT RAISED BY THE AO ON THE BANK STATEMENTS NOT SUSTAINABLE. BESIDES, IT HAS BEEN OBSERVED THAT THE SAME CONCERN HAD ISSUED TWO CHEQUES 77 77 BEARING NO. 81362 & 81363 OF RS.10,00,000/- EACH TO THE BROTHER OF THE APPELLANT NAMELY SHRI DEEPAK PANJWANI BUT THE CHEQUE NO.81368 WAS ISSUED ONLY IN THE NAME OF THE APPELLANT AND THEREFORE THE AO COMMENT TO THE EFFECT THAT THE RECEIPT OF THE LOAN ON THE SAME DATE THOUGH THE SAME CHEQUE WAS ALSO SHOWN BY SHRI DEEPAK PANJWANI IS FACTUALLY INCORRECT. SUCH FACT IS ALSO VERIFIED FROM THE LOAN CONFIRMATION LETTER GIVEN BY M/S. SPS JEWELLERS IN CASE OF SHRI DEEPAK PANJWANI IN APPEAL NO. IT-273/C-10 FOR A.Y. 2008-09. SINCE, THE APPELLANT HAS ESTABLISHED ALL THE THREE INGREDIENTS I.E, IDENTITY OF THE CREDITOR , GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR, I FIND NO REASON FOR NOT ACCEPTING THE RECEIPT OF LOAN OF RS. 10,00,000/- AS CLAIMED BY THE APPELLANT, AS GENUINE. 8.2.4 AS REGARD THE SOURCE OF DEPOSIT OF RS.15,00,000/- MADE BY THE APPELLANT WITH HDFC BANK ON 06-12-2007., THE APPELLANT HAS EXPLAINED 78 78 THAT SUCH SUM WAS RECEIVED BY HIM BY WAY OF LOAN, THROUGH ACCOUNT PAYEE CHEQUE FROM SOME M/S. SHREYANSH TRADING AND REAL ESTATE PVT. LTD., 182, JANKI NAGAR EXTN., INDORE. THE APPELLANT SUBMITTED THAT THE LOAN CREDITOR IS SEPARATELY ASSESSED TO INCOME-TAX WITH THE ITO-5(L), INDORE UNDER PAN- AAKCS6781R. IN ORDER TO ESTABLISH, THE GENUINENESS OF THE TRANSACTIONS, THE APPELLANT HAS FURNISHED LETTER OF CONFIRMATION DULY GIVEN BY THE LOAN CREDITOR. THE APPELLANT IN ORDER TO ESTABLISH THE CREDITWORTHINESS OF M/S. SHREYANSH TRADING AND REAL ESTATE PVT. LTD. ALSO FURNISHED COPY OF BANK ACCOUNT OF THE CREDITOR WITH STATE BANK OF INDORE, PALSIKAR COLONY BRANCH, INDORE FOR THE RELEVANT PERIOD . THE APPELLANT CLAIMED THAT HE HAD RECEIVED A SUM OF RS. 15,00,000/- VIDE CHEQUE NO. 345215 DRAWN BY M/S. SHREYANSH TRADING AND REAL ESTATE PVT. LTD AND SUCH CHEQUE GOT CLEARED FROM THE BANK ACCOUNT OF M/S. SHREYANSH TRADING AND REAL ESTATE PVT. LTD, ON 06-12-2007 AND THE CREDIT FOR SUCH CHEQUE WAS GIVEN TO THE APPELLANT ON THE VERY SAME 79 79 DAY. FROM A PERUSAL OF THE COPY OF THE BANK STATEMENTS OF' M/S. SHREYANSH TRADING AND REAL ESTATE PRIVATE LIMITED, IT HAS BEEN NOTICED THAT CHEQUE NO. 845215 IS APPEARING IN BOTH THE STATEMENTS. THE APPELLANT IN THE EARLIER YEARS HAD GIVEN LOAN OF RS. 8,00,000/- TO ABOVE NAMED COMPANY AND HE HAD FURTHER GIVEN A SUM OF RS. 6,00,000/- THROUGH ACCOUNT PAYEE CHEQUE TO THE COMPANY ON 26.04.2007. THUS, AS AGAINST TOTAL LOAN PAYMENT OF RS. 14,00,000/- HE HAD RECEIVED A SUM OF RS. 15,00,000/- FROM THE COMPANY WITH THE RESULT THAT AT THE END OF THE RELEVANT YEAR, HE WAS OWING A BALANCE SUM OF RS. 1,00,000/- TOWARDS SUCH COMPANY. IN ORDER TO FOR THE GENUINENESS OF THE LOA N TRANSACTION, THE APPELLANT ALSO FURNISHED A COPY OF THE AUDITED FINANCIAL STATEMENTS OF M/S. SHREYANSH TRADING AND REAL ESTATE PVT.LTD. PERTAINING TO THE YEAR ENDED ON 31.03.2008. IN SUCH BALANCE-SHEET, AT SCHEDULE-7, A SUM. OF' R.S. 1,00,000/- HAS BEEN SHOWN AS RECEIVABLE FROM THE APPELLANT WHICH GETS CORROBORATED WITH THE APPELLANT'S CLAIM AS 80 80 AFORESAID. THE AO'S COMMENT IN REMAND REPORT TO THE EFFECT THAT THE CREDITOR COMPANY HAD SHOWN HUGE SHARE PREMIUM WITHOUT ANY PROFIT-COULD BE A MATTER OF CONCERN SO FAR AS THE AFFAIRS OF THE COMPANY ARE CONCERNED BUT SUCH FACTOR CANNOT BE VIEWED ADVERSELY FOR ADJUDGING THE LOAN TRANSACTIONS OF THE APPELLANT WITH THE SAID COMPANY. SINCE, THE APPELLANT HAS ESTABLISHED ALL THE THREE INGREDIENTS I.E. IDENTITY OF THE CREDITOR , GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR, I FIND NO REASON FOR NOT ACCEPTING THE RECEIPT OF LOAN OF RS. 15,00,000/ - AS CLAIMED BY THE APPELLANT, AS GENUINE. 8.25 AS REGARD THE SOURCE OF DEPOSITS OF RS. 1,01,970/- MADE BY THE APPELLANT WITH HDFC BANK ON 29-03-2007, I FIND FULL MERIT IN THE SUBMISSION OF THE APPELLANT THAT SUCH CHEQUE WAS RECEIVED BY HIM FROM SOME M/S. BUSINESS AUTOMATION (I) PVT. LTD. TOWARDS COMMISSION. THE APPELLANT HAS SUBMITTED THAT SUCH COMMISSION WAS RECEIVED BY HIM AFTER DUE TDS OF RS.13,030/- ON 81 81 GROSS INCOME OF RS. 1,15,000/-. IT HAS BEEN SEEN THAT THE COMMISSION INCOME OF RS. 1,15,000/- HAS DULY BEEN SHOWN BY THE APPELLANT IN HIS RETURN OF INCOME AND THE SAME WAS DULY ASSESSED BY THE AO. THE AO HAS ALSO GRANTED CREDIT FOR TDS AT RS.13,030/- TO THE APPELLANT. IN SUCH CIRCUMSTANCES, THERE IS ABSOLUTELY NO MERIT IN MAKING THE SAME ADDITION TWICE. ACCORDINGLY, THE DEPOSIT OF RS. 1,01,970/- I S HELD TO BE EXPLAINED BY THE APPELLANT. 8.2.6 AS REGARD THE SOURCE OF DEPOSIT OF RS. 8,50,000/- MADE BY THE APPELLANT WITH BANK OF INDIA ON 10-01-2008, THE APPELLANT HAS EXPLAINED THAT SUCH SUM WAS RECEIVED BY HIM BY WAY OR LOAN, THROUGH ACCOUNT PAYEE CHEQUE FROM SOME M/S. SHIV SUPARI STORES, INDORE, PROPRIETOR SHR I ORNPRAKASH WADHWANI. THE APPELLANT SUBMITTED THAT THE LOAN CREDITOR IS SEPARATED ASSESSED TO INCOME-TAX WITH THE ACIT, KHANDWA UNDER PAN -AAHPW0037G. IT WAS FURTHER SUBMITTED BY THE APPELLANT THAT THE LOA N TRANSACTIONS WAS SQUARED UP BY HIM THROUGH ACCOUNT PAYEE CHEQUE BEARING NO. 111788 DATED 15- 82 82 01-2008 DRAWN ON THE SAME BANK. ON A PERUSAL OF THE COPY OF THE SAVING BANK PASSBOOK OF THE APPELLANT PLACED AT PAGE NO. 31 OF THE COMPILATION, THE PAYMENT OF RS. 8,50,000/- WAS CLEARLY FOUND. IN ORDER TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS; THE APPELLANT HAS FURNISHED LETTER OF CONFIRMATION DULY GIVEN BY THE LOAN CREDITOR. THE APPELLANT IN ORDER TO ESTABLISH THE CREDITWORTHINES S OF M/S. SHIV SUPARI STORES ALSO FURNISHED COPY OF INCOME-TAX ACKNOWLEDGEMENT OF THE PROPRIETOR OF M/S. SHIV SUPARI STORES NAMELY SHRI OMPRAKASH WADHWANI AND FROM SUCH ACKNOWLEDGEMENT IT WAS NOTICED THAT THE LOAN CREDITOR HAS SHOWN TAXABLE INCOME OF RS. 59,37,430/- AND HAS ALSO SHOWN PAYMENT OF TAX OF RS. 20,46,064/-. THE OBSERVATION OF THE AO IN HIS REMAND REPORT THAT FROM THE ACKNOWLEDGEMENT OF THE IT RETURN OF SHRI OMPRAKASH WADHWANI FOR A. Y. 2008-09 IT IS NOT CLEAR THAT SUCH MR. WADHWANI WAS THE PROPRIETOR OF M/S. SHIV SUPARI STORES IS FACTUALLY INCORRECT FOR THE VERY REASON THAT IN COLUMN PRESCRIBED FOR ADDRESS, IT 83 83 HAS CLEARLY BEEN STATED AS C/O. M/S. SHIV SUPARI STORES. SINCE, THE APPELLANT HAS ESTABLISHED ALL TH E THREE INGREDIENTS I.E. IDENTITY OF THE CREDITOR, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR, GENUINENESS I FIND NO REASON FOR N OT ACCEPTING THE RECEIPT OF LOAN OF RS. 8,50,000/- AS CLAIMED BY THE APPELLANT, AS GENUINE. 8.2.7 AS REGARD THE SOURCE OF DEPOSIT OF RS.8,52,000/- MADE BY THE APPELLANT WITH BANK OF INDIA ON 11-01-2008, THE APPELLANT HAS EXPLAINED THAT SUCH SUM WAS RECEIVED BY HIM BY WAY OF LOAN, THROUGH ACCOUNT PAYEE CHEQUE FROM HIS OWN UNCLE NAMELY SHRI KRIPALDAS HEMWANI WHO IS SEPARATELY ASSESSED TO INCOME-TAX UNDER PAN-AAGPH9810F. IT WAS SUBMITTED BY THE APPELLANT THAT THE LOAN TRANSACTION HAD TAKEN PLACE THROUGH ACCOUNT PAYEE CHEQUE ONLY AND THE LOAN CREDITOR HAD DULY CONFIRMED SUCH TRANSACTION BY PROVIDING LETTER OF CONFIRMATION WHICH WAS DULY FILED BEFORE THE AO. IT WAS FURTHER SUBMITTED THAT ASSESSMENT PROCEEDINGS IN CASE OF THE LOAN CREDITOR WAS DULY COMPLETED 84 84 UNDER SECTION 143(3) OF THE ACT BY THE ITO-5(L), INDORE VIDE HIS ORDER DATED 20-12-2010 DETERMINING THE TOTAL INCOME OF RS. 2,58,860/-. CONSIDERING AL L THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THA T THE SOURCE OF DEPOSIT OF RS.8,52,000/- AS CLAIMED B Y THE APPELLANT HAS MERIT AND DESERVES TO BE ACCEPTED. ACCORDINGLY, THE ADDITION OF RS.8,52,000/ - ATTRIBUTABLE TO THE ABOVE SAID BANK DEPOSIT IS HEREBY DELETED. 8.2.8 AS REGARD THE SOURCE OF DEPOSIT OF RS. 3,00,000/- MADE BY THE. APPELLANT WITH BANK OF INDIA ON 29-03-2008, THE APPELLANT HAS EXPLAINED THAT SUCH SUM WAS RECEIVED BY HIM BY WAY OF LOAN, THROUGH ACCOUNT PAYEE CHEQUE FROM MR. SANJAY KASLIWAL OF 21, R.K. PURAM COLONY, INDORE, WHO IS SEPARATELY ASSESSED TO INCOME-TAX UNDER PAN- ADUPK6495Q. IT WAS SUBMITTED BY THE APPELLANT THAT THE SUBJECT LOAN TRANSACTION HAD ALSO TAKEN PLACE THROUGH ACCOUNT PAYEE CHEQUE ONLY AND THE LOAN CREDITOR HAD DULY CONFIRMED SUCH TRANSACTION BY PROVIDING LETTER OF CONFIRMATION WHICH WAS DULY 85 85 FILED BEFORE THE AO IN SUPPORT OF THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE LOAN CREDITOR, THE APPELLANT HAS FURNISHED COPY OF INCOME-TAX RETURN WITH COMPUTATION AND BANK STATEMENT FOR THE RELEVANT PERIOD OF THE LOAN CREDITOR. THE AO IN HIS REMAND REPORT HAS ALSO ADMITTED THE CLAIM OF THE APPELLANT BY STATING THAT THE TRANSACTION IS VERIFIABLE. IN SUCH CIRCUMSTANCE S, I DO NOT FIND ANY REASON FOR NOT ACCEPTING THE BANK DEPOSIT OF RS. 3,00,000/-, AS CLAIMED BY THE APPELLANT, DULY EXPLAINED. ACCORDINGLY, THE ADDITIO N OF RS. 3,00,000/-, ATTRIBUTABLE TO SUCH BANK DEPOSI T IS ALSO HEREBY DELETED. 8.2.9 IN NUTSHELL, THE ENTIRE ADDITION OF RS. 53,03,970/- MADE BY THE AO UNDER S. 68 ON ACCOUNT OF UNEXPLAINED BANK DEPOSIT IS HEREBY DELETED. 33. AGAINST THE ABOVE ORDER OF CIT(A) DELETING THE ADDI TION MADE U/S 68, THE REVENUE IS IN FURTHER APPEAL BEFOR E US. 86 86 34. WE HAVE CONSIDERED RIVAL CONTENTION AND FOUND FROM RECORD THAT ADDITIONAL DOCUMENTS WERE FILED BY THE ASSESSEE BEFORE THE CIT(A) UNDER RULE 46A. AFTER CALLING REM AND REPORT FROM THE ASSESSING OFFICER AND ASSESSEES CO MMENTS ON THE REMAND REPORT, THE LD. CIT(A) RECORDED A DET AILED FINDING AT PARA 7.4 AS REPRODUCED HEREINABOVE, WHER EIN CASH DEPOSITED IN THE BANK ACCOUNT WAS FOUND TO BE SATISFACTORILY EXPLAINED. WITH RESPECT TO THE CHEQU E RECEIVED FROM VARIOUS PARTIES AND DEPOSITED IN THE BANK ACCO UNT, THE LD. CIT(A) HAS EXAMINED NOT ONLY GENUINENESS OF LOA N TRANSACTION BUT ALSO CREDITWORTHINESS OF THE LOAN C REDITOR. AS ALL THE THREE INGREDIENTS OF IDENTITY, GENUINENE SS AND CREDITWORTHINESS OF LOAN CREDITORS WERE DULY SATISF IED, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR D ELETING THE ADDITION OF RS. 53,09,970/- IN THE ASSESSMENT YEAR 2008-09 MADE U/S 68 OF THE INCOME-TAX ACT, 1961. DEEPAK PANJWANI : 35. IN CASE OF DEEPAK PANJWANI, THE ADDITIONS WERE MADE WHILE FRAMING ASSESSMENT U/S 153A READ WITH SECTION 143(3). THE ASSESSING OFFICER MADE ADDITION OF RS. 87 87 26,46,000/- IN RESPECT OF GIFT AND UNEXPLAINED BANK DEPOSITS, ADDITION OF RS. 97,14,900/- WAS ALSO MADE ON ACCOUNT OF GIFT OF PROPERTY. ADDITION IN THE ASSESS MENT YEAR 2005-06 AMOUNTING TO RS. 26,46,000/- WAS MADE WITH RESPECT TO THE GIFT RECEIVED FROM BHAVESH P. MANWA NI, WHICH WAS DELETED BY THE LD.CIT(A) AFTER HAVING THE FOLLOWING OBSERVATIONS :- 4.2 GROUND NO.2 IS DIRECTED AGAINST AO'S ACTION IN MAKING ADDITION U/S 68 OF THE ACT BY HOLDING RECEIPT OF GIN 01 RS. 5,00,000/-, CLAIMED TO HAVE BEEN RECEIVED BY THE APPELLANT FROM SOME MR. BHAVESH P. MAVANI, AS NON GENUINE. THE RELEVANT FACTS HAVE BEEN NOTED BY THE AO IN THE ASSESSMENT ORDER. THE AO DID NOT ACCEPT THE APPELLANT'S CONTENTION ABOUT SUCH GIFT, FOR WANT OF PRODUCTION OF THE DONOR BEFORE HIM. AO ALSO HELD THAT THE APPELLANT HAS NOT SHOWN ANY OCCASION OF RECEIVING THE GIFT FROM THE SAID DONOR. 4.2.1 THE APPELLANT HAS INCLUDED NECESSARY 88 88 SUPPORTING DOCUMENTS IN COMPILATION STARTING FROM PAGE 29 TO 43 BEING COPY OF THE WRITTEN SUBMISSION EXPLAINING THE TRANSACTION OF GIFT BEFORE THE AO, COPY OF PAN CARD OF THE DONOR, COPY OF THE GIFT DEED DULY NOTARIZED, COPY OF CONFIRMATION LETTER OF THE DONOR, COPY OF THE CHEQUE THROUGH WHICH THE GIFT WAS RECEIVED BY THE APPELLANT, COPY OF THE BALANCE-SHEET AND PROFIT & LOSS A/C OF THE DONOR FOR THE YEAR 2001-02, COPY OF THE COMPUTATION OF INCOME AND IT RETURN OF THE DONOR, COPY OF THE BANK PASS-BOOK OF THE DONOR FOR THE RELEVANT PERIOD AND COPY OF THE BANK STATEMENT OF THE APPELLANT IN WHICH THE PROCEEDS OF THE GIFT WERE CREDITED. 4.2.2 THE IDENTITY OF THE DONOR IS ESTABLISHED BY VARIOUS DOCUMENTS SUCH AS, COPY OF HIS PAN CARD, COPY OF INCOME-TAX RETURN, COPY OF BANK STATEMENT, ETC. THE GENUINENESS OF THE TRANSACTION IS EVIDENCED FROM THE COPY OF THE 89 89 GIFT-DEED DULY SIGNED BY THE DONOR FOLLOWED BY A LETTER OF CONFIRMATION. THE TRANSACTION HAS UNDISPUTEDLY TAKEN PLACE THROUGH BANKING CHANNEL, NOW COMING TO THE CREDITWORTHINESS OF THE DONOR, FROM THE COPY OF THE CAPITAL ACCOUNT OF THE DONOR, IT HAS BEEN NOTICED THAT THE DONOR WAS HAVING SUBSTANTIAL CAPITAL OF RS. 97,66,690/- ON 31.03.2002. THE DONOR WAS CARRYING OUT SOME TRADING ACTIVITIES AND FOR THE ASSESSMENT YEAR 2002-03, HE HAS FILED HIS RETURN OF INCOME SHOWING INCOME OF RS. 8,60,192/-. ALTHOUGH THE TRANSACTION OF GIFT HAS TAKEN PLACE ALMOST THREE YEARS AFTER THE PERIOD TO WHICH THE FINANCIAL STATEMENTS AND INCOME-TAX RETURN OF THE DONOR PERTAINS, STILL, THESE DOCUMENTS ESTABLISHES BEYOND DOUBT THE CREDITWORTHINESS OF THE DONOR. 4.2.3 AS REGARD THE RELATIONSHIP OF THE APPELLANT WITH THE DONOR, IT HAS BEEN OBSERVED THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS TOO, THE APPELLANT 90 90 HAD CLAIMED THAT THE DONOR WAS HIS MOUSAJI AND SUCH FACT WAS NOT CONTROVERT BY THE AO. AS REGARD PRODUCTION OF THE DONOR, IT IS NOTICED FROM THE ASSESSMENT ORDER ITSELF, THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT HAD EXPRESSED HIS INABILITY TO PRODUCE THE DONOR FOR THE REASON THAT HE WAS A RESIDENT OF MUMBAI WHICH IS A PLACE FAR AWAY FROM INDORE. IT HAS BEEN NOTICED THAT THE APPELLANT, VIDE HIS LETTER DATED 8.12.2009, HAD MADE A SPECIFIC REQUEST TO COLLECT THE NECESSARY INFORMATION RELATING TO THE TRANSACTION BY ISSUING A SUMMONS U/S 131 TO THE DONOR, BUT THE AO DID NOT TAKE ANY ACTION IN THIS DIRECTION. THE COUNSEL OF THE APPELLANT HAS SUBMITTED THAT FOR MAKING A GIFT, IT IS NOT NECESSARY THAT IT SHOULD BE MADE ON A PARTICULAR OCCASION ONLY. THE AO DID NOT CONTROVERT ANY OF THE DOCUMENTARY EVIDENCES FURNISHED BY THE APPELLANT BEFORE HIM AND, THEREFORE, MERELY ON SUSPICION AND GUESS 91 91 WORK, THE AO WAS NOT JUSTIFIED TO DISBELIEVE GIFT RECEIVED BY THE APPELLANT FROM HIS RELATIVE AS NON GENUINE. ACCORDINGLY, THE ADDITION OF RS. 5,00,000/- MADE BY THE AO ON THIS COUNT, BEING DEVOID OF ANY MERIT, IS HEREBY DELETED. 36. AGAINST THE ABOVE DELETION, THE REVENUE IS IN APPEA L BEFORE US. 37. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GONE THROUGH THE FINDINGS RECORDED BY THE ASSESSING OFFI CER AND CIT(A) WITH REGARD TO ADDITION OF RS. 5 LAKHS U/S 6 8 IN RESPECT OF GIFT RECEIVED FROM SHRI BHAVESH P.MEWANI . AFTER EXAMINING IN DETAIL THE CIT(A) RECORDED A FINDING T O THE EFFECT THAT NOT ONLY IDENTITY AND GENUINENESS OF GI FT TRANSACTION WAS ESTABLISHED BUT THE CREDITWORTHINES S OF THE PERSON GIVING GIFT IS ALSO ESTABLISHED AS PER DOCUM ENT PLACED ON RECORD. AS THIS FINDING HAS NOT BEEN CONTROVERTE D BY THE DEPARTMENT BY BRINGING ANY POSITIVE MATERIAL ON REC ORD, WE UPHOLD THE ORDER OF CIT(A) FOR DELETING ADDITION OF RS. 5 LAKHS WITH RESPECT TO THE GIFT RECEIVED FROM MR. BH AVESH P.MEWANI. 92 92 38. ADDITION MADE ON ACCOUNT OF AMOUNT OF RS. 21,46,000/- DEPOSITED IN THE BANK WAS DELETED BY TH E LD.CIT(A) AFTER HAVING FOLLOWING OBSERVATIONS :- 4.3 NOW COMING TO GROUND NO. 3(A) TO 3(E) RAISING VARIOUS FACETS AND ARGUMENTS AGAINST AO'S APPROACH ON CONSIDERING THE AMOUNT OF RS. 21,46,000/- AS UNEXPLAINED DEPOSITS. THESE GROUNDS ARE CONSIDERED TOGETHER. ON EXAMINING THE AO'S FINDING IN THIS BEHALF AS CONTAINED IN THE ASSESSMENT ORDER, IT EMERGES THAT THE AO HAS TAKEN NOTE OF THE POST SEARCH ENQUIRY CONDUCTED BY INVESTIGATION WING THERE WAS NO COMPLIANCE ON THE PART OF THE REPRESENTATIVE OF THE SEARCH GROUP IN FURNISHING ADEQUATE DETAILS RELATING TO BANK DEPOSITS. THEREFORE, THE AO DIRECTED THE APPELLANT TO EXPLAIN THE DEPOSIT IN BANK ACCOUNTS WITH HIS BANK. THE APPELLANT FILED COPY OF BANK ACCOUNT AND SUMMARY OF BANK ACCOUNT GIVEN IN THE COMPUTATION OF INCOME WHICH EXPLAIN SOURCE OF SUCH TRANSACTIONS IN BANK ACCOUNT. THE APPELLANT ALSO FURNISHED A COPY OF STATEMENT SHOWING DATE WISE 93 93 DETAILS OF TRANSACTIONS IN BANK ACCOUNT. 4.3.1 THE AO HOWEVER, SUMMARILY REJECTED SUCH EXPLANATION WITH THE FOLLOWING FINDING WITH VARIATION OF AMOUNTS IN BOTH THE ASSESSMENT YEARS IN THE APPEAL. 'THE EXPLANATION NOW PUTFORTH BY THE ASSESSEE, AS ABOVE, CAN NOT BE TREATED AS SATISFACTORY. THE PANJWANI FAMILY IS ENGAGED IN THE INVESTMENT IN THE REAL ESTATES FOR THE LAST SEVERAL YEARS AND WAS NOT DECLARING ANY INCOME AND INSPITE OF GIVING SEVERAL OPPORTUNITIES BY THE ADIT (INV.), INDORE, ASSESSEE NEVER EXPLAINED THESE DEPOSITS. THE EXPLANATION NOW OFFERED BY THE ASSESSEE IS NOTHING BUT AN AFTER THOUGHT. THE ASSESSEE HAS ALSO NOT SUBSTANTIATED TH E EXPLANATIONS WITH PROPER AND CONVINCING EVIDENCE. ' 4.3.2 THE VARIOUS CONTENTIONS OF THE APPELLANT IN THIS BEHALF IN WHICH VARIOUS SERIOUS ISSUES HAVE BEEN RAISED REQUIRES DETAILED DELIBERATIONS. THE APPELLANT HAS RAISED A VERY SERIOUS OBJECTION THAT THE AO MADE THIS ADDITION WITHOUT APPLICATION OF HIS OWN MIND ON THE BASIS OF POST 94 94 SEARCH ENQUIRIES CONDUCTED BY INVESTIGATION WING AND THUS SUCH ADDITION WAS MADE AT THE DICTATE OF THE INVESTIGATION WING WITHOUT THERE BEING ANY INDEPENDENT EXAMINATION AND APPLICATION OF MIND AND DISCRETION ON THE PART OF AO. IT IS ALSO CHALLENGED BY WAY OF SUB-GROUND 3(C) THAT SUCH ADDITION SERIOUSLY VIOLATED THE PRINCIPLES OF NATURAL JUSTICE AS THE AO HAS MADE SUCH ADDITION WITHOUT RECORDING ANY WORTHWHILE REASON FOR MAKING SUCH ADDITION MUCH LESS THAN OF ASSIGNING ANY SPECIFIC REASON FOR REJECTING THE EXPLANATION OFFERED IN THIS BEHALF. GROUND 3(D) IS AGAIN TECHNICAL IN NATURE TO THE EFFECT THAT NO ADDITION UNDER SECTION 68 CAN BE MADE IN RESPECT OF BANK DEPOSITS. 4.3.3 IT HAS TO BE NECESSARILY HELD ON EXAMINATION OF THE FINDING RECORDED BY AO IN THE ASSESSMENT YEAR UNDER CONSIDERATION THAT THE AO HAS FAILED TO RECORD ANY FINDING AS TO HOW SUCH DEPOSITS IN BANK ACCOUNT WERE LIABLE TO BE TREATED AS UNEXPLAINED. THUS, THE APPROACH OF 95 95 AO IN MAKING SUCH ADDITION WITHOUT CONSIDERING CONTENTIONS OF APPELLANT AND IN SUMMARILY REJECTING SUCH CONTENTIONS AND MAKING SUCH ADDITION STRENGTHEN TO THE APPELLANTS CONTENTION THAT SUCH ADDITION WERE MADE ON THE BASIS OF ENQUIRY REPORT PREPARED BY INVESTIGATION WING IN APPRAISAL REPORT. THE AO FAILED TO APPRECIATE THAT EVEN IF FOR ANY REASON NO COMPLIANCE WAS MADE OR NO DETAILS OR DOCUMENTS WERE FURNISHED IN POST SEARCH ENQUIRY BEFORE INVESTIGATION WING THE APPELLANT COULD NOT BE PREVENTED IN LAW IN OFFERING PROPER DETAILS AND DOCUMENTS IN SUPPORT OF SUCH TRANSACTIONS IN COURSE OF ASSESSMENT PROCEEDINGS. THE AO WAS DUTY BOUND IN LAW TO EXAMINE SUCH FINDINGS WITHOUT BEING GUIDED BY THE FACT THAT WHY SUCH EXPLANATION WAS NOT GIVEN BEFORE INVESTIGATION WING AND WAS REQUIRED TO GIVE A DEFINITE FINDING BY APPLYING HIS MIND AND DISCUSSION BUT THE SAME HAS NOT BEEN DONE. SUCH ADDITION HAS TO BE ACCORDINGLY NECESSARILY HELD TO BE ARBITRARY IN NATURE. THUS 96 96 THERE IS A MERIT IN GROUNDS 3(B) AND 3(C) RAISED BY APPELLANT IN THIS BEHALF. 4.3.4 NOW COMING TO THE SPECIFIC FACTS SURROUNDED AND TRANSACTION THE SAME ARE FOUND TO BE EXPLAINED IN DETAIL IN LIGHT OF SUBMISSIONS ON GROUND 3(E). THE APPELLANT HAS MADE A VERY DETAILED EXPLANATION ALONG WITH THE DOCUMENTARY EVIDENCES TO EXPLAIN THE SOURCES OF VARIOUS BANK DEPOSITS. IT WOULD BE USEFUL TO REPRODUCE THE EXPLANATION OF THE APPELLANT AS UNDER: 'IT SHALL BE APPRECIATED BY YOUR HONOUR THAT ALTHOUG H A SUMMARY OF THE BANK TRANSACTIONS WAS DULY FURNISHED BY THE APPELLANT IN THE COMPUTATION OF TOTAL INCOME ACCOMPANYING THE RETURN OF INCOME ITSELF [KINDLY RE FER PAGE NO. 17 OF THE PAPER BOOK] BUT IN ORDER TO EXPL AIN THE NATURE AND DETAILS OF EACH AND EVERY TRANSACTIO N, DATE BY DATE, THE APPELLANT HAD FURTHER SUBMITTED SEPARATE STATEMENT ALONG WITH HIS SUBMISSION LETTER 14- 10-2009. SUCH STATEMENTS ARE BEING SUBMITTED HEREWI TH FOR KIND PERUSAL AND RECORD OF YOUR HONOUR, AS ANNEXURE A-6.00 [PB PAGE NO. 44]. 97 97 YOUR HONOUR, THE LEARNED AO HAS MADE ADDITION OF RS . 21,46,000/-, ON ACCOUNT OF ALLEGED UNEXPLAINED DEPO SITS IN HIS SAVING BANK ACCOUNT WITH BANK OF BARODA. OUT 'OF SUCH DEPOSITS OF RS. 21,46,000/-, DEPOSITS OF RS. 7,46,000/- WERE MADE IN CASH AND REMAINING DEPOSITS OF RS. 19,00,000/- WERE MADE THROUGH ACCOUNT PAYEE CHEQUES/DRAFTS. THE EXPLANATION OF THE APPELLANT REGARDING SOURCES OF SUCH DEPOSITS, AS TENDERED BEF ORE THE LEARNED AO TOO, IS AS UNDER: S.NO. DATE MODE OF SOURCE OF DEPOSIT AMOUNT, REMARKS DEPOSIT 1 17-05-2004 CHEQUE LOAN RECEIVED FROM SMT. 150000 LOAN KAVITA PANJWANI CONFIRMATIO N [AIGPP2788L ] LETTER ENCLOSED 2 17-05-2004 CHEQUE LOAN RECEIVED FROM SHRI 40000 ----DO---- SHRICHAND PANJWANI [ADUP P 1148F ] 3 17 - 05 - 2004 CHEQUE LOAN RECEIVED FROM SHRI 40 000 ---- DO ---- HIRALAL PANJWANI (ADUPPI149E] 4 17 - 05 - 2004 CHEQUE LOAN RECEIVED FROM SMT. 20000 ---- DO ---- CHANDNI PANJWANI [AHLPP7275N ] 5 17 - 05 - 2004 CHEQUE LOAN RECEIVED FROM SHRI 25000 ---- DO ---- KRIPALDAS PANJWANI ______ [AAGPH981OF ] 6 17 - 05 - 2004 CHEQUE LOAN RECEIVED FROM SMT. 75000 ---- DO --- ~ SUN ITA TOPANDAS S; [AIUPPOI19R ] 7 17-05-2004 CHEQUE LOAN RECEIVED FROM SMT. 50000 ----DO--~- CHANDNI PANJWANI [AHUPP7275N ] 8 17 - 05 - 2004 CHEQUE LOAN RECEIVED FROM SHRI 50000 ---- DO' --- NEERAJ PANIWANI [ACLPPL19IL] 9 18 - 05 - 2004 CHEQUE LOA RECEIVED FROM SMT. 200000 - DO - NEETU [ABPPP2990N] ] 10 18 - 05 - 2004 CHEQUE LOA RECEIVED FROM SMT. 50000 ---- DO - KAVITA 98 98 [AIGPP2788L] 11 24-05-2004 CHEQUE LOA N RECEIVED FROM SMT. 100000 ----DO--- KAVITA ( AIGPP2788L] 12 20 - 07 - 2004 CHEQUE AMOUNT REFUND FROM ANAND 400000 CHEQ UE OF GRA NIRM SAHKARI RS.400000/ - SANSTH A WAS GIVEN ON 08 - 06 - 2004 OUT OF SAME BANK 13 15-09-2004 CASH OUT OF CASH WITHDRAWALS 49000 REFER BANK FROM BANK OF BARODA MADE STATEMENT AS , 21-07- 2004 & 06-08- 2004 ANNEXURE A - 1.02 14 16-09-2004 CASH ------DO----- 49000 ------DO----- IT 23-09-2004 CASH ------DO----- 49000 ------DO----- 16 24-09-2004 CASH ------DO----- 49000 -.-----DO----- 17 28-09-2004 CASH ------DO----- 100000 ------DO----- 18 29 - 09 - 2004 CASH ------ DO ----- 50000 -- ,, --- DO ----- 19 01-10-2004 CASH ------DO----- 50000 ------DO---- 20 05-10-2004 CASH ------DO----- 50000 ------DO----- 21 07-10-2004 CASH ------DO----- 50000 ------DO----- 22 29-12-2004 CASH ------DO----- 50000 ------DO---- 23 05-01-2005 CASH ------DO----- 50000 ------DO----- 24 07-01-2005 CASH ------DO----- 100000 ------DO----- 25 18-03-2005 CASH ------DO----- 50000 ------DO---- 26 24-03-2005 CHEQUE LOA N RECEIVED BACK FROM 200000 ------DO---- SHRI INDER [LOAN GIVEN ON 18 - 01 - 2005) TOTAL 2146000 YOUR HONOUR, IN ORDER TO PROVE THE ABOVE STATED EXP LANATION, WE ARE SUBMITTING HEREWITH FOLLOWING DOCUMENTS, WHI CH WERE ALSO FILED BEFORE THE LEARNED AO: I) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SMT. KAVITA PANJWANI [ANNEXURE A-7.0L] [PB PAGE NO. 45] IT) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI SHRICHAND PANJWANI [ANNEXURE A-7.02] [PB PAGE NO. 4 6] III) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN B Y SHRI 99 99 HIRALAL PANJWANI [ANNEXURE A-7.03] [PH PAGE NO. 47] . IV) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SMT. CHANDNI PANJWANI [ANNEXURE A-7.04} [PE PAGE NO. 48] V) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI KRIPALDAS PANJWANI [ANNEXURE A-7.05} [PE PAGE NO. 49] VI) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SMT. NITU PANJWANI [ANNEXURE A-7.06} [PE PAGE NO. 50] IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, IT SH ALL BE APPRECIATED BY YOUR HONOUR THAT THE APPELLANT HA D ESTABLISHED SOURCE OF DEPOSITS OF RS.21,46,000/- IN HIS BANK ACCOUNT AND THEREFORE, THE ADDITION SO MADE ON THIS COUNT, WITHOUT MAKING ANY APPLICATION OF THE M IND DESERVES TO BE DELETED IN TOTO.' 4.3.5 DURING THE COURSE OF THE APPELLATE PROCEEDINGS, THE APPELLANT HAD FILED CERTAIN ADDITIONAL EVIDENCES UNDER RULE 46A OF THE INCOME- TAX RULES, 1962 WITH AN EXPLANATION THAT SINCE THE APPELLANT WAS NOT GRANTED ANY OPPORTUNITY TO PROVE THE GENUINENESS OF CERTAIN LOANS, DEPOSITED IN THE BANK ACCOUNT, SUCH DOCUMENTS COULD NOT BE PRODUCED AT EARLIER STAGE. THE APPELLANT ALSO 100 100 FURNISHED A COPY OF SUCH ADDITIONAL EVIDENCES BEFORE THE AO. THE AO SUBMITTED HIS REMAND REPORT DATED 28.7.2011 WHICH IS PLACED ON RECORD. CONSIDERING THE FACTS OF THE CASE, ADDITIONAL EVIDENCES FILED BY THE APPELLANT ARE ADMITTED. 4.3.6 THE CONTENTIONS OF THE APPELLANT ALONG WITH THE DOCUMENTARY EVIDENCES, ADDITIONAL EVIDENCES AND COUNTER COMMENTS OF THE AO, HAVE BEEN CONSIDERED CAREFULLY. THE APPELLANT HAS SUBSTANTIATED SOURCES OF VARIOUS CASH DEPOSITS IN HIS BANK ACCOUNT AGGREGATING TO RS. 7,46,000/- BY DEMONSTRATING THAT HE HAD MADE SUBSTANTIAL CASH. WITHDRAWALS OF RS. 11,50,000/- FROM THE SAME BANK ACCOUNT ON THREE OCCASIONS, I.E. ON 15.7.2004, 21.7.2004 AND 6.8.2004 AND OUT OF SUCH CASH WITHDRAWAL ONLY, HE HAD DEPOSITED CASH ON VARIOUS DATES STARTING FROM 15.9.2004 IN HIS BANK ACCOUNT. THERE IS NO FOUND ON RECORD TO SUGGEST THAT THE ENTIRE CASH WITHDRAWAL FROM BANK WAS UTILIZED BY THE APPELLANT FOR SOME OTHER PURPOSES AND HE WAS NOT HAVING THE ABOVE SAID CASH OF RS. 7,46,000/- 101 101 WITH HIM FOR MAKING THE IMPUGNED DEPOSIT. THUS, THERE IS APPARENTLY NO REASON NOT TO ACCEPT SUCH CASH DEPOSITS AS DULY EXPLAINED IN VIEW OF THE CLEA R FACTS AND EVIDENCE FILED. 4.3.7 AS REGARD THE REMAINING BANK DEPOSITS OF RS. 14,00,000/- MADE BY THE APPELLANT IN HIS BANKS THROUGH ACCOUNT PAYEE CHEQUES, THE APPELLANT HAS PRIMA-FACIE EXPLAINED THE SOURCES OF ALL THE DEPOSITS. OUT OF THE BANK DEPOSITS OF RS.14,00,000/- , THE APPELLANT HAS CLAIMED TO HAVE MADE DEPOSITS O F RS. 1,50,000/-, RS. 40,000/-, RS. 40,000/-, RS. 20,000/-, RS. 25,000/-, RS. 75,000/-, RS. 50,000/-, RS. 50,000/-, RS. 2,00,000/-, RS. 50,000 AND RS. 1,00,000/-, THUS AGGREGATING TO RS. 8,00,000/- FROM HIS OWN FAMILY MEMBERS, WHO ARE HAVING INDEPENDENT SOURCES OF INCOME AND SEPARATELY ASSESSED TO INCOME - TAX. IT HAS BEEN NOTICED THAT SIMULTANEOUS ASSESSMENT PROCEEDINGS WERE CARRIED OUT BY THE SAME ASSESSING OFFICER FOR THE SAME PERIOD IN RESPECT OF MANY OF THE LOAN CREDITORS NAMELY, SMT. KAVITA PANJWANI, SHRI SHRICHAND PANJWANI, SHRI HIRALAL 102 102 PANJWANI, SMT. CHANDNI PANJWANI, SMT, SUNITA TOPANDAS AND SHRI NEERAJ PANJWANI. THE ASSESSMENT PROCEEDINGS FOR REMAINING TWO CREDITORS, NAMELY, SM T. NEETU PANJWANI AND SHRI KRIPALDAS PANJWANI WERE ALSO COMPLETED U/S 143(3)/147 OF THE ACT. THE TRANSACTIONS OF LOANS HAVE DULY BEEN CONFIRMED BY T HE LOAN CREDITORS. ALL THE TRANSACTIONS HAVE TAKEN PLA CE THROUGH ACCOUNT PAYEE CHEQUES ONLY. THE SOURCES OF LOANS HAVE BEEN EXPLAINED BY THE LOAN CREDITORS IN THEIR RETURNS OF INCOME. IN SUCH CIRCUMSTANCES, THE RE IS NO MERIT IN THE AO'S ACTION IN HOLDING THE BANK DEPOSITS OF RS.8,00,000/- MADE BY THE APPELLANT OUT OF SUCH LOANS AS UNEXPLAINED. 4.3.8 THE EXPLANATION OF THE APPELLANT FOR THE REFU ND OF RS. 4,00,000/- FROM ANAND GRAH NIRMAN SAHAKARI SANSTHA ON 20.7.2004 IS VERIFIABLE FROM THE BANK STATEMENT ITSELF IN WHICH WITHDRAWALS THROUGH CHEQU E NO.757394 ON 8.6.2004 ILL THE NAME OF ANAND NAGAR SAHAKARI SANSTHA OF RS. 4,00,000/- IS CLEARLY REFLECTED. LIKEWISE, THE APPELLANT'S CLAIM TO THE E FFECT THAT SOME OF RS.2,00,000/- WAS DEPOSITED BY HIM IN 103 103 HIS BANK ACCOUNT ON 24.3.2005 OUT OF REFUND OF LOAN FROM SHRI INDER KOHLI TO WHOM HE HAD GIVEN LOAN ON EARLIER OCCASION I.E. ON 18.1.2005, IS ALSO VERIFIA BLE FROM THE COPY OF THE BANK STATEMENT OF THE APPELLAN T FOR THE RELEVANT PERIOD PLACED ON RECORD. THUS, THE RE IS NO REASON FOR HOLDING THE BANK DEPOSITS BEING THE REFUND OF LOANS GRANTED BY THE APPELLANT FROM HIS O WN BANK ACCOUNT AT EARLIER OCCASIONS, AS UNEXPLAINED. ACCORDINGLY, THE BANK DEPOSITS TO THE EXTENT OF RS. 6,00,000/- ARE ALSO FOUND TO BE EXPLAINED. 4.3.9 IN VIEW OF THE ABOVE FINDINGS, THERE IS ABSOLUTELY NO MERIT FOUND IN THE ACTION OF THE AO I N MAKING THE ADDITION OF RS. 21,46,000/- BY HOLDING T HE VARIOUS BANK DEPOSITS AS UNEXPLAINED. ACCORDINGLY, SUCH-ADDITIONS ARE DELETED AND GROUND NO. 3(A) TO 3 (E) OF THE APPELLANT ARE ALLOWED. 39. AGAINST THE ABOVE DELETION OF RS. 21,46,000/- MADE U/S 68, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 40. WE HAVE CONSIDERED THE RIVAL CONTENTIONS IN THE LIG HT OF DOCUMENTS PLACED ON RECORD AND FOUND THAT CIT(A) HAS GIVEN CLEAR FINDING WITH RESPECT TO EACH AND EVERY LOAN 104 104 CREDITOR, WHO HAS CONFIRMED THE LOAN TRANSACTION AN D ALSO THEIR CREDITWORTHINESS ARE DULY ESTABLISHED. THE DE TAILED FINDING RECORDED BY THE LD.CIT(A) AT PARA 4.3 REPRO DUCED HEREINABOVE HAVE NOT BEEN CONTROVERTED BY THE DEPAR TMENT BY BRINGING ANY POSITIVE MATERIAL ON RECORD, ACCORD INGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FO R DELETING THE ADDITION OF RS. 21.46 LAKHS MADE U/S 68 OF THE INCOME- TAX ACT, 1961. 41. IN THE ASSESSMENT YEAR 2006-07, THE ADDITION OF RS. 18,58,000/- MADE BY THE ASSESSING OFFICER IN RESPEC T OF DEPOSITS MADE IN SAVING BANK ACCOUNT, WAS DELETED B Y THE LD.CIT(A) TO THE EXTENT OF RS. 18,25,000/-, WHERE A S DEPOSIT OF RS. 33000/- WAS CONFIRMED, AFTER HAVING THE FOLL OWING OBSERVATIONS :- 5 .3 IN GROUND NO. 2(E), THE APPELLANT HAS CONTENDED THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 18,58,000/- BY TREATING THE VARIOUS DEPOSITS MADE IN HIS SAVING BANK ACCOUNTS AS UNEXPLAINED. THE APPELLANT HAS MADE DETAILS 105 105 SUBMISSIONS, INTER-ALIA, IN RESPECT. OF GROUND NO. 2(E), WHICH IS EXTRACTED BELOW: 'IN THIS CONTEXT, BEFORE DELVING THE ISSUE, WE WISH TO SUBMIT COPY OF BANK STATEMENT OF THE APPELLANT, FOR THE RELEVANT PERIOD, IN RESPECT OF THE BANK ACCOUNT MAINTAINED BY HIM WITH BANK OF BARODA [ANNEXURE A- 4.00] [PAGE NO. 22 TO 23]. SUCH BANK STATEMENT WAS ALSO FURNISHED BY THE APPELLANT BEFORE THE LEARNED AO ALONG WITH HIS SUBMISSION LETTER DATED 14-10-2009 [KINDLY REFER PAGE NO.18 OF THE PAPER BOOK]. IT SHALL BE APPRECIATED BY YOUR HONOUR THAT ALTHOUG H A SUMMARY OF THE BANK TRANSACTIONS WAS DULY FURNISHED BY THE APPELLANT IN THE COMPUTATION OF TO TAL INCOME ACCOMPANYING THE RETURN OF INCOME ITSELF [KINDLY REFER PAGE NO. 12 OF THE PAPER BOOK] BUT IN ORDER TO EXPLAIN THE NATURE AND DETAILS OF EACH AND EVERY TRANSACTION, DATE BY DATE, THE APPELLANT HAD FURTHER SUBMITTED SEPARATE STATEMENT ALONG WITH HIS SUBMISSION LETTER 14-10-2009. SUCH STATEMENTS ARE BEING SUBMITTED HEREWITH FOR KIND PERUSAL AND RECOR D 106 106 OF YOUR HONOUR, AS ANNEXURE A -5.00 [P B PAGE NO. 24]. YOUR HONOUR, THE LEARNED A.O. HAS MADE ADDITION OF RS. 18,58,000/-, ON ACCOUNT OF ALLEGED UNEXPLAINED DEPOSITS IN HIS SAVING BANK ACCOUNT WITH BANK OF BARODA. OUT OF SUCH DEPOSITS OF RS. 18,58,000/-, DEPOSITS OF ONLY RS. 1,98,000/- WERE MADE IN CASH AND REMAINING DEPOSITS OF RS. 16,60,000/- WERE MADE THROUGH ACCOUNT PAYEE CHEQUES/DRAFTS. THE EXPLANATION OF THE APPELLANT REGARDING SOURCES OF SUCH DEPOSITS, AS TENDERED BEFORE THE LEARNED AO TO O, IS AS UNDER :- S. NO. DATE MODE SOURCE OF AMOUNT REMARKS OF DEPOSIT DEPOS IT 1 11-04-2005 CASH CASH DEPOSITED 99000 OUT OF LOANS. GENUINENESS OF THE LOANS ALONG WITH DOCUMENTARY EVIDENCES WERE ESTABLISHED VIDE DATED 08-12-2009 2 09-05-2005 CHEQUE LOAN RECEIVED 150000 LOAN RECEIVED FROM FAMILY FROM SHRI HIRALAL MEMBER WHO HAS ALSO BEEN PANJWANI ASSESSED BY THE SAME AO. [ADUPPL149EJ LOAN CONFIRMATION LETTER WAS DULY 3 09-05-2005 CASH CASH DEPOSITED 99000 OUT OF LOANS. GENUINENESS I OF THE LOANS ALONG WITH DOCUMENTARY EVIDENCES WERE ESTABLISHED VIDE LETTER DATED 08-12-2009 4 10-05-2005 CHEQUE LOAN RECEIVED 40000 LOAN RECEIVED FROM FAMILY FROM SMT. MEMBER WHO HAS ALSO BEEN CHANDN I ASSESSED BY THE SAME AD. PANJWANI LOAN CONFIRMATION LETTER [AHLPP7275N) WAS DULY FILED 107 107 5 10-05-2005 CHEQUE LOAN RECEIVED 4000FJ -----DO----- FROM SMT. NEETU PANJWANI [ABPPP2990N) 6 10-05-2005 CHEQUE LOAN RECEIVED 40000 -----DO----- FROM SHRI SHRICHAND LAXMANDAS HUF [AABHS7286K) 7 10-05-2005 CHEQUE LOAN RECEIVED 40000 -----DO----- FROM SHRI KRIPALDAS HEMWANIHUF [AAGHM8901B) 8 10-05-2005 CHEQUE LOAN RECEIVED 40000 -----DO----- BACK FROM SMT. SUNITA TOPANDAS [AIUPPOL19R] 9 10-05-2005 CHEQUE LOAN RECEIVED 40000 -----DO----- BACK FROM SMT. MUSKAN PANJWANI [ABAPH7620L] 10 10-05-2005 CHEQUE LOAN RECEIVED 160000 -----DO----- FROM SHRI HIRALAL PANJWANI [ADUPP 1149E] I) YOUR HONOUR, IN ORDER TO PROVE THE ABOVE STATED 11 10-05-2005 CHEQUE COMMISSION 60000 COMMISSION INCOME OF INCOME RS.1254001- SHOWN IN COMPUTATION OF INCOME 12 11-05-2005 CHEQUE LOAN RECEIVED 50000 LOAN WAS GIVEN TO SMT. BACK FROM SMT. SUNIT A TOPANSAS THROUGH SUNITA TOPANDAS ACCOUNT PAYEE CHEQUES IN (AIUPPOL19R) EARLIER YEARS 13 10-06-2005 CHEQUE LOAN RECEIVED 200000 GENUINENESS OF THE LOANS FROM NAJAKAT ALONG WITH DOCUMENTAR Y DRESSE S EVIDENCES WERE ESTABLISHED VIDE LETTER DATED 08-12- 2009 14 27-09-2005 CHEQUE LOAN RECEIVED 300000 -----DO----- FROM NAJAKAT DRESSE 15 02-03-2006 CHEQUE LOAN RECEIVED 300000 LOAN RECEIVED FROM FAMILY FROM SHRI NEERAJ MEMBER WHO HAS ALSO BEEN PANJWANI ASSESSED BY THE SAME AG. [ACLPPLI9ILJ LOAN CONFIRMATION LETTER WAS DULY FILED 16 28-03-2006 CHEQUE ------DO----- 200000 ------DO----- TOTAL 1858000 108 108 EXPLANATION, WE ARE SUBMITTING HEREWITH FOLLOWING DOCUMENTS, WHICH WERE ALSO FILED BEFORE THE LEARNED AO: I) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI NEERAJ PANJWANI [ANNEXURE A-6.01] [P.B PAGE NO. 25] II) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI HIRALAL PANJWANI [ANNEXURE A-6.02] [P.B. PAGE NO. 26] III) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SMT. CHANDNI PANJWANI [ANNEXURE A-6.03] [P.B. PAGE NO. 27] IV) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SMT. NITU PANJWANI [ANNEXURE A-6.04] [P.B. PAGE NO. 28] V) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI SHRICHAND LAXMANDAS HUF [ANNEXURE A-6.05] [P.B. PAGE NO. 29] VI) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI KRIPALDAS HEMWANI HUF [ANNEXURE A-6.06] [P.B. PAGE NO.30] 109 109 VII) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY M/S. NAZAKAT [ANNEXURE A-6.07] [P.B. PAGE NO. 31] VIII) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI LEKHRAJ HEMWANI (ANNEXURE A-6.08] PB PAGE NO.32] IX) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI ANIL RATHOD (ANNEXURE A-6.09] PB PAGE NO.33] X) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI VIKAS MOOLCHANDANI (ANNEXURE A- 6.10] PB PAGE NO.34] XI) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI RUPESH SHARMA (ANNEXURE A-6.11] PB PAGE NO.35] XII) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI GAURAV SHARMA (ANNEXURE A-6.12] PB PAGE NO.36] XIII) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN 110 110 BY SMT. POOJA BANSAL (ANNEXURE A-6.13] PB PAGE NO.37] XIV) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI SANJAY LALGE (ANNEXURE A-6.14] PB PAGE NO.38] XV) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI RAJENDRA NEEMA (ANNEXURE A-6.15] PB PAGE NO.39] XVI) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI JITENDRA GUPTA (ANNEXURE A-6.16] PB PAGE NO.40] IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, IT SHALL BE APPRECIATED BY YOUR HONOUR THAT THE APPELLANT HAS ESTABLISHED SOURCE OF DEPOSITS OF RS. 18,58, 000/- IN HIS BANK ACCOUNT AND THEREFORE, THE ADDITION SO MADE ON THIS COUNT, WITHOUT MAKING ANY APPLICATION OF THE MIND DESERVES TO BE DELETED IN TOTO. 5.3.1 DURING THE COURSE OF THE APPELLATE PROCEEDINGS, THE APPELLANT HAD FILED CERTAIN 111 111 ADDITIONAL EVIDENCES UNDER RULE 46A OF THE INCOME-TAX RULES, 1962 WITH AN EXPLANATION THAT SINCE THE APPELLANT WAS NOT GRANTED ANY OPPORTUNITY TO PROVE THE GENUINENESS OF CERTAIN LOANS, DEPOSITED IN THE BANK ACCOUNT, SUCH DOCUMENTS COULD NOT BE PRODUCED AT EARLIER STAGE. THE APPELLANT ALSO FURNISHED A COPY OF SUCH ADDITIONAL EVIDENCES BEFORE THE AO. THE AO SUBMITTED HIS REMAND REPORT DATED 28.7.2011 WHICH IS PLACED ON RECORD. CONSIDERING THE FACTS OF THE CASE, ADDITIONAL EVIDENCES FILED BY THE APPELLANT ARE ADMITTED. 5.3.2 THE CONTENTIONS OF THE APPELLANT ALONG WITH THE DOCUMENTARY EVIDENCES, ADDITIONAL EVIDENCES AND COUNTER COMMENTS OF THE AO, HAVE BEEN CONSIDERED CAREFULLY. THE APPELLANT HAS SUBSTANTIATED SOURCES OF VARIOUS CASH DEPOSITS IN HIS BANK ACCOUNT AGGREGATING TO RS. 1,98,000/- BY CLAIMING THAT HE HAD RAISED CASH LOANS AMOUNTING TO RS. 1,65,000/- FROM VARIOUS 112 112 PERSONS NAMELY, SHRI JITENDRA GUPTA (RS.10,000/-), SHRI RAJENDRA NEMA (RS.15,000/- ), SHRI SANJAY LALGE (RS.17,500/-), SMT. PUJA BANSAL (RS.18,000/-), SHRI GAURAV SHARMA (RS.18,000/-), SHRI RUPESH SHARMA (RS.18,0000/-), SHRI VIKAS MULCHANDANI (RS.18,000/-), SHRI ANIL RATHORE RS.17,500/-), SHRI LEKHRAJ HEMWANI (RS.15,000/-), SHRI SHRICHAND LAXMANDAS HUF (RS.18,OOO/-). IN EVIDENCE OF THE LOANS, THE APPELLANT HAD FURNISHED THE COPY OF INCOME-TAX RETURN AND ACKNOWLEDGEMENTS OF THE CREDITORS. THE APPELLANT HAD ALSO FURNISHED COPY OF CONFIRMATION LETTERS OF THE CREDITORS. ALL THE CREDITORS ARE ASSESSED TO INCOME-TAX. THE AO, IN HIS REMAND REPORT, DID NOT MAKE ANY ADVERSE COMMENT IN RESPECT OF THE DOCUMENTARY EVIDENCES FURNISHED BY THE APPELLANT IN SUPPORT OF THE CASH LOANS. THE AO HAS RAISED HIS OBJECTION IN RESPECT OF ONE LOAN OF RS.15,000/- FROM SHRI LEKHRAJ HEMWANI BY STATING THAT IN 113 113 HIS STATEMENT OF AFFAIRS, THE NAME OF THE APPELLANT IS NOT APPEARING. THE AO HAS FURTHER COMMENTED THAT THE COPY OF INCOME-TAX RETURNS, LETTERS OF CONFIRMATION DO PROVE THE EXISTENCE OF THE CREDITORS BUT NOT THE GENUINENESS OF TRANSACTIONS. THE OBSERVATIONS OF THE AO, ARE NOT SUSTAINABLE. AS FAR AS THE CASE OF SHRI LEKHRAJ HEMWANI IS CONCERNED, THE BALANCE-SHEET REFERRED TO BY THE AO PERTAINS TO 31.3.2003 WHEREAS THE TRANSACTION HAS TAKEN PLACE DURING THE FINANCIAL YEAR 2005-06 AND, THEREFORE, OBVIOUSLY, THE NAME OF THE APPELLANT COULD NOT BE EXPECTED IN SUCH BALANCE-SHEET. AS REGARD THE OTHER CREDITORS TOO, LOOKING TO THE SMALLNESS OF THE AMOUNT OF LOAN, LETTERS OF CONFIRMATION AND COPY OF INCOME-TAX RETURNS OF ALL THE CREDITORS, THE EXPLANATION OF THE APPELLANT DESERVES TO BE ACCEPTED. THERE IS SUCH CASH LOANS AS FULLY EXPLAINED AND, THEREFORE, THE CORRESPONDING BANK DEPOSITS TO THE EXTENT OF RS. 1,65,000/-IN CASH IS ALSO FOUND EXPLAINED. HOWEVER, FOR THE 114 114 REMAINING CASH DEPOSITS OF RS. 33,000/- (RS. 1,98,000/- - RS. 1,65,000/-) THE APPELLANT COULD NOT GIVE ANY SATISFACTORY EXPLANATION AND, THEREFORE, THE SAME IS UPHELD TO BE UNEXPLAINED. 5.3.3 AS REGARD THE REMAINING BANK DEPOSITS OF RS. 16,60,000/- MADE BY THE APPELLANT IN HIS BANKS THROUGH ACCOUNT PAYEE CHEQUES, THE APPELLANT HAS PRIMA-FACIE EXPLAINED THE SOURCES OF ALL THE DEPOSITS. OUT OF THE BANK DEPOSITS OF RS. 16,60,000/-, THE APPELLANT HAS CLAIMED TO HAVE MADE DEPOSITS OF RS. 16,00,000/- BY RAISING LOANS FROM VARIOUS PERSONS AND PARTIES THROUGH ACCOUNT PAYEE CHEQUES. THE APPELLANT HAS CLAIMED TO HAVE RAISED LOAN OF RS. 3,10,000/- FROM SHRI HIRALAL PANJWANI, RS. 40,000/- FROM SMT. CHANDNI PANJWANI, RS. 5,00,000/- FROM SHRI NEERAJ PANJWANI, RS. 40,000/- FROM SMT. NEETU PANJWANI, RS. 40,000/- FROM SMT. MUSKAN PANJWANI, RS.90,000/- FROM SMT, SUNITA TOPANDAS, RS. 115 115 40,000/- FROM SHRI SHRICHAND LAXMANDAS HUF, RS. 40,000/- FROM SHRI KRIPALDAS HEMWANI HUF AND RS. 5,00,000/- FROM M/S.NAZAKAT DRESSES. 5.3.4 THE APPELLANT HAS CLAIMED THAT OUT OF TOTAL LOAN OF RS. 16,00,000/-, HE HAD TAKEN LOANS AMOUNTING TO RS. 11,00,000/- FROM HIS OWN FAMILY MEMBERS, WHO ARE HAVING INDEPENDENT SOURCES OF INCOME AND SEPARATELY ASSESSED TO INCOME-TAX. IT HAS BEEN NOTICED THAT SIMULTANEOUS ASSESSMENT PROCEEDINGS WERE CARRIED OUT BY THE SAME AO FOR THE SAME PERIOD IN RESPECT OF MANY OF THE LOAN CREDITORS NAMELY, SHRI HIRALAL PANJWANI, SMT. CHANDNI PANJWANI, SMT. SUNITA TOPANDAS, SHRI NEERAJ PANJWANI AND SMT, MUSKAN PANJWANI. THE ASSESSMENT PROCEEDINGS FOR THREE CREDITORS, NAMELY, SMT. NEETU PANJWANI, SHRI SHRICHAND PANJWANI HUF AND SHRI KRIPALDAS PANJWANI HUF, WERE ALSO COMPLETED U/S 143(3)/147 OF THE ACT. THE TRANSACTIONS OF LOANS HAVE DULY BEEN CONFIRMED BY THE LOAN CREDITORS. ALL THE TRANSACTIONS HAVE TAKEN PLACE THROUGH ACCOUNT PAYEE CHEQUES ONLY. THE 116 116 SOURCES OF LOANS HAVE BEEN EXPLAINED BY THE LOAN CREDITORS IN THEIR RETURNS OF INCOME. 5.3.5 IN RESPECT OF THE ONLY ONE OUTSIDE LOAN BEING OF RS. 5,00,000/- FROM M/S. NAZAKAT DRESSES, THE APPELLANT HAS FURNISHED COPY OF LOAN CONFIRMATION LETTER OF THE CREDITOR AS WELL AS COPY OF ITS IT RE TURN. IN SUCH CIRCUMSTANCES, THERE IS NO MERIT IN THE AO' S ACTION IN HOLDING THE BANK DEPOSITS OF RS.16,00,000/-MADE BY THE APPELLANT OUT OF SUCH LOANS AS UNEXPLAINED. 5.3.6 IN RESPECT THE REMAINING BANK DEPOSIT OF RS.60,000/- MADE BY THE APPELLANT IN HIS BANKS THROUGH ACCOUNT PAYEE CHEQUE, THE APPELLANT HAS EXPLAINED THAT SUCH DEPOSIT WAS MADE BY HIM OUT OF HIS COMMISSION INCOME. THE APPELLANT HAS SHOWN INCOME FROM COMMISSION AT RS. 1,25,400/- IN THE RETURN OF INCOME AND, THEREFORE, THE EXPLANATION OF THE APPELLANT THAT SUCH COMMISSION INCOME INCLUDES THE BANK DEPOSIT OF RS. 60,000/-, HAS APPARENT MERIT. NO ADDITION OF RS. 60,000/- IS ALSO DELETED. 5.4 IN NUTSHELL, OUT OF TOTAL BANK DEPOSITS OF RS. 117 117 18,58,000/-, BANK DEPOSITS TO THE EXTENT OF RS. 18,25,000/- ARE FOUND EXPLAINED AND REMAINING BANK DEPOSITS TO THE EXTENT OF RS. 33,000/- ARE FOUND UNEXPLAINED AND TO THE EXTENT OF UNEXPLAINED DEPOSITS THE ACTION OF THE AO IS CONFIRMED AND BALANCE ADDITION IS DELETED. 42. AGAINST THE ABOVE ORDER OF CIT(A), BOTH ASSESSEE AN D REVENUE ARE BEFORE US. REVENUE IS AGGRIEVED FOR DE LETION OF ADDITION OF RS. 18,25,000/-,WHEREAS THE ASSESSEE IS AGGRIEVED FOR SUSTAINING ADDITION OF RS. 33,000/-. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED MATERIAL P LACED ON RECORD. DURING COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE HAS FILED ADDITIONAL EVIDENCE, WHICH WERE SENT BY T HE LD.CIT(A) FOR REMAND REPORT TO THE ASSESSING OFFICE R UNDER RULE 46A. THE ASSESSEE HAS ALSO FURNISHED SOURCE OF VARIOUS CASH DEPOSIT IN HIS BANK ACCOUNT AGGREGATING TO RS. 1,98,000/-. LOAN CONFIRMATION LETTER ALONGWITH INCO ME TAX ASSESSMENT ORDER OF LOAN CREDITOR WAS ALSO FILED. W ITH REGARD TO CASH DEPOSIT OF RS. 1,98,000/- IN THE BANK, THE CIT(A) FOUND THAT THE ASSESSEE HAS DULY EXPLAINED SOURCE O F CASH AT RS. 1,65,000/-. ACCORDINGLY, HE UPHELD ADDITION OF RS. 118 118 33,000/- AND DELETED ADDITION OF RS. 1,65,000/-. TH E FINDING RECORDED BY THE LD.CIT(A) IS AS PER MATERIAL ON REC ORD. ACCORDINGLY, NO INTERFERENCE IS REQUIRED IN THIS PA RT OF THE ORDER OF CIT(A) FOR DELETING AND UPHOLDING ADDITION OF RS. 1,65,000/- AND RS. 33,000/- RESPECTIVELY. 43. THE REMAINING DEPOSIT OF RS. 16.60 LAKHS IN THE BAN K ACCOUNT WAS THROUGH ACCOUNT PAYEE CHEQUE. MOST OF T HE LOAN HAS BEEN TAKEN BY THE ASSESSEE FROM HIS FAMILY MEMBERS. ALL OF WHOM WERE ASSESSED TO TAX AND CORRESPONDING TRANSACTIONS WERE ALSO APPEARING IN T HE RESPECTIVE BALANCE SHEET. THUS, THE LOAN OF RS. 11 LAKHS OUT OF TOTAL DEPOSIT OF RS. 16.60 LAKHS FROM THEIR OWN FAMILY MEMBERS HAVING INDEPENDENT SOURCE OF INCOME AND SEPARATELY ASSESSED TO INCOME TAX. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR DELET ING ADDITION OF RS. 11 LAKHS IN RESPECT OF LOAN RECEIVED FROM TH E FAMILY MEMBERS, WHICH WERE UTILIZED FOR DEPOSIT IN A SAVIN G BANK ACCOUNT. 44. IN RESPECT OF LOAN OF RS. 5 LAKHS RECEIVED FROM M/S . NAZAKAT DRESSES, THE LD. CIT(A) HAS DELETED THE ADD ITION MERELY BY STATING THAT COPY OF LOAN CONFIRMATION WA S FILED. 119 119 HOWEVER, NO COMMENT/FINDING HAS BEEN RECORDED WITH REGARD TO GENUINENESS OF THE LOAN TRANSACTION AS WE LL AS CREDITWORTHINESS OF THE LOAN CREDITOR. IN THE INTER EST OF JUSTICE, WE RESTORE THE ISSUE WITH REGARD TO LOAN O F RS. 5 LAKHS FROM M/S. NAZAKAT DRESSES TO THE FILE OF ASSE SSING OFFICER FOR DECIDING AFRESH AS PER LAW. NEEDLESS TO SAY, IN CASE OF LOAN CREDITOR NOT ONLY IDENTITY BUT ALSO GE NUINENESS OF LOAN TRANSACTION AS WELL AS ITS CREDITWORTHINESS OF LOAN CREDITOR IS REQUIRED TO BE ESTABLISHED BY THE ASSES SEE. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 45. IN THE RESULT, THE GROUND TAKEN BY THE ASSESSEE IS DISMISSED WHEREAS GROUND TAKEN BY THE REVENUE IS AL LOWED IN PART IN TERMS INDICATED ABOVE. 46. IN THE ASSESSMENT YEAR 2007-08, AN ADDITION OF RS. 28.68 LAKHS WAS MADE ON ACCOUNT OF SALE PROCEEDS OF LAND SITUATED AT 12, VINAY COLONY, INDORE, WHICH WAS CLA IMED TO HAVE RECEIVED BY THE ASSESSEE THROUGH GIFT ON 27.7. 2004, FROM SHRI CHEN SINGH MODI AND SHRI ANANDILAL BHURAD IA. BY THE IMPUGNED ORDER, THE CIT(A) DELETED THE ADDIT ION AFTER HAVING THE FOLLOWING OBSERVATIONS :- 4.2 GROUND NO. 2(A) & 2(B) ARE DIRECTED AGAINST 120 120 AO'S ACTION IN MAKING ADDITION OF RS. 28,60,000/-, ON ACCOUNT OF SALE PROCEEDS OF A LAND SITUATED AT 12, VINAY COLONY, INDORE, CLAIMED TO HAVE BEEN RECEIVED BY THE APPELLANT BY WAY OF GIFT ON 23-07- 2004 FROM SHRI CHAINSINGH MODI AND SHRI ANANDILAL B HURADIA UNDER REGISTERED GIFT DEED. 4.2.1 THE APPELLANT HAS SUBMITTED A COPY OF THE GIFT DEED EXECUTED ON 31-03-2004 THE TWO DONORS, JOINTLY IN HIS FAVOUR IN RESPECT OF THE SUBJECT LAND. THE GIFT DEED HAS BEEN FOUND REGISTERED WITH THE SUB-REGISTRAR OF THE P ROPERTY ON 23-07-2004. THE APPELLANT HAS ALSO FURNISHED COPY OF SALE AGREEMENT DATED 04-10- 2005 AND COPY OF POWER OF ATTORNEY IN RESPECT OF SALE OF THE SUBJECT LAND FOR RS. 28,60,000/-.THE APPELLANT FURTHER DEMONSTRATED THAT OUT OF THE TOTAL CONSIDERATION OF RS. 28,60,000/-, A SUM OF RS . 28,10,000/-WAS RECEIVED BY HIM THROUGH ACCOUNT PAYEE CHEQUES AND ONLY A SUM OF RS. 50,000/- 121 121 WAS RECEIVED BY HIM IN CASH. IT WAS SUBMITTED BY THE APPELLANT THAT THE ABOVE STATED DOCUMENTS WERE ALSO FOUND AND SEIZED DURING THE COURSE OF SEARCH OPERATIONS AND STATEMENT OF BROTHER OF THE APPELLANT, NAMELY OF SHRI NEERAJ PANJWANI, WAS RECORDED ON THE SUBJECT ISSUE AND DURING THE COURSE OF SEARCH OPERATIONS ITSELF, WHEREIN THE NATURE OF TRANSACTION WAS EXPLAINED. IT WAS FURTHER CONTENDED THAT DURING THE POST-SEARCH ENQUIRY, STATEMENTS OF DONORS WERE ALSO GOT RECORDED BY THE INVESTIGATION WING AND THEY RECONFIRMED TRANSACTION OF MAKING GIFT OF PLOT BY THEM TO THE APPELLANT, THE APPELLANT HAD MADE THE SIMILAR SUBMISSION BEFORE THE AO VIDE HIS SUBMISSION LETTER DATED 08-12-2009, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AND THE AO DID NOT CONTROVERT THE SUBMISSION. 4.2.2 THE WRITTEN SUBMISSIONS OF THE COUNSEL OF THE APPELLANT AS ALSO FINDING OF THE AO ON THE ISSUE ALONG WITH HIS REMAND REPORT, HAS BEEN TAKEN INTO CONSIDERATION VERY CAREFULLY. 122 122 CONSIDERING ALL THE FACTS AND CIRCUMSTANCES, THERE IS APPARENTLY NO MERIT IN AO'S ACTION IN HOLDING THE SALES PROCEEDS OF THE PLOT AT 12, VINAY NAGAR COLONY, INDORE, AS SHOWN IN THE RETURN AT RS. 28,60,000/-, AS UNDISCLOSED INCOME OF THE APPELLANT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION FOR REASONS DISCUSSED HEREUNDER. 4.2.3 THE APPELLANT HAS EMPHASIZED THAT THE IDENTITY OF BOTH THE DONORS IS ESTABLISHED FROM THE COPY OF THE GIFT-DEED ITSELF FOR THE REASON THAT FO R EXECUTING SUCH GIFT DEED, BOTH THE DONORS MUST HAVE GOT THEMSELVES APPEARED BEFORE THE SUB- REGISTRAR OF PROPERTY WHICH IS A GOVERNMENT AUTHORITY. THE GENUINENESS OF THE TRANSACTION IS PRIMA FACIE ESTABLISHED FROM THE COPY OF THE REGISTERED GIFT-DEED AS WELL AS FROM THE STATEMENTS MADE BY THE DONORS BEFORE THE INVESTIGATION WING. THE CREDITWORTHINESS OF THE DONORS, SO FAR IT RELAT ES TO THE PROPERTY UNDER GIFT, IS ESTABLISHED FOR THE SIMPLE REASON THAT IT IS NOT UNDER DISPUTE THAT BOT H THE DONORS WERE HOLDING SUCH PROPERTY SINCE (JR.) 123 123 22.11.1986, AS FOUND MENTIONED IN PARA 1 OF THE GIFT-DEED. 4.2.4 THE AO HAS NOTED THAT THE GIFT HAS BEEN CLAIMED TO HAVE MADE BY TWO ON-RELATIVE PERSONS. THE AR HAS SUBMITTED THAT IN THE ACT, THERE IS NO PROHIBITION THAT GIFT OF A PROPERTY CAN BE MADE TO A PERSON ONLY BY HIS RELATIVES. HE FURTHER SUBMITTED THAT THE PROVISIONS OF SECTION 56(2)(VII), AS INSERTED BY THE FINANCE ACT, 2009, ARE NOT RETROSPECTIVE AND, THEREFORE, THE SAME CANNOT BE MADE APPLICABLE TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THERE IS APPARENT SUBSTANCE IN THE FINDING OF THE AO THAT TWO NON-RELATIVES CANNOT MAKE A JOINT GIFT TO A THIRD PERSON, BUT MERELY ON THE BASIS OF SUSPICION ANY TRANSACTION, DULY SUPPORTED BY THE DOCUMENTARY EVIDENCES AND CONFIRMED BY THE PARTIES TO THE TRANSACTIONS, CANNOT BE DISREGARDED, WITHOUT BRINGING DEFINITE MATERIAL/FINDINGS ON RECORD. HOWEVER, THE OBSERVATION OF THE AO THAT THE COST FOR GETTING THE 124 124 GIFT-DEED REGISTERED WAS BORNE BY THE APPELLANT AND NOT BY THE DONOR IN ITSELF IS OF NO MERIT. IN A NY TRANSACTION OF TRANSFER OF PROPERTY, THE REGISTRATI ON COST CAN BE BORNE BY EITHER OF THE PARTIES AS MAY BE MUTUALLY AGREED BETWEEN THEM AND NORMALLY IT IS BORNE BY PURCHASER/ACQUIRER OF THE PROPERTY. 4.2.5 NEVERTHELESS, THE AO HAS COMMITTED A SERIOUS MISTAKE WHILE MAKING THE ADDITION ON THE SUBJECT ISSUE. THE AO HIMSELF HAS STATED THAT THE SUBJECT PROPERTY WAS CLAIMED TO HAVE BEEN RECEIVED BY WAY OF GIFT BY THE APPELLANT DURING THE ASSESSMENT YEAR 2004-05 AND THAT TOO BY A REGISTERED DEED, THEREFORE, IF FOR ANY REASON, AO WAS OF THE VIEW TH AT THE SAID GIRT WAS A MANAGED. AFFAIR OF THE APPELLAN T, THEN ANY ADDITION ON THIS COUNT COULD HAVE BEEN SEE N AND SHOULD HAVE BEEN MADE FOR THE ASSESSMENT YEAR 2004-05 ONLY AND NOT IN ANY OTHER ASSESSMENT YEAR. THE APPELLANT MUST HAVE PASSED ON THE CONSIDERATION FOR MANAGING THE SAID GIFT ONLY DURING THE ASSESSME NT YEAR 2004-05 AND NOT IN THE YEAR IN WHICH HE SOLD T HE 125 125 GIFTED PROPERTY, I.E. THREE YEARS LATER. 4.2.6 IN VIEW OF THE ABOVE FINDINGS, THE LONG TERM CAPITAL GAIN OF RS. 24,24,366/- SHOWN BY THE APPELLANT IN HIS RETURN OF INCOME ON ACCOUNT OF SAL E OF THE SUBJECT PLOT, DESERVES TO BE ACCEPTED AND, ACCORDINGLY, THE ENTIRE ADDITION MADE BY THE AO ON THIS COUNT, IS DELETED. BOTH GROUND 2(A) & 2(B) ARE ACCORDINGLY ALLOWED. 47. AGAINST THE ABOVE DELETION BY THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 48. WE HAVE GONE THROUGH MATERIAL PLACED ON RECORD AND FOUND THAT ADDITION OF RS. 28.50 LAKHS WAS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT YEAR 2007-08 IN RESPECT OF SALE PROCEEDS OF LAND SITUATED AT VINAY COLONY, INDORE. IT WAS CLAIMED BY THE ASSESSEE THAT THIS LAND WAS RECE IVED BY WAY OF GIFT ON 23.7.2004 FROM SHRI CHEN SINGH MODI AND SHRI ANANDILAL BHURADIA UNDER A REGISTERED GIFT DEE D. THESE DOCUMENTS WERE ALSO FOUND DURING COURSE OF SE ARCH AS PER THE FINDINGS RECORDED BY THE LD.CIT(A). THE CIT(A) AFTER CALLING A REMAND REPORT HELD THAT IT WAS A GE NUINE GIFT 126 126 AND THE SALE PROCEEDS OF THE GIFTED LAND WAS DEPOSI TED IN THE ASSESSEES BANK ACCOUNT. ACCORDINGLY, THE CAPITAL G AIN ON SALE OF SUCH GIFT CANNOT BE ADDED IN THE ASSESSEES HANDS. THE DETAILED FINDING RECORDED AT PARA 4.2 HAS NOT B EEN CONTROVERTED BY THE DEPARTMENT, ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDING RECORDED BY THE LD.CIT(A) RESULTING INTO DELETION OF ADDITION OF RS . 28.68 LAKHS. 49. ADDITION OF RS. 70.90 LAKHS WAS MADE ON ACCOUNT OF UNEXPLAINED DEPOSIT. 50. BY THE IMPUGNED ORDER, THE LD. CIT(A) DELETED ADDIT ION OF RS. 68,54,900/- AND RETAINED ADDITION OF RS. 2,3 5,100/- AFTER HAVING THE FOLLOWING OBSERVATIONS :- 4.3 NOW COMING TO GROUND NO. 3(A) TO 3(E) RAISING VARIOUS FACETS AND ARGUMENTS AGAINST AO'S APPROACH ON CONSIDERING THE AMOUNT OF RS. 70,90,000/- AS UNEXPLAINED DEPOSITS. THESE GROUNDS ARE CONSIDERED TOGETHER. ON EXAMINING THE AO'S FINDING IN THIS BEH ALF AS CONTAINED IN THE ASSESSMENT ORDER, IT EMERGES TH AT THE AO HAS TAKEN NOTE OF THE POST SEARCH ENQUIRY CONDUCTED BY INVESTIGATION WING THERE WAS NO 127 127 COMPLIANCE ON THE PART OF THE REPRESENTATIVE OF THE SEARCH GROUP IN FURNISHING ADEQUATE DETAILS RELATIN G TO BANK DEPOSITS. THEREFORE, THE AO DIRECTED THE APPELLANT TO EXPLAIN THE DEPOSITS IN BANK ACCOUNTS WITH HSBC BANK AND BANK OF BARODA. THE APPELLANT FILED COPY OF BANK ACCOUNTS AND SUMMARY OF BANK ACCOUNTS GIVEN IN THE COMPUTATION OF INCOME WHICH EXPLAIN SOURCE OF SUCH TRANSACTIONS IN BANK ACCOUNT S. THE APPELLANT ALSO FURNISHED SEPARATE COPY OF STATEMENTS SHOWING DATE WISE DETAILS OF TRANSACTION S IN HIS TWO BANK ACCOUNTS. 4.3.1 THE AO HOWEVER, SUMMARILY REJECTED SUCH EXPLANATION WITH THE FOLLOWING FINDING WITH VARIATI ON OF AMOUNTS IN ALL THE ASSESSMENT YEARS IN THE APPEAL. ' THE EXPLANATION NOW PUTFORTH BY THE ASSESSEE, AS ABOVE, CAN NOT BE TREATED AS SATISFACTORY. THE PANJWANI FAMILY IS ENGAGED IN THE INVESTMENT IN THE REAL ESTATES FOR THE LAST SEVERAL YEARS AND WAS NOT DECLARING ANY INCOME AND INSPITE OF GIVING SEVERAL OPPORTUNITIES BY THE ADIT 128 128 (INV.), INDORE, ASSESSEE NEVER EXPLAINED THESE DEPOSITS. THE EXPLANATION NOW OFFERED BY THE ASSESSEE IS NOTHING BUT AN AFTER THOUGHT. THE ASSESSEE HAS ALSO NOT SUBSTANTIATED THE EXPLANATIONS WITH PROPER AND CONVINCING EVIDENCE. 4.3.2 THE VARIOUS CONTENTIONS OF THE APPELLANT IN THIS BEHALF IN WHICH VARIOUS SERIOUS ISSUES HAVE BEEN RAISED REQUIRES DETAILED DELIBERATIONS. THE APPELLANT HAS RAISED A VERY SERIOUS OBJECTION THAT THE AO MADE THIS ADDITION WITHOUT APPLICATION OF HIS OWN MIND ON THE BASIS OF POST SEARCH ENQUIRIES CONDUCTED' BY INVESTIGATION WING AND THUS SUCH ADDITION WAS MADE AT THE DICTATE OF THE INVESTIGATION WING WITHOUT THERE BEING ANY INDEPENDENT EXAMINATION AND APPLICATION OF MIND AND DISCRETION ON THE PART OF AO. IT IS ALSO CHALLENGED BY WAY OF SUB-GROUND 3(C) THAT SUCH ADDITION SERIOUSLY VIOLATED THE PRINCIPLES OF NATURAL JUSTICE AS THE AO HAS MADE SUCH ADDITION WITHOUT RECORDING ANY WORTHWHILE 129 129 REASON FOR MAKING SUCH ADDITION MUCH LESS THAN OF ASSIGNING ANY SPECIFIC REASON FOR REJECTING THE EXPLANATION OFFERED IN THIS BEHALF. GROUND 3(D) IS AGAIN TECHNICAL IN NATURE TO THE EFFECT THAT NO ADDITION UNDER SECTION 68 CAN BE MADE IN RESPECT OF BANK DEPOSITS. 4.3.3 IT HAS TO BE NECESSARILY HELD ON EXAMINATION OF THE FINDING RECORDED BY AO IN THE ASSESSMENT YEAR UNDER CONSIDERATION THAT THE AO HAS FAILED TO RECORD ANY FINDING AS TO HOW SUCH DEPOSITS IN BANK ACCOUNTS WERE LIABLE TO BE TREATED AS UNEXPLAINED. THUS, THE APPROACH OF AO IN MAKING SUCH ADDITION WITHOUT CONSIDERING CONTENTIONS OF APPELLANT AND IN SUMMARILY REJECTING SUCH CONTENTIONS AND MAKING SUCH ADDITION STRENGTHEN TO THE APPELLANTS CONTENTION THAT SUCH ADDITION WERE MADE ON THE BASIS OF ENQUIRY REPORT PREPARED BY INVESTIGATION WING IN APPRAISAL REPORT. THE AO FAILED TO APPRECIATE THAT EVEN IF FOR ANY REASON NO COMPLIANCE WAS MADE OR NO DETAILS OR DOCUMENTS WERE FURNISHED IN 130 130 POST SEARCH ENQUIRY BEFORE INVESTIGATION WING THE APPELLANT COULD NOT BE PREVENTED IN LAW IN OFFERING PROPER DETAILS AND DOCUMENTS IN SUPPORT OF SUCH TRANSACTIONS IN COURSE OF ASSESSMENT PROCEEDINGS. THE AO WAS DUTY BOUND IN 1AW TO EXAMINE SUCH FINDINGS WITHOUT BEING GUIDED BY THE FACT THAT WHY SUCH EXPLANATION WAS NOT GIVEN BEFORE INVESTIGATION WING AND WAS REQUIRED TO GIVE A DEFINITE FINDING BY APPLYING HIS MIND AND DISCUSSION BUT THE SAME HAS NOT BEEN DONE. SUCH ADDITION HAS TO BE ACCORDINGLY NECESSARILY HELD TO BE ARBITRARY IN NATURE. THUS THERE IS A MERIT IN GROUNDS 3(B) AND 3(C) RAISED BY APPELLANT IN THIS BEHALF. 4.3.4 NOW CORNING TO THE SPECIFIC FACTS SURROUNDING SUCH TRANSACTIONS, 'THE SAME ARE FOUND TO BE EXPLAINED IN DETAIL IN LIGHT OF SUBMISSIONS ON GROUND 3(E). THE APPELLANT HAS MADE A VERY DETAILED EXPLANATION ALONG WITH TILE DOCUMENTARY EVIDENCES TO EXPLAIN THE SOURCES OF VARIOUS BANK DEPOSITS. IT WOULD BE 131 131 USEFUL TO REPRODUCE THE EXPLANATION OF THE APPELLANT AS UNDER: 'IN THIS CONTEXT, BEFORE DELVING THE ISSUE, WE WISH TO SUBMIT COPY OF BANK STATEMENT OF THE APPELLANT, FOR (HE RELEVANT PERIOD, IN RESPECT OF THE BANK ACCOUNT MAINTAINED BY HIM WITH BANK OF BARODA [ANNEXURE A-5. GO] [PAGE NO. 42 & 43). SUCH BANK STATEMENT WAS ALSO FURNISHED BY THE APPELLANT BEFORE THE LEARNED AO (ALONG WITH HIS SUBMISSION LETTER DATED 14- 10-2009 [KINDLY REFER PAGE NO. 23 OF THE PAPER BOOK). IT SHALL BE APPRECIATED BY YOUR HONOUR THAT ALTHOUGH A SUMMARY OF THE BONK TRANSACTIONS WAS DULY FURNISHED BY THE APPELLANT IN THE COMPUTATION OF TOTAL INCOME ACCOMPANYING THE RETURN OF INCOME ITSELF [KINDLY REFER PAGE NO. 17 0F THE PAPER BOOK ] BUT IN ORDER TO EXPLAIN THE NATURE AND DETAILS OF EACH AND EVERY TRANSACTION, DATE BY DATE, THE APPELLANT HAD FURTHER SUBMITTED 132 132 SEPARATE STATEMENT ALONG WITH HIS SUBMISSION LETTER 14-10-2009. SUCH STATEMENTS ARE BEING SUBMITTED HEREWITH FOR KIND PERUSAL AND RECORD OF YOUR HONOUR, AS ANNEXURE 11-6.0U [PE PAGE NO. 44]. YOUR HONOUR, THE LEARNED AO HAS MADE ADDITION OF RS. 21,46,000/-, ON ACCOUNT OF ALLEGED UNEXPLAINED DEPOSITS IN HIS SAVING BANK ACCOUNT WITH BANK OF BARODA. OUT OF SUCH DEPOSITS OF RS. 21,46, 000/-, DEPOSITS OF RS. 7,46,000/- WERE MADE IN CASH AND REMAINING DEPOSITS OF RS. 19,00,000/- WERE MADE THROUGH ACCOUNT PAYEE CHEQUES/DRAFTS. THE EXPLANATION OF THE APPELLANT REGARDING SOURCES OF' SUCH DEPOSITS, AS TENDERED BEFORE THE LEARNED AO TOO, IS AS UNDER : S.NO. DATE MODE OF DEPOSIT SOURCE OF DEPOSIT AMOUNT REMARKS 1. 17.05.2004 CHEQUE LOAN RECEIVED FROM SMT. KAVITA PANJWANI [AIGPP2788LJ 150000 LOAN CONFIRMATION LETTER ENCLOSED 2. 17.05 .2004 CHEQUE LOAN RECEIVED FROM SHRI SHRICHAND PANJWANI ADUPPI148F 40000 - DO - 3. 17.05.2004 CHEQUE LOAN RECEIVED FROM SHRI JIRALAL PANJWANI [ADUPPI149E) 40000 - DO - 4. 17.05.2004 CHEQUE LOAN RECEIVED FROM SMT. CHANDNI PANJWANI [AHLPP7275N) 20000 - DO - 5. 17.05.2004 CHEQUE LOAN RECEIVED FROM SHRI KRIPALDAS PANJWANI [AAGPJ-I9810F) 25000 - DO - 6. 17.05.2004 CHEQUE LOAN RECEIVEDFRONT SMT. SUNITA TOPANDAS [ALUPPOI19R) 75000 - DO - 133 133 7. 17.05.2004 CHEQUE LOAN RECEIVED FROM SMT. CHANDNI PANJWANI [AHUPP7275N) 5000 0 - DO - 8. 17.05.2004 CHEQUE LOAN RECEIVED FROM SHRI NEERAJ PANJWANI ACLPPI191L) 50000 - DO - 9. 18.05.2004 CHEQUE LOAN RECEIVED FROM SMT, NEETU PANJWANI ABPPP2990N 200000 - DO - 10. 18 - 05 - 2004 CHEQUE LOAN RECEIVED FROM SMT. KAVITA PANJWANI[AIGPP2788L] 50000 - DO - 11. 24.05.2004 CHEQUE LOAN RECEIVED FROM SMT.KAVITA PANJWANI[AIGPP2788L] 100000 - DO - 12. 20.07.2004 CHEQUE AMOUNT REFUND FROM ANAND GRAH NIRMAN SAHKARI SANSTHA 400000 CHEQUE OF RS. 4 LAKHS WAS GIVEN ON 8.6.04 OUT OF SAME BANK 13 15.09.2004 CASH OUT OF CASH WITHDRAWALS FROM BANK OF BARODA MADE ON 21.7.2004 & 6.8.2004 49000 REFER BANK STATEMENT AS ANNEXURE A-1- .02 14 16.09.2004 CASH -DO- 49000 - DO - 15 23.09.2004 CASH -DO- 49000 - DO - 16 24.09.2004 CASH -DO- 49000 - DO - 17 28.09.2004 CASH -DO- 1000 00 - DO - 18 29.09.2004 CASH -DO- 50000 - DO - 19 1.10.2004 CASH -DO- 50000 - DO - 20 5.10.2004 CASH -DO- 50000 - DO - 21 7.10.2004 CASH -DO- 50000 - DO - 22 29.12.2004 CASH -DO- 50000 - DO - 23 5.01.2005 CASH -DO- 50000 - DO - 24 07.1.2005 CASH -DO- 100000 - DO - 25 18.03.2005 CASH -DO- 50000 - DO - 26 24.03.2005 C HEQUE LOAN RECEIVED BACK FROM SHRI INDER KOHLI 200000 - DO - LOAN GIVEN ON 18.1.2005 TOTAL 2146000 YOUR HONOUR, IN ORDER TO PROVE THE ABOVE STATED EXP LANATION, WE ARE SUBMITTING HEREWITH FOLLOWING DOCUMENTS, WHICH WERE ALSO FILED BEFORE THE LD. ASSESSING OFFICER : I) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SMT. KAVITA PANJWANI [ANNEXURE A-7.01 [PB PAGE NO. 45] II) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI SHRICHAND PANJWANI [ANNEXURE A-7.02] [PB PAGE NO. 134 134 46] III) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI HIRALAL PANJWANI [ANNEXURE A-7.03] [PB PAGE NO. -I7 1 IV) COPY OF LOAN CONFIRMATION LETTER DILLY GIVEN BY SNIT. CHANDNI PANJWANI [ANNEXURE A-7.0-/] [PB PAGE NO. -18] V) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI KRIPALDAS PANJWANI [ANNEXURE A-7.057 [PB PAGE NO. 49] VI) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SMT. NITU PANJWANI [ANNEXURE A-7.06 [PB PAGE NO. 50] IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, IT SHALL BE APPRECIATED BY YOUR HONOUR THAT THE APPELL ANT HAD ESTABLISHED SOURCE OF DEPOSITS OF RS. 21,46, 000/- IN HIS BANK ACCOUNT AND THEREFORE, THE ADDITION SO MAD E ON THIS COUNT, WITHOUT MAKING ANY APPLICATION OF TH E MIND DESERVES TO BE DELETED IN TOTO. ' 4.3.5 THE CONTENTIONS OF THE APPELLANT ALONG WITH THE DOCUMENTARY EVIDENCES, ADDITIONAL EVIDENCES 135 135 AND COUNTER COMMENTS OF THE AO, HAVE BEEN CONSIDERED CAREFULLY. THE APPELLANT HAS EXPLAINED SOURCES OF VARIOUS CASH DEPOSITS IN HIS BANK ACCOUNT WITH HSBC BANK AGGREGATING TO RS. 3,40,000/- BY CLAIMING THAT HE HAD MADE CASH DEPOSITS PARTIALLY OUT OF ADVANCE RECEIVED AGAINST THE SALE OF A PROPERTY SITUATED AT CM-L, VASANT VIHAR COLONY, NIRANJANPUR, INDORE AND PARTIALLY OUT OF THE COMMISSION INCOME AND RENTAL INCOME FOR THE YEAR UNDER CONSIDERATION SHOWN IN THE RETURN OF INCOME. THE APPELLANT HAD SOLD SUCH PROPERTY FOR A CONSIDERATION OF RS. 48,00,000/- AND CAPITAL GAIN ON SALE OF SUCH PROPERTY WAS DULY SHOWN IN HIS RETURN OF INCOME FOR A Y 2008-09 AND THE AO HAS ACCEPTED SUCH GAIN WHILE PASSING THE ASSESSMENT ORDER FOR A Y 2008-09. THE APPELLANT FILED A COPY OF THE SALE- AGREEMENT IN SUPPORT OF HIS SUBMISSION. 4.3.6. THE APPELLANT HAS MADE CASH DEPOSITS OF RS.5,100/-ON 04.07.2006, 45,000/- ON 136 136 11.08.2006, RS. 45,000/- ON 12.08.2006, RS. 50,000/- ON 1.01.2007 AND RS. 2,00,000/- ON 20.03.2007 AGGREGATING TO RS.3,45,100/- IN HIS HSBC ACCOUNT. HOWEVER, ON A PERUSAL OF THE COPY OF THE AGREEMENT, IT HAS BEEN NOTICED THAT THE CASH AMOUNTING TO RS. AND RS. 2,00,000/- RESPECTIVELY HAS BEEN RECEIVED 1,OO,OOO/- BY THE APPELLANT ONLY ON 12.03.20{)7 AND 29.03.2007 AND, THEREFORE, THE SUBMISSION OF THE APPELLANT ON THIS COUNT IS NOT FULLY ACCEPTABLE. FROM THE CASH RECEIVED AGAINST THE SALE OF PROPERTY, THE APPELLANT COULD HAVE UTILIZED ONLY A SUM OF RS. 1,OO,OOO/- WHICH WAS RECEIVED BY HIM ON 12.03.2007 AND THE SAME CAN BE PRESUMED TO HAVE BEEN UTILIZED FOR MAKING DEPOSIT ON 20.03.2007 . OUT OF THE RENTAL INCOME AND COMMISSION. INCOME AGGREGATING TO RS. 60,000/- , AGAIN AFTER TAKING INTO ACCOUNT WITHDRAWALS, INCOME-TAX AND PROPERTY TAX PAYMENT OF RS. 30,366/-, RS. 4,912/- AND RS. 4,500/- RESPECTIVELY, AS SHOWN BY THE APPELLANT HIMSELF IN HIS 137 137 COMPUTATION OF INCOME, THE APPELLANT COULD HAVE BEEN IN A POSITION TO DEPOSIT A SUM OF RS. 10,000/- ONLY. THUS, OUT OF THE TOTAL CASH DEPOSITS OF RS. 3,45,100/-, MADE BY THE APPELLANT FROM TIME TO TIME IN HIS HSBC ACCOUNT, ONLY A SUM OF RS. 1,10,000/- CAN BE CONSIDERED AS EXPLAINED AND REMAINING SUM OF RS. 2,35,100/- HAS TO BE CONSIDERED AS UNEXPLAINED ONLY AND TO SUCH EXTENT, THE ACTION OF THE ASSESSING OFFICER IS UPHELD. 4.3.7 AS REGARD THE REMAINING BANK DEPOSITS OF RS. 68,50,000/- MADE BY THE APPELLANT IN HIS HSBC BANK THROUGH ACCOUNT PAYEE CHEQUES, THE APPELLANT HAS PRIMA-FACIE EXPLAINED THE SOURCES OF ALL THE DEPOSITS. OUT OF THE BANK DEPOSITS OF RS. 68,50,000/-, THE APPELLANT HAS CLAIMED TO HAVE MADE DEPOSITS OF R 3,50,000/-, RS.2,50,000/-, RS.1,00,000/- AND RS.2,50,000/- THUS AGGREGATING TO RS.9,50,000/- OUT OF THE LOANS TAKEN FROM HIS OWN FAMILY MEMBERS, WHO ARE HAVING INDEPENDENT 138 138 SOURCES OF INCOME AND SEPARATELY ASSESSED TO INCOME-TAX. THE APPELLANT HAS CLAIMED RECEIPT OF RS.3,50,000/- BY WAY OF LOAN FROM SMT. MUSKAN PANJWANI, RS.2,50,000/- FROM SMT. NEETU PANJWANI, RS.1,00,000/- FROM SHRI HIRALAL PANJWANI AND RS.2,50,000/- FROM SHRI NEERAJ PANJWANI. IT HAS BEEN NOTICED THAT SIMULTANEOUS ASSESSMENT PROCEEDINGS WERE CARRIED OUT BY THE SAME ASSESSING OFFICER FOR THE SAME PERIOD IN RESPECT OF THREE OF THE ABOVE NAMED LOAN CREDITORS VIZ., SMT. MUSKAN PANJWANI, SHRI HIRALAL PANJWANI AND SHRI NEERAJ PANJWANI. THE ASSESSMENT PROCEEDINGS FOR REMAINING ONE CREDITOR, NAMELY, SMT. NEETU PANJWANI WAS ALSO COMPLETED U/S 143(3)/147 OF THE ACT. THE TRANSACTIONS OF LOANS HAVE DULY BEEN CONFIRMED BY ~ THE LOAN CREDITORS. ALL THE TRANSACTIONS HAVE TAKEN PLACE THROUGH ACCOUNT PAYEE CHEQUES ONLY. THE SOURCES OF LOANS HAVE BEEN EXPLAINED BY THE LOAN CREDITORS IN THEIR 139 139 RETURNS OF INCOME. IN SUCH CIRCUMSTANCES, THERE IS NO MERIT IN THE AO'S ACTION IN HOLDING THE ABOVE STATED BANK DEPOSITS AGGREGATING TO RS.9,50,000/- MADE BY THE APPELLANT OUT OF SUCH LOANS AS UNEXPLAINED. ACCORDINGLY, THE SAME IS HEREBY DELETED. 4.3.8 THE EXPLANATION OF THE APPELLANT FOR THE DEPOSIT OF RS. 6,00,000/- AND RS. 5,00,000/- RESPECTIVELY ON 29.03.2007 AND 30.03.2007, IS VERIFIABLE FROM THE COPY OF THE SALE AGREEMENT IN RESPECT OF PLOT AT VASANT VIHAR AS REFERRED TO IN EARLIER PARA. IT HAS BEEN OBSERVED THAT THE PURCHASER OF THE PLOT HAD ISSUED TWO CHEQUES OF RS. 6,00,000/- AND RS. 5,00,000/- IN FAVOUR OF THE APPELLANT RESPECTIVELY ON 29.03.2007 AND 30.03.2007. THUS, THE BANK DEPOSITS AGGREGATING TO RS. 11,00,000/- MADE BY THE APPELLANT AS AFORESAID, IS FOUND EXPLAINED. THE SAME IS ALSO HEREBY DELETED. V) 4.3.9 AS REGARD THE SOURCE OF DEPOSIT OF 140 140 RS.48,00,000/- MADE BY THE APPELLANT WITH HSBC BANK ON VARIOUS DATES SUCH AS ON 18.08.2006 (RS. 8,00,000/-), 02.11.2006 (RS. 20,00,000/-) 06.11.2006, (RS. 10 ,00,000/-) 12.12.2006, (RS. 5,00,000/-) AND 18.12.2006 (RS. 5,00,000/-), THE APPELLANT HAS EXPLAINED THAT SUCH SUM WAS RECEIVED BY HIM BY WAY OF LOAN, THROUGH ACCOUNT PAYEE CHEQUE FROM SOME MIS. SHREYANSH TRADING AND REAL ESTATE PVT.LTD., 182, JANKI NAGAR EXTN., INDORE. THE APPELLANT SUBMITTED THAT THE LOAN CREDITOR IS SEPARATELY ASSESSED TO INCOME-TAX WITH THE ITO-5(1), INDORE UNDER PAN- AAKCS6781R. IN ORDER TO ESTABLISH, THE GENUINENESS OF THE TRANSACTIONS, THE APPELLANT HAS FURNISHED LETTER OF CONFIRMATION DULY GIVEN BY THE LOAN CREDITOR. THE APPELLANT IN ORDER TO ESTABLISH THE CREDITWORTHINES S OF M/S. SHREYANSH TRADING AND REAL ESTATE PVT. LTD. ALSO FURNISHED COPY OF BANK ACCOUNT OF THE CREDITOR WITH STATE BANK OF INDORE, PALSIKAR COLONY BRANCH, INDORE FOR THE RELEVANT PERIOD. THE APPELLANT CLAIMED THAT HE HAD RECEIVED THE ENTIRE 141 141 SUM OF RS. 48,00,000/- THROUGH VARIOUS CHEQUES DRAWN BY M/S. SHREYANSH TRADING AND REAL ESTATE PVT. LTD AND SUCH CHEQUES GOT CLEARED FROM THE BANK ACCOUNT OF M/S. SHREYANSH TRADING AND REAL ESTATE PVT. LTD AND THE CREDITS FOR SUCH CHEQUES WERE DULY GIVEN TO THE APPELLANT BY HIS BANKER. FROM A PERUSAL OF THE COPY OF THE BANK STATEMENTS OF MIS. SHREYANSH TRADING AND REAL ESTATE PVT. LTD AND OF THE APPELLANT, IT HAS BEEN NOTICED THAT ALL THE CHEQUES ARE APPEARING IN BOTH THE STATEMENTS I.E. BANK STATEMENT OF THE LOAN CREDITOR AND BANK STATEMENT OF THE APPELLANT. 'OUT OF THE LOANS OF RS . 48,00,000/- TAKEN BY THE APPELLANT FROM TIME TO TIME, HE HAD REPAID LOAN TO THE EXTENT OF RS. 27,00,000/-ON 28.10.2006 AND 19.03.2007 AND AT THE END OF THE YEAR, THE APPELLANT WAS OWING A SUM OF RS. 21,00,000/- TO ABOVE NAMED COMPANY. THE ASSESSING OFFICERS COMMENT IN REMAND REPORT TO THE EFFECT THAT THE CREDITOR COMPANY HAD SHOWN HUGE SHARE PREMIUM WITHOUT ANY 142 142 PROFIT COULD BE A MATTER OF INVESTIGATION SO FAR AS THE AFFAIRS OF THE COMPANY ARE CONCERNED BUT SUCH FACTOR ALONE CANNOT BE VIEWED CONCLUSIVELY FOR NOT ACCEPTING THE LOAN TRANSACTIONS OF THE APPELLANT WITH THE SAID COMPANY. SINCE, THE APPELLANT HAS PRIMA FACIE ESTABLISHED AL L THE THREE INGREDIENTS I.E. IDENTITY OF THE CREDITO R, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR, THERE IS NO REASON FOR NOT ACCEPTING THE RECEIPT OF LOAN OF RS. 48,00,000/- AS CLAIMED BY THE APPELLANT, AS GENUINE. THE A.O. IS DIRECTED ACCORDINGLY. 4.3.10 IN VIEW OF THE ABOVE FINDINGS, OUT OF THE TOTAL ADDITIONS OF RS. 70,90,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED BANK DEPOSITS, BANK DEPOSITS TO THE EXTENT OF RS. 2,35,100/- IS FOUND UNEXPLAINED AND THE REMAINING DEPOSITS OF RS. 68,54,900/- IS HELD TO BE EXPLAINED. ACCORDINGLY, THE ADDITION MADE BY THE AO IS CONFIRMED TO THE EXTENT OF RS. 2,35,100/- ONLY 143 143 AND THE REMAINING ADDITION OF RS. 68,54,900/- IS DELETED. ACCORDINGLY, GROUND NO.3(A) TO 3(E) OF THE APPELLANT ARE DISPOSED AS DISCUSSED ABOVE . 51. AGAINST THE ABOVE ORDER, BOTH THE ASSESSEE AND REVENUE ARE IN APPEAL BEFORE US. AN ADDITION OF RS. 70.90 LAKHS WAS MADE ON ACCOUNT OF UNEXPLAINED DEPOSIT. B Y THE IMPUGNED ORDER, THE CIT(A) DELETED ADDITION OF RS. 68,54,900/- AND RETAINED ADDITION OF RS. 2,35,100/- AFTER RECORDING THE FINDINGS AS QUOTED ABOVE. FROM THE RE CORD, WE FOUND THAT ADDITION OF RS. 21,46,000/- WAS MADE ON ACCOUNT OF ALLEGED UNEXPLAINED DEPOSIT IN HIS BANK ACCOUNT WITH BANK OF BARODA. OUT OF SUCH DEPOSIT, A SUM OF RS. 7.46 LAKHS WAS MADE IN CASH AND REMAINING DEPOSIT OF RS. 19 LAKHS WAS THROUGH ACCOUNT PAYEE CHEQUE/DRAFT. THE ASSESSEE HAS FURNISHED DETAILED CHART BEFORE THE AS SESSING OFFICER INDICATING RECEIPT OF CASH AND CHEQUE FROM VARIOUS PERSONS AMOUNTING TO RS. 21.46 LAKHS, WHICH WAS UTI LIZED FOR DEPOSIT IN THE BANK. THE CIT(A) HAS EXAMINED AN D GIVEN FINDING IN RESPECT OF EACH AND EVERY LOAN CREDITOR AND AFTER RECORDING HIS FINDING THAT THEIR CREDITWORTHINESS A ND GENUINENESS OF LOAN TRANSACTION IS WELL ESTABLISHED , HE 144 144 DELETED THE ADDITION. WE FOUND THAT AFTER EXAMINING THE LOAN CONFIRMATION LETTER, PAN ACCOUNT AND OTHER DETAILS FILED BY THE ASSESSEE, THE LD. CIT(A) HAS DELETED ADDITION O F RS. 21.46 LAKHS, NO INTERFERENCE IS REQUIRED IN THIS PART OF THE ORDER OF THE CIT(A). 52. WE FOUND THAT CHEQUE OF RS. 3.50 LAKHS, RS. 2. 50 LAKHS, RS. 1 LAKH, RS. 2.50 LAKHS AGGREGATING TO RS . 9.50 LAKHS WAS RECEIVED BY THE ASSESSEE FROM HIS OWN FAM ILY MEMBERS HAVING INDEPENDENT SOURCE OF INCOME AND SEPARATELY ASSESSED TO TAX. A SUM OF RS. 3.50 LAKHS WAS RECEIVED AS LOAN FROM SMT. MUSKAN PANJWANI, RS. 2.5 0 LAKHS FROM NEETU PANJWANI, RS. 1 LAKH FROM HIRALAL PANJWANI AND RS. 2.50 LAKHS FROM NEERAJ PANJWANI. A LL THESE LOAN TRANSACTIONS HAVE BEEN COUNTER-VERIFIED BY THE LD.CIT(A) IN THE RESPECTIVE ORDER OF OTHER FAMILY MEMBERS. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY FOR SUCH DELETION OF ADDITION IN RESPECT OF LOAN RECEIVED FROM FAMILY TH ROUGH ACCOUNT PAYEE CHEQUE. 53. WITH REGARD TO DEPOSIT OF RS. 48 LAKHS IN HSBC BANK ON VARIOUS DATES, THE ASSESSEE HAS DULY EXPLAINED T HE SOURCE OF FUND ALONGWITH PARTICULARS OF PERSONS FRO M WHOM 145 145 THESE AMOUNTS WERE RECEIVED. THE LD. CIT(A) HAS ALS O CALLED A REMAND REPORT FROM THE ASSESSING OFFICER AND FOUN D THAT THE ASSESSEE HAS PRIMA FACIELY ESTABLISHED ALL THE THREE INGREDIENTS OF IDENTITY, GENUINENESS AND CREDITWORT HINESS OF LOAN CREDITORS. ACCORDINGLY, NO INTERFERENCE IS REQ UIRED FOR DELETION OF RS. 48 LAKHS ALLEGED TO BE DEPOSITED IN HSBC BANK. 54. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIR MITY IN THE ORDER OF CIT(A) FOR SUSTAINING ADDITION OF RS. 2,35,100/- AND DELETING ADDITION OF RS. 68,54,900/- OUT OF VAR IOUS AMOUNT DEPOSITED IN THE BANK ACCOUNT. 55. IN THE ASSESSMENT YEAR 2008-09, THE ADDITION O F RS. 1,02,83,711/- IN RESPECT OF VARIOUS DEPOSITS MADE I N SAVING BANK ACCOUNT ON THE PLEA OF SAME BEING UNEXPLAINED. 56. BY THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITION OF RS. 92,83,700/-, WHEREAS ADDITION OF RS . 10 LAKHS WAS CONFIRMED AFTER HAVING THE FOLLOWING OBSE RVATIONS :- 5.3 IN GROUND NO. 2(E), THE APPELLANT HAS CONTEND ED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKI NG ADDITION OF RS. 1,02,83,711/- BY TREATING THE VARI OUS 146 146 DEPOSITS MADE IN HIS SAVING BANK ACCOUNTS AS UNEXPLAINED. THE APPELLANT HAS MADE DETAILS SUBMISSIONS, INTER-ALIA, IN RESPECT OF GROUND NO. 2 (E), WHICH IS EXTRACTED BELOW: IN THIS CONTEXT, BEFORE DELVING THE ISSUE, WE WISH TO SUBMIT COPY OF BANK STATEMENTS OF THE APPELLANT, FOR THE RELEVANT PERIOD, IN RESPECT OF THE BANK ACCOUNTS MAINTAINED BY HIM WITH HSBC BANK AND HDFC BANK [ANNEXURE A-4.01 & A-4.02][PAGE NO. 28 & 45). SUCH BANK STATEMENTS WAS ALSO FURNISHED BY THE APPELLANT BEFORE THE LEARNED A .O. ALONG WITH HIS SUBMISSION LETTER DATED 14-10-2009 [KINDLY REFER PAGE NO. 20 & 21 OF THE PAPER BOOK). IT SHALL BE APPRECIATED BY YOUR HONOUR THAT ALTHOUGH A SUMMARY OF THE BANK TRANSACTIONS WAS DULY FURNISHED BY THE APPELLANT IN THE COMPUTATION OF TOTAL INCOME ACCOMPANYING THE RETURN OF INCOME ITSELF [KINDLY REFER PAGE 147 147 NO. 12 & 13 OF THE PAPER BOOK BUT IN ORDER TO EXPLAIN THE NATURE AND DETAILS OF EACH AND EVERY TRANSACTION, DATE BY DATE, THE APPELLANT HAD FURTHER SUBMITTED THREE SEPARATE STATEMENTS ALONG WITH HIS SUBMISSION LETTER 14-10-2009. SUCH STATEMENTS ARE BEING SUBMITTED HEREWITH FOR KIND PERUSAL AND RECORD OF YOUR HONOUR, AS ANNEXURE A-5.0110 A-5.03 (PB PAGE NO. 46 TO 48). YOUR HONOUR, THE LEARNED A.O. HAS MADE TOTAL ADDITIONS OF RS. 1,02,83,711/-, ON ACCOUNT OF ALLEGED UNEXPLAINED DEPOSITS IN HIS SAYING BANK ACCOUNTS THE EXPLANATION OF THE APPELLANT REGARDING SOURCES OF SUCH DEPOSITS, AS TENDERED BEFORE THE LEARNED A O TOO, IS AS UNDER: A. HSBC BANK SNO DATE MODE OF SOURCE OF DEPOSIT AMOUNT REMARKS DEPOSIT 1 25-06-2007 CHEQUE TRANSFERRED FROM BANK 63711 REFER BANK OF BARODA, S. B. ACCOUNT STATEMENT OF BANK OF BARODA, S.B ACCOUNT 2 22-08-2007 CHEQUE SALES PROCEEDS OF LAND 1050000 SALES REALIZATION AT HUKMAKHEDI SOLD OF LAND HAS DUL DURING F.Y . 2006-07 DULY BE E N SH OWN IN 148 148 REALIZED COMPUTATION 2007-08 3 23-08-2007 CHEQUE LOAN TAKEN FROM SPS 1000000 LOAN CONFIRMATION JEWELLERS LETTER ENCLOSED 4 25-08-2007 CHEQUE SALE OF PLOT AT VIDYA 225000 SALES REALIZATION PALACE COLONY OF PLOT OF RS 2,25,000/- HAS DULY BEEN SHOWN IN COMPUTATION 5 12-09-2007 CASH CASH DEPOSITED 100000 THE ASSESSEE WAS HAVING CASH BALANCE OJ RS.205320/- AS PEL' HIS STATEMENT 0/ AFFAIRS AS 01'3/-03- 200' 6 1 2-09-2007 CASH CASH DEPOSITED 100000 -----DO----- 7 21-09-2007 CHEQUE AMOUNT REED. FROM SNIT. 1500000 LOAN CONFIRMATION REKHA CHUGLI LETTER ENCLOSED 8 2/-0/-2008 CHEQUE AMOUNT REED. FROM SHRI 800000 -----DO----- ADITVA KASLIWAL 9 2/-0/-2008 CHEQUE ------DO------- 700000 ----DO----- TOTAL 5538711 ,.. B. HDFC BANK SNO. DATE MODE OF SOURCE OF DEPOSIT AMOUNT REMARKS DEPOSIT 1 13-10-2007 CHEQUE A MOUNT TFD. FROM HSBC 10000 REFER BANK BANK FOR OPENING OF NEW STATEMENT A CCOUNT 2 26-11-2007 CHEQUE AMOUNT REED. FROM M/S. 1500000 LOAN C ONFIRMATION SPS JEWELLERS LETTER ENCLOSED 3 28-11-2007 CHEQUE AMOUNT RECD. FRONT M/S. 1000000 LOAN CONFIRMATION SPS JEWELLERS 4. 29-11-2007 CHEQUE A MOUNT REED. FROM SHRI 35000 LOAN CONFIRMAT ION HIRALAL PANIWANI LETTER ENCLOSED 5 29-11-2007 CHEQUE AMOUNT REED. FROM SHRI 25000 LOAN CONFIRMATION SHRICHOND PANJWANI LETTER ENCLOSED 6 29-11-2007 CHEQUE A MOUNT REED. FROM SMT. 25000 LOAN CONFIRMAT ION CHANDNI PANJWANI LETTER ENCLOSED 7. 29-02-2008 CHEQUE AMOUNT REED. FROM M/S. 150000 LOAN CONFIRMATION KASLIWAL BROTHERS LETTER ENCLOSED 8 29-02-2008 CHEQUE AMOUNT REED. FROM SMT. 400000 LOAN CONFIRMAT ION KAVITA KASLI WAL LETTER ENCLOSED 9 05-03-2008 CHEQUE AMOUNT REED. FROM SHRI 200000 LOAN CONFIRMAT ION PRABHAT JAIN LEITER ENCLOSED 10 15-03-2008 CHEQUE AMOUNT REED. FROM M/S. 300000 LOAN CONFIRMATION MBM FINANCE & LETTER ENCLOSED INVESTMENT PVT. LTD. 11. 17-03-2008 CHEQUE AMOUNT RECD. FROM M/S. 300000 LOAN CONFIRMAT ION F 149 149 MBM FINANCE & LETTER ENCLOSED INVESTMENT PVT. LTD. 12 . ! 25-03-2008 CHEQUE AMOUNT REED. FROM M/S.. 500000 LOAN CORFIRMATION AGGRESSIVE CONSULTANTS LETTER ENCLOSED PVT. LTD. TOTAL (8) 4745000 TOTAL (A+B) 10283711 YOUR HONOUR, IN ORDER TO PROVE THE ABOVE STATED EXP LANATION, WE ARE SUBMITTING HEREWITH FOLLOWING DOCUMENTS, WHI CH HAS BEEN ALREADY FILED BEFORE LEARNED AO: I) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI SHRICHAND PANJWANI [ANNEXURE A-6.01][PB PAGE NO. 49 ] II) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY SHRI HIRALAL PANJWANI [ANNEXURE A-6.02] [PB PAGE NO. 50] III) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN B Y SMT. CHANDNI PANJWANI [ANNEXURE A-6.03] [PB PAGE NO. 51} IV) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY M/S. SPS JEWELLERS [ANNEXURE A-6.04] [PB PAGE NO. 52] V) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY M/S. KASLIWAL BROTHERS [ANNEXURE A-6.05] [PB PAGE NO. 53 ] VI) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN BY M/S. MBM FINANCE & INVESTMENT PVT. LTD. [ANNEXURE A-6.06 ] [PB PAGE NO 54]. 150 150 VII) COPY OF LOAN CONFIRMATION LETTER DULY GIVEN B Y M/S. AGGRESSIVE CONSULTANTS PVT. LTD. [ANNEXURE A-6.07] [PB PAGE NO. 55] LN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, IT S HALL BE APPRECIATED BY YOUR HONOUR THAT THE APPELLANT HAS ESTABLISHED SOURCE OF DEPOSITS OF RS. 1,02,83,711/- IN HIS BANK ACCOUNTS AND THEREFORE, THE ADDITION SO MADE O N THIS COUNT, WITHOUT MAKING ANY APPLICATION OF THE MIND D ESERVES TO BE DELETED IN TOTO.' 5.3.1 DURING THE COURSE OF THE APPELLATE PROCEEDINGS, THE APPELLANT HAD FILED CERTAIN ADDITIONAL EVIDENCES UNDER RULE 46A OF THE INCOME-TAX RULES, 1962 WITH AN EXPLANATION THAT SINCE THE APPELLANT WAS NOT GRANTED ANY OPPORTUNITY TO PROVE THE GENUINENESS OF CERTAIN LOANS, DEPOSITED IN THE BANK ACCOUNT, SUCH DOCUMENTS COULD NOT BE PRODUCED AT EARLIER STAGE. THE APPELLANT ALSO FURNISHED A COPY OF SUCH ADDITIONAL EVIDENCES BEFORE THE AO. THE 151 151 AO SUBMITTED HIS REMAND REPORT DATED 28.7.2011 WHICH IS PLACED ON RECORD. CONSIDERING THE FACTS OF THE CASE, ADDITIONAL EVIDENCES FILED BY THE APPELLANT ARE ADMITTED. 5.3.2 THE CONTENTIONS OF THE APPELLANT ALONG WITH THE DOCUMENTARY EVIDENCES, ADDITIONAL EVIDENCES AND COUNTER COMMENTS OF THE AO, HAVE BEEN CONSIDERED CAREFULLY. THE APPELLANT HAS SUBSTANTIATED SOURCES OF TWO CASH DEPOSITS OF RS. 1,00,000/- EACH IN HIS BANK ACCOUNT AGGREGATING TO RS. 2,00,000/- ON 12.09.2007 BY CLAIMING THAT SUCH DEPOSITS WERE MADE BY HIM OUT OF CASH AVAILABLE WITH HIM. THE APPELLANT HAS CLAIMED THAT HE WAS HAVING CASH BALANCE OF RS. 2,05,320/- AS PER HIS STATEMENT OF AFFAIRS AS OF 31.03.2007 AND OUT OF SUCH CASH BALANCE, HE HAD MADE THE IMPUGNED CASH DEPOSITS. THE APPELLANT FURTHER EXPLAINED THAT THE CASH BALANCE AT THE END OF THE PRECEDING: PREVIOUS YEAR, WAS BUILT-UP OUT OF ADVANCE IN THE FORM OF CASH RECEIVED FROM SALE OF HIS PLOT AT VASANT 152 152 VIHAR COLONY, NIRANJANPUR, INDORE WHICH HAS BEEN SOLD DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. THE APPELLANT FURTHER SUBMITTED THAT SHORT TERM CAPITAL GAIN FROM SUCH PLOT HAS DULY BEEN SHOWN IN THE RETURN OF INCOME AND THE SAME HAS BEEN ACCEPTED BY THE AO. THE AR OF THE APPELLANT FURTHER CONTENDED THAT IT IS NOT THE CASE OF THE AO THAT THE OPENING CASH BALANCE OF RS. 2,05,320/- WAS UTILIZED BY THE APPELLANT FOR SOME OTHER PURPOSES. THE SUBMISSION OF THE APPELLANT IS WORTH CONSIDERATION. THE AVAILABILITY OF THE CASH, AS CLAIMED BY THE APPELLANT, HAS BEEN VERIFIED FROM THE STATEMENT OF AFFAIRS OF THE APPELLANT AS OF 31.03.2007, AS FILED BY THE APPELLANT ALONG WITH THE RETURN OF INCOME. 5.3.3 THE AO, IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR A Y 2007-08, HAS NOT FOUND ANY DISCREPANCY IN THE STATEMENT OF AFFAIRS SO FILED BY THE APPELLANT ALONG WITH THE RETURN. THE RECEIPT OF CASH BY THE APPELLANT AGAINST SALE OF PLOT HAS DULY BEEN EXAMINED IN THE COURSE OF APPELLATE 153 153 PROCEEDINGS FOR A Y 2007-08. FOR REMAINING CASH DEPOSIT OF RS.1 0,000/- MADE BY THE APPELLANT FOR OPENING NEW BANK ACCOUNT WITH HDFC BANK LTD., ON 13.10.2007, IT HAS TO BE HELD THAT SUCH A PETTY AMOUNT CAN BE PRESUMED TO BE AVAILABLE WITH THE APPELLANT OUT OF RENTAL INCOME OF RS. 24,000/- SHOWN BY HIM IN HIS RETURN OF INCOME AS WELL AS OUT OF THE OPENING CASH BALANCE. IN SUCH CIRCUMSTANCES, NO MERIT IS FOUND IN UPHOLDING THE ADDITION MADE BY THE AO ON ACCOUNT OF CASH DEPOSITS OF RS. 2,1 0,000/- MADE IN BANK ACCOUNT OF THE APPELLANT. 5.3.4 AS REGARD THE REMAINING BANK DEPOSITS OF RS. 1,00,73,711/- MADE BY THE APPELLANT IN HIS BANKS THROUGH ACCOUNT PAYEE CHEQUES, THE APPELLANT HAS PRIMA-FACIE EXPLAINED THE SOURCES OF ALL THE DEPOSITS. OUT OF THE BANK DEPOSITS OF RS.1 ,00,83,711/-, THE APPELLANT HAS CLAIMED TO HAVE MADE DEPOSITS OF RS.72,35,000/- BY RAISING LOANS FROM VARIOUS PERSONS AND PARTIES THROUGH ACCOUNT 154 154 PAYEE CHEQUES. THE APPELLANT HAS CLAIMED TO HAVE RAISED LOANS AS UNDER: S.NO. NAME OF DEPOSITOR AMOUNT 1 SHRI HIRALAL PANJWANI RS. 35,000 2 SMT. CHANDNI PANJWANI RS. 25,000 3 FROM SHRI _SHRICHAND PANJWANI RS. 25,000 4 M/S. SPS JEWELLERS RS. 35,00,000 5 SHRI ADITYA KASLIWAL, RS. 15,00,000 6 M/S. KASLIWAL BROTHERS RS. 4,50,000 7 SMT. KAVITA KASLIWAL RS. 4,00,000 8 SHRI PRABHAT JAIN RS. 2,00,000 9 M/S. MBM FINANCE AND INVESTMENT PVT. LTD. RS. 6,00,000 10 M/S. AGGRESSIVE CONSULTANTS PVT. LTD. RS. 5,00,000 TOTAL 72,35,000 5.3.5 THE APPELLANT HAS CLAIMED THAT PETTY LOANS OF RS. 35,000/-, RS. 25,000/- AND RS. 25,000/- HAD BEEN TAKEN BY HIM FROM HIS OWN FAMILY MEMBERS, WHO ARE HAVING INDEPENDENT SOURCES OF INCOME AND SEPARATELY ASSESSED TO INCOME-TAX. IN VIEW OF THE DISCUSSION ON SIMILAR TRANSACTIONS FOR A. Y. 2007- 08, THESE THREE LOANS AGGREGATING TO RS. 85,000/- ARE FOUND FULLY EXPLAINED. 5.3.6 IN RESPECT OF THE LOAN AMOUNTING TO RS. 35,00,000/- FROM M/S. SPS JEWELLERS, THE ASSESSEE HAS FURNISHED COPY OF LOAN CONFIRMATION 155 155 LETTER OF THE CREDITOR AS WELL AS COPY OF ITS IT RETURN. THE APPELLANT HAS ALSO FURNISHED COPY OF BANK STATEMENT OF M/S. SPS JEWELLERS FOR THE RELEVANT PERIOD, ON A PERUSAL OF THE LOAN CONFIRMATION LETTER GIVEN BY M/S. SPS JEWELLERS, IT HAS BEEN NOTICED THAT THE LOAN CREDITOR HAS CONFIRMED ADVANCING OF LOAN TO THE EXTENT OF RS. 25,00,000/- ONLY I.E. OF RS. 15,00,000/- ON 26.11.2007 VIDE CHEQUE NO.081362 AND 081364 AND RS. 10,00,000/- VIDE CHEQUE NO.081363 ON 28.11.2007. FROM THE BANK ACCOUNTS OF MIS. SPS JEWELLERS ALSO IT HAS BEEN NOTICED THAT ONLY THREE CHEQUES FOR AN AGGREGATE SUM OF RS. 25,00,000/- HAVE GOT REALIZED FROM THEIR ACCOUNT. THE CLAIM OF THE APPELLANT THAT HE HAD RECEIVED A FURTHER CHEQUE OF RS.10,00,000/- FROM THE SAME PARTY THROUGH CHEQUE NO. 81368 IS NOT CORRECT. IT HAS BEEN NOTICED THAT SUCH CHEQUE WAS ISSUED IN THE NAME OF SHRI NEERAJ PANJWANI, BROTHER OF THE APPELLANT AND NOT IN THE NAME OF THE APPELLANT. THE 156 156 AO, IN HIS REMAND REPORT ALSO, HAS GIVEN THE SIMILA R COMMENT WHICH IS FOUND CORRECT. AS REGARD THE AO'S COMMENT REGARDING DEPOSIT OF CASH BY THE CREDITOR BEFORE MAKING THE IMPUGNED DEPOSITS, THE AR OF THE APPELLANT HAS EXPLAINED THAT THE CREDITOR IS CARRYING OUT THE BUSINESS OF JEWELLERY AND OUT OF THE SALES REALIZATION OF JEWELLERY ONLY, THE IMPUGNED SUM WAS DEPOSITED BY HIM IN HIS BANK ACCOUNT. THE EXPLANATION OF THE APPELLANT ON THIS COUNT HAS MERIT. IT HAS BEEN NOTICED THAT DURING TH E RELEVANT PREVIOUS YEAR, THE APPELLANT HAS REFUNDED LOAN AMOUNTING TO RS. 31,50,000/- 'THROUGH VARIOUS CHEQUES AND THE REFUND OF LOAN HAS DULY BEEN CONFIRMED BY THE LOAN CREDITOR. . THE REFUND OF LOANS IS GETTING REFLECTED IN THE BANK STATEMENT OF THE APPELLANT AS WELL AS OF THE LOAN CREDITOR. IN SUCH CIRCUMSTANCES, THE LOAN AMOUNTING TO RS. 25,00,000/- AS CONFIRMED BY THE LOAN CREDITOR, DESERVES TO BE HELD AS EXPLAINED. ACCORDINGLY, OUT OF THE DEPOSIT OF RS. 35,00,000/- CLAIMED BY THE APPELLANT OUT OF LOAN FROM M/S. SPS JEWELLERS, 157 157 DEPOSIT TO THE EXTENT OF RS. 25,00,000/- ONLY IS HE LD AS EXPLAINED. HOWEVER, DURING THE COURSE OF APPELLATE PROCEEDINGS, THE AR OF THE APPELLANT, IN HIS REJOINDER ON THE AO'S REMAND REPORT, SUBMITTED THAT DUE TO INADVERTENT MISTAKE, RECEIPT OF A SUM OF RS. 10,00,000/- ON 23.08.2007, HAS WRONGLY BEEN SHOWN TO HAVE BEEN RECEIVED FROM M/S. SPS JEWELLERS WHEREAS THE FACT REMAINED THAT SUCH SUM OF RS.10,00,000/- WAS RECEIVED BY THE APPELLANT THROUGH ACCOUNT PAYEE CHEQUE FROM MRS. ANITA DAWANI OF INDORE. IT HAS BEEN EXPLAINED BY THE APPELLANT THAT HE HAD GIVEN A LOAN OF RS. 10,00,000/- TO SMT. ANITA DAWANI OF 103, VISHAL CASTLE, PANCHWATI, 24-25, JANKI NAGAR EXTN., INDORE, THROUGH ACCOUNT PAYEE CHEQUE NO.016076 ON 18.07.2007 AND SUCH LOAN WAS RECEIVED BACK BY HIM ON 23.08.2007. THE APPELLANT HAS FURNISHED A LETTER DULY GIVEN BY SMT. ANITA DWANI CONFIRMING SUCH TRANSACTION. THE SUBMISSION OF THE APPELLANT CANNOT BE ACCEPTED AT THIS STAGE THOUGH 158 158 HIMSELF FOUND VERIFIABLE FROM THE BANK STATEMENT OF THE APPELLANT. FURTHER, THE LOAN FROM M/S. SPS JEWELLERS HAS BEEN FOUND VERIFIABLE TO THE EXTENT OF RS. 25,00,000/- ONLY, AS DISCUSSED ABOVE. THE EXPLANATION OF THE APPELLANT REGARDING THE REMAINING DEPOSIT OF RS. 10,00,000/-, BEING THE REFUND OF LOAN GIVEN EARLIER TO SMT. ANITA DAWANI CANNOT BE ACCEPTED NOW AS IT WAS NEVER RAISED BEFORE AO AND CHANGES THE WHOLE COMPLEXION OF LOAN TRANSACTION AS IN PLACE OF ONE, TWO LOAN CREDITORS ARE BEING ACCREDITED TO THE SAME LOAN AMOUNT OF RS. 35,OO,OOO/-. IT WAS THE DUTY OF THE APPELLANT TO FILE THE CORRECT DETAILS W ITH THE RETURN OF INCOME AND TO REVISE RETURN IF A BONA FIDE MISTAKE WAS COMMITTED WHICH HAS NOT BEEN DONE. EVEN, SUCH EXPLANATION WAS NEVER OFFERED BEFORE AO EITHER IN APPELLANT PROCEEDING OR WAY OF ADDITIONAL EVIDENCES BROUGHT ON RECORD IS APPEAL IS APPEAL PROCEEDINGS. FURTHERS, THERE IS NO EXPLANATION AS TO WHY REFUND OF LOAN AMOUNT TO M/S. SPS JEWELERS WAS MADE AT RS. 31,50,OOO/- 159 159 ONLY WHEN THE ACTUAL LOAN WAS FOR RS. 25,OO,OOO/- ONLY. THUS, IN VIEW OF AFORESAID DISCUSSION AO IS DIRECTED TO DELETE ADDITION TO THE EXTENT OF RS. 25 LAKHS AND BALANCE AMOUNT OF RS. 10 LAKHS IS CONFIRMED. 4.3.7 IN RESPECT OF THE REMAINING LOAN AMOUNTING TO RS. 15,00,000/- FROM SHRI ADITYA KASLIWAL, RS. 4,50,000/- FROM M/S. KASLIWAL BROTHERS AND RS. 4,OO,OOO/- F ROM SMT. KAVITA KASLIWAL, THE ASSESSEE HAS FURNISHED COPY OF LOAN CONFIRMATION LETTERS OF THE CREDITOR AS WELL AS COPY OF ITS IT RETURN. THE LETTERS OF CONFIRMATION CORROBORATE WIT H THE CLAIM OF THE APPELLANT. ALL THE LOAN TRANSACTIO NS HAVE TAKEN PLACE THROUGH ACCOUNT PAYEE CHEQUES ONLY. ALL THE THREE LOAN CREDITORS ARE ASSESSED TO INCOME-TAX. FROM THE IT ACKNOWLEDGEMENT OF M/S.KASLIWAL BROTHERS IT HAS BEEN OBSERVED THAT HE HAD SHOWN INCOME OF RS. 7,67,590/- IN HIS RETURN OF INCOME FOR A.Y. 2008-09. LIKEWISE, SMT. KAVITA KASLIWAL HAS SHOWN TAXABLE INCOME AT RS. 1,92,860/- IN HER RETURN OF INCOME. THE APPELLANT 160 160 HAS ESTABLISHED THE IDENTITY OF THE CREDITORS BY FURNISHING COPY OF IT RETURNS OF THE CREDITORS. THE CONFIRMATION OF TRANSACTIONS BY CREDITORS GOES TO ESTABLISH GENUINENESS OF THE TRANSACTIONS. THE CREDITWORTHINESS OF THE LOAN CREDITORS CAN BE ADJUDGED FROM THEIR IT RETURNS. IN SUCH CIRCUMSTANCES, ALL THE THREE INGREDIENTS OF CASH CREDIT GET SATISFIED AND, THEREFORE, THERE IS NO JUSTIFICATION FOR HOLDING SUCH CASH CREDITS AS UNEXPLAINED. ACCORDINGLY, LOANS AGGREGATING TO RS. 23,50,000/- FROM THESE THREE CREDITORS BELONGING TO THE SAME GROUP, ARE HELD TO BE GENUINE AND CONSEQUENTLY BANK DEPOSITS MADE OUT OF SUCH LOANS' ARE ALSO HELD AS EXPLAINED. 5.3.8 IN RESPECT THE REMAINING BANK DEPOSIT OF RS. 2,00,000/-, RS. 6,00,000/AND RS. 5,00,000/- CLAIMED TO HAVE BEEN MADE BY THE APPELLANT OUT OF LOANS TAKEN RESPECTIVELY FROM SHRI PRABHAT JAIN, M/S. MBM FINANCE & INVESTMENT PVT. LTD. AND M/S. AGGRESSIVE CONSULTANTS PVT. LTD., THE APPELLANT HAS FILED THE LETTERS OF CONFIRMATION DUL Y 161 161 GIVEN BY THE LOAN CREDITORS. IN ORDER TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE LOAN CREDITORS , THE APPELLANT HAS FILED COPIES OF ACKNOWLEDGEMENT OF IT RETURN AND COMPUTATION OF INCOME OF THE LOAN CREDITORS. ALL THE TRANSACTIONS OF LOANS HAVE TAKEN PLACE THROUGH ACCOUNT PAYEE CHEQUES ONLY. IN SUCH CIRCUMSTANCES, IT HAS TO BE NECESSARILY HELD THAT A LL THE LOANS CLAIMED BY THE APPELLANT ARE EXPLAINED AND CONSEQUENTLY DEPOSITS MADE OUT OF RECEIPTS OF SUCH LOANS WILL ALSO HAVE TO BE HELD AS EXPLAINED. ACCORDINGLY, THE DEPOSITS OF RS. 13,00,000/- MADE BY THE APPELLANT BY RAISING LOANS FROM THESE THREE PARTIES ARE HELD AS EXPLAINED AND TO THAT EXTENT, THE ADDITION MADE BY THE AO IS DELETED. 5.3.9 THE APPELLANT HAS CLAIMED TO HAVE MADE DEPOSIT OF RS. 63,711/- ON 25.06.2007 OUT OF THE FUNDS TRANSFERRED FROM HIS ANOTHER BANK ACCOUNT MAINTAINED WITH BANK OF BARODA. THE EXPLANATION OF THE APPELLANT HAS BEEN FOUND VERIFIABLE FROM THE COPY OF BANK STATEMENT OF THE APPELLANT WITH BANK OF BARODA. ACCORDINGLY, SUCH DEPOSIT OF RS. 162 162 63,711/- IS HELD TO BE EXPLAINED. 5.3.10 THE CLAIM OF THE APPELLANT REGARDING DEPOSIT OF RS. 10,50,000/- ON 22.08.2007 OUT OF SALES REALIZATION OF LAND AT HUKMA KHEDI AND DEPOSIT OF RS. 2,25,000/- OUT OF SALES REALIZATION OF PLOT AT VIDYA PALACE COLONY IS ALSO FOUND VERIFIABLE FROM THE COPY OF THE SALE-DEEDS/AGREEMENTS AND AS ALSO FROM THE COMPUTATION OF INCOME IN WHICH THE APPELLANT HAS DULY SHOWN CAPITAL GAIN ON THE SALE OF SUCH PROPERTIES. ACCORDINGLY, DEPOSITS OF RS. 12,75,000/- MADE BY THE APPELLANT OUT OF SALES REALIZATION OF THE PROPERTIES ARE HELD TO BE EXPLAINED. 5.3.11 AS REGARD THE CLAIM OF THE APPELLANT IN RESPECT OF DEPOSIT OF RS. 15,00,000/- MADE ON 21.09.2007 OUT OF REFUND OF LOAN FROM MRS. REKHA CHUGH, IT HAS BEEN OBSERVED FROM THE BANK ACCOUNT OF THE APPELLANT THAT THE APPELLANT HAD GIVEN LOAN TO MRS. REKHA CHUGH ON 25.07.2007 VIDE CHEQUE NO.1553676. SINCE THE ADVANCING OF LOAN AND THE SOURCE THEREOF BY THE APPELLANT TO MRS. REKHA 163 163 CHUGH IS NOT UNDER DISPUTE, THE SUBSEQUENT REFUND OF THE LOAN TO THE APPELLANT CANNOT BE DISPUTED. IN SUCH CIRCUMSTANCES, THE ADDITION OF RS. 15,00,000/- MADE IN RESPECT OF SUCH DEPOSIT CANNOT BE UPHELD. ACCORDINGLY, THE SAID ADDITION OF RS. 15,00,000/- IS ALSO DELETED. IN NUTSHELL, OUT OF THE BANK DEPOSITS TO THE EXTENT OF RS. 1,02,83,711/- MADE BY THE APPELLANT IN HIS SAVING BANK ACCOUNTS WITH HSBC BANK AND HDFC BANK, BANK DEPOSITS TO THE EXTENT OF RS. 92,83,711/- ARE FOUND EXPLAINED AND BANK DEPOSIT TO THE EXTENT OF RS. 10 LAKHS ARE HELD AS UNEXPLAINED. ACCORDINGLY, THE ADDITION OF RS. 92,83,711/- MADE BY THE AO IS HEREBY DELETED AND BALANCE ADDITION OF RS. 10 LAKHS IS CONFIRMED. 57. AGAINST THE ABOVE ORDER OF CIT(A), THE REVENUE IS IN FURTHER APPEAL BEFORE US. FROM THE RECORD, WE FOUND THAT IN THE ASSESSMENT ORDER OF 2008-09, AN ADDITION OF RS. 1,02,83,711/- WAS MADE IN RESPECT OF VARIOUS DEPOSI TS MADE IN THE SAME BANK ACCOUNT OF HSBC BANK AND HDFC BANK. AFTER EXAMINING THE SOURCE OF DEPOSIT, THE LD . CIT(A) 164 164 HAS DELETED THE ADDITION TO THE EXTENT OF RS. 92,83 ,711/-. HOWEVER, AN ADDITION OF RS. 10 LAKHS WAS CONFIRMED ON THE PLEA THAT THE SAME WAS NOT EXPLAINED BY THE ASSESSE E. BOTH THE ASSESSEE AND REVENUE ARE IN APPEAL BEFORE US. 58. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND F OUND THAT DETAILED CHART WAS FURNISHED BY THE ASSESSEE W ITH RESPECT TO VARIOUS DEPOSITS IN THE BANK ACCOUNT ALO NGWITH NAME AND ADDRESSES OF THE PERSONS FROM WHOM AMOUNT WAS RECEIVED, CHEQUE NUMBER ETC. VARIOUS DOCUMENTS FILED UNDER RULED 46A WAS SENT BY CIT(A) TO ASSESSING OFF ICER FOR HIS REMAND REPORT AND AFTER CONSIDERING THE SAM E, THE CIT(A) RECORDED A FINDING TO THE EFFECT THAT AMOUNT OF RS. 92,83.711/- WAS DULY EXPLAINED, WHEREAS THE ASSESSE E COULD NOT SATISFACTORILY EXPLAIN THE DEPOSIT OF RS. 10 LAKHS, ACCORDINGLY, THE SAME WAS CONFIRMED. THE DETAILED F INDING RECORDED BY THE LD.CIT(A) AT PARA 5.3 COULD NOT BE CONTROVERTED BY THE DEPARTMENT NOR BY LD. AUTHORIZE D REPRESENTATIVE BY BRINGING ANY POSITIVE MATERIAL ON RECORD, ACCORDINGLY, THE SAME IS UPHELD. 59. IN THE RESULT, GROUND TAKEN BY BOTH ASSESSEE A ND REVENUE ARE DISMISSED. 165 165 SUNEETA PANJWANI A. Y. 2002-03 60. IN THE ASSESSMENT YEAR 2002-03, THE ADDITION OF RS. 19,320/- WAS MADE ON ACCOUNT OF BOGUS SHORT TERM CA PITAL GAINS. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIR MED THE ADDITION BY OBSERVING AS UNDER :- 1.02. IN GROUND NO.2, THE APPELLANT HAS CHALLENGED AO'S ACTION IN NOT ACCEPTING SHORT TERM CAPITAL GAIN OF RS. 19,320/- AND TREATING THE SAME AS INCOME FROM UNEXPLAINED SOURCES. THE AO HAS RECORDED DETAILED REASONS IN DRAWING SUCH CONCLUSION IN THE ASSESSMENT ORDER. THESE TRANSACTIONS ARE CONNECTED WITH THE SUBSEQUENT LONG TERM CAPITAL GAIN TRANSACTIONS AS DISCUSSED ABOVE IN AY 2003- 04. IN FACT THE SHORT TERM 'CAPITAL GAIN TRANSACTION APPARENTLY APPEARS TO HAVE BEEN COOKED UP FOR FACILITATING PURCHASE OF SHARES OF A COMPANY, M/S. MANTRA ONLINE, AS HAS BEEN DISCUSSED BY AO. THE REASON GIVEN BY AO IS FOUND TO BE COGENT AND APPELLANT'S CONTENTION 166 166 ON THIS POINT IS FOUND TO BE DEVOID OF ANY MERIT AND SUBSTANCE WHATSOEVER. CONSIDERING THE DETAILED DISCUSSIONS MADE ON THE ISSUE OF DENIAL OF CLAIM OF LONG TERM CAPITAL GAIN FOR THE A Y 2003-04 SUCH GROUND IS ALSO HEREBY REJECTED. 61. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FO UND THAT TRANSACTION REGARDING PURCHASE OF SHARES OF MA NTRA ON LINE WERE RECORDED SO AS TO JUSTIFY CLAIM OF LONG T ERM CAPITAL GAIN IN SUBSEQUENT YEAR. IT WAS FOUND BY THE LOWER AUTHORITIES THAT SHORT TERM CAPITAL GAIN TRANSACTIO N WAS THE COOKED UP STORY FOR FACILITATING PURCHASE OF SHARES OF M/S. MANTRA ON LINE. (I) THE ASSESSEE HAS STATED THAT, IN THE FIRST WEE K OF APRIL 2001, THE ASSESSEE CAME INTO CONTACT WITH SHR I PRAKASH NAHATA, A SHARE BROKER OF KOLKATA AND ON WH OSE ADVISE, THE ASSESSEE PURCHASED THE SHARES ON 06.04. 01 FOR A CONSIDERATION OF RS. 19,320/-. HOWEVER, IN THE LETT ER DATED 08.12.09, FILED FOR A. Y. 2002-03, THE ASSESSEE STATED THAT ON ADVISE OF ONE OF THESE FAMILY FRIENDS IN FIRST WEEK OF APRIL I 167 167 2001 THE ASSESSEE ASKED SHRI PRAKASH NAHATA TO SALE SOME OTHER SHARES. THEREFORE, THE STATEMENT OF THE ASSES SEE IN TWO LETTERS OF SAME DATE BUT FILED IN TWO DIFFERENT ASSESSMENT YEARS, GIVES DIFFERENT VERSION. II) THE ASSESSEE HAS FURTHER STATED THAT THE SHAR ES OF RS. 19,320/- OF MANTRA ONLINE LTD. WERE PURCHASED ON 06 .04.01 AND IN THE ASSESSEE HAS ALSO ENCLOSED A CONTRACT NOTE AND A BILL DATED 06.04.01. THE ASSESSEE, HAS FURTHER ST ATED THAT THE BROKER DID NOT INSISTED FOR THE PAYMENT OF RS. 19,320/FOR SHARES PURCHASED ON 06.04.01, SINCE IN T HE VERY SAME SETTLEMENT THE ASSESSEE EARNED SOME GAIN THROUGH THE SAME BROKER AND THEREFORE THE ASSESSEE WAS NOT REQUIRED TO MAKE ANY PAYMENT. IT MAY BE POINTED OUT THAT AS DISCUSSED IN THE ASSESSMENT ORDER FOR A . Y: 2002-03, THERE, THE ASSESSEE HAS SHORT SOLD SHARES ON 06.04.01 WHICH WERE LATER ON PURCHASED ON 11.04. 01 AND HENCE NO PAYMENT WAS DUE TO THE ASSESSEE ON 06. 04. 01. WHATEVER PROFIT THE ASSESSEE STATED TO HAVE EARNED, WOULD ONLY ACCRUE AFTER 11.04.01. HENCE, TH E STORY PROPOUNDED BY THE ASSESSEE, THAT HE WAS NOT SUPPOSED TO PAY PURCHASED PRICE OF MANTRA ONLINE LT D. 168 168 PURCHASED ON 06.04.01, IS NOT SUSTAINABLE. III) IT IS SURPRISING TO NOTE THAT THE ASSESSEE AND THE BROKER WERE VERY CONFIDENT OF EARNING A PROFIT OF R S. 19,320/- ON 06.04.01 ITSELF, WHEN THE SHARES FOR RS . 19,320/- WERE PURCHASED. INFECT, THE PROFIT OF RS. 19,320/ACCRUED TO THE ASSESSEE, ONLY ON 11.04.01, W HEN HE RECOVERED THE SHORT SALE AS DISCUSSED IN THE ASSESSMENT ORDER FOR THE A. Y. 2002-03. BY ANY STRETCH OF IMAGINATION, IT CANNOT BE ACCEPTED THAT THE ASSESSE E PURCHASES SHARES OF MANTRA FOR RS. 19,320/- ON 06.04.01 AND EARNS, AN EXACT PROFIT OF RS. 19,320/- ON 11.04.01 ON SOME OTHER SHARES. IT IS CLEAR THAT THE ASSESSEE HAS ACTED IN CONCERT WITH THE BROKER AND H AS MANAGED THIS ENTIRE AFFAIR AT A LATER DATE. IV) IT IS ALSO WORTH POINTING OUT THAT THE ASSESSE E HAS FILED A RETURN FOR A. Y 2002-03 ON 30.07. 02 (AS MENTIONED BY THE ASSESSEE IN RETURN FILED U/S 153A) AND THE LONG TERM CAPITAL GAIN IN A. Y. 2003-04 HAS BEEN SHOWN TO HAVE EARNED ON 16.06.02. THEREFORE THE RET URN FOR A. Y 2002-03 WAS FILED AT A LATER DATE AFTER SH OWING ALL THESE TRANSACTIONS. THIS FACT ALONG WITH THE FA CT THAT 169 169 THERE WAS NO ACTUAL PAYMENT BY THE ASSESSEE OF RS. 19,320/- FOR PURCHASE OF SHARES OF MANTRA, ALSO SUBSTANTIATE THAT THESE TRANSACTIONS CANNOT BE TREA TED AS NORMAL AND GENUINE TRANSACTIONS. V) IT IS SURPRISING TO NOTE THAT THE SHARES HAVE B EEN TRANSFERRED IN THE NAME OF THE ASSESSEE ON THE BASI S OF INCOMPLETE TRANSFER DEED THIS TRANSFER DEED IS NOT COMPLETE IN RESPECT OF THE DATE ON WHICH IT WAS SIG NED BY THE TRANSFEREE, IT DOES NOT MENTIONED THE VALUE OF STAMPS AFFIXED AND IT DOES NOT MENTION THE NAME OF THE STOCK EXCHANGE AND THE CONSIDERATION IN WORDS AND I N FIGURES. VERY IMPORTANT THE TRANSFER DEED DOES NOT CONTAIN THE ADDRESS OF THE ASSESSEE NOR DOES IT CON TAIN THE NAME OF ASSESSEE'S HUSBAND ANOTHER GLARING MISTAKE IS THAT IN THE TRANSFER DEED THE NAME OF TH E TRANSFEREE I.E. THE ASSESSEE WAS MENTIONED AS SANGE ETA AND LATER ON CORRECTED TO SUNITA. HOWEVER EVEN AFTE R THE CORRECTION OF THE NAME IN THE' TRANSFER DEED, THE COMPANY TRANSFERRED THE SHARES IN THE NAME OF SANGEETA WHICH WAS LATER ON RECTIFIED TO SUNITA. IF THE 170 170 CORRECTION IN THE TRANSFER DEED WAS MADE BEFORE SEN DING THE SAME TO THE COMPANY FOR TRANSFER, HOW COME THE COMPANY ALSO COMMITTED THE SAME MISTAKE AND HOW THE SAME WAS RECTIFIED ON THE SAME DATE, IS NOT EXPLAINABLE. 1. VI) THE SHARES WERE STATED TO HAVE BEEN PURCHASED ON 06.04.01 AS PER ANNEXURE A-1-1 AND THE SETTLEMENT PERIOD MENTIONED ON THE BROKER NOTE IS 06.04.01 TO 12.04.01. AS PER THE EARLIER SETTLEMENT SYSTEM, AFTER THE SETTLEMENT PERIOD, THE PURCHASER BROKER HAS TO DEPOSIT THE MONEY WITH THE STOCK EXCHANGE AND THE SELLER BROKER HAS TO DEPOSIT THE SHARES WITH TRANSFER DEED AFTER CLEARANCE OF THE PAYMENTS THE STOCK EXCHANGE THROUGH THE CLEARING HOUSE USED TO DELIVER THE SHARE CERTIFICATE WITH TH E TRANSFER DEED TO THE PURCHASER BROKER. THIS ENTIRE EXERCISE USE TO TAKE 7 TO 10 DAYS. AFTER THIS THE B ROKER WILL HAND OVER THE SHARES TO HIS CLIENT. IN THE PRE SENT CASE SURPRISINGLY THE SHARES HAVE BEEN TRANSFERRED IN THE NAME OF THE ASSESSEE ON 3.04.01. THIS IS 171 171 PRACTICALLY NOT POSSIBLE FOR THE REASON THAT AFTER THE END OF THE SETTLEMENT ON 12.04.01 THE BROKER OF THE ASSESSEE MUST HAVE RECEIVED THESE SHARES FROM THE STOCK EXCHANGE NOT BEFORE THAN 19.04.01 THE ASSESSEE HERSELF HAS FILED THE BROKER BILL NO. 232 DATED 19.04.01 WHICH IS AT ANNEXURE B2.02 WHICH PROVES THAT THE SAID SHARES COULD NOT BE RECEIVED BY THE ASSESSEE FROM THE BROKER BEFORE 19.04.01. AFTER RECEIVING THE SHARES FROM THE STOCK EXCHANGE, THE BROKER FROM KOLKATTA MUST HAVE SENT THE SAME TO THE ASSESSEE IN INDORE, WHICH WILL TAKE AT LEAST TWO DAYS AND THEN THE ASSESSEE WILL FILL UP T HE DEED SIGNED THE SAME AND AFFIX THE STAMPS AND WILL THE SAME TO THE COMPANY FOR TRANSFER WHICH IS GOING TO TAKE 3-4 DAYS TIME. THAN THE BOARD OF DIRECTORS/ SHARE TRANSFER COMMITTEE MEETS (AT FIXED INTERVALS AND NO T DAILY) AND APPROVES THE TRANSFERS. THEREFORE, IT IS NOT POSSIBLE TO GET THE PHYSICAL SHARES TRANSFERRED IN THE NAME OF THE PURCHASER WITHIN 10 DAYS OF THE END OF THE SETTLEMENT IN WHICH THESE WERE PURCHASED. IT IS A W ELL KNOWN FACT THAT IN THOSE DAYS THE ENTIRE PROCESS OF 172 172 SHARE TRANSFER USED TO TAKE AT LEAST A MONTHS TIME . MORE SO, WHEN THERE WERE SO MANY DEFECTS IN THE TRANSFER DEED, IT TAKES MUCH MORE TIME TO HAVE THE SHARES TRANSFER. VII) IT IS AGAIN SURPRISING TO NOTE THAT THE LETTER OF MANTRA FILED AS ANNEXURE B-6 DATED 23.04.01 ENCLOSING THE SIX THOUSAND SHARES DULY TRANSFER IN THE NAME OF THE ASSESSEE DOES NOT MENTION THE FULL ADDRESS OF THE ASSESSEE. IT ONLY STATES SUNITA PANJWANI, INDORE, M P. ON THE BASIS OF THIS ADDRESS THE CERTIFICATES CAN NOT BE DELIVERED TO THE ASSESSEE. IN THIS CASE THE ASSESSE E HAS NOT MENTIONED HER ADDRESS IN THE SHARE TRANSFER DEE D ALSO. VIII) AS PER THE BROKER NOTE THE DATE OF SALE IS 06 .06.02. THE ASSESSEE HAS RECEIVED THE PAYMENT OF RS. 6,29,4 00/-. RS. 6,00,000/- HAS BEEN CREDITED TO THE ASSESSEE'S BANK ACCOUNT WITH STATE BANK OF INDORE ON 14.06.02 AND R S. 29,400/- ON 17.07.02. THE INTERESTING ISSUES EMERGI NG HERE ARE THAT AGAIN SALES HAVING MADE ON 06.06.02, THE PAYMENT THEREOF CANNOT BE RECEIVED AS EARLY AS ON 14.06.02 THAT IS WITH IN EIGHT DAYS THAT TOO CREDITED 173 173 IN THE A CCOUNT OF THE ASSESSEE AT INDORE FROM THE ACCOUNT OF THE BROKER AT KOLKATTA. AFTER SELLING THE SHARES ON 06.06.02 AND AFTER THE END OF THE SETTLEMENT THE BROKER WILL DEPOSIT THE SHARES WITH THE STOCK EXCHANGE AFT ER WHICH TO EXCHANGE WILL RELEASE THE PAYMENTS TO THE BROKER 'WHICH IS NEVER SO FAST. THEN THE BROKER FRO M KOLKATTA WILL ISSUE THE CHEQUE TO ASSESSEE AT INDOR E. AS KNOWN IN THOSE DAYS OUTSTATION CHEQUES USED TO TAKE A LONG TIME FOR CLEARANCE. IX) THE RECEIPTS OF SALE CONSIDERATION IN TWO PART S OF RS. 6,00,000/- AND BALANCE RS. 29,400/- THAT TOO AF TER MORE THAN A MONTH, IS ALSO NOT UNDERSTANDABLE. WHEN THE ENTIRE AMOUNT WAS DUE TO THE ASSESSEE AND THE ASSESSEE HAS NOT UNDER TAKEN ANY OTHER TRANSACTION THEN WHY THE FULL PAYMENT WAS NOT MADE BY THE BROKE R IMMEDIATELY. X) THE ASSESSEE HAS FILED AS ANNEXURE B-9-A LETTER FROM THE ASSESSEE TO THE BROKER STATING TO ENCLOSED THE DELIVERY OF SIX THOUSAND SHARES. THIS LETTER IS UND ATED AND ITS MODE AND PROOF OF DELIVERY IS ALSO NOT AVAI LABLE. 174 174 THEREFORE THE SAME AS NO SANCTITY. 2. XI) THE ASSESSEE HAS ALSO FILED A QUOTATION INFORMATION FOR 06.06.02, WERE IN THE RATE OF MANTR A ONLINE LTD HAS BEEN SHOWN AT RS. 101/- TO RS. 96/-. HOWEVER WHEN THE SAME WAS CHECKED ONLINE AT THE OFFICIAL SITE KOLKATTA STOCK EXCHANGE THE SAME WAS NOT REFLECTING THEREON. 62. CONSIDERING THE ABOVE FACTS AND DISCUSSIONS, HAVING POINTED OUT SO MANY DISCREPANCIES AND RAISED SO MANY ISSUES, IT IS CLEAR THAT THE ENTIRE TRANSAC TION HAS BEEN COOKED UP WITH THE SALE VIEW OF CONVERTING THE ASSESSEE'S INCOME FROM UNDISCLOSED SOURCES AND GIVI NG IT A COLOR OF LONG TERM CAPITAL GAINS WHICH IS TAXA BLE AT A LOWER RATE OF ONLY 10%. IN VIEW-OF THE ABOVE DISCUSSION, IT IS PRACTICALLY NOT POSSIBLE THAT THE ASSESSEE HAS PURCHASED AND SOLD THESE SHARES. THEREFORE THE PROFIT OF RS. 6,10,080/ SHOWN UNDER THE GRAB OF LONG TERM CAPITAL GAIN IS TREATED AS INCOME FROM OTHER SOURCES AND ACCORDINGLY NO EXEMPTION U/S 54F AS CLAIMED IN THE RETURN, WILL BE ALLOWED THIS ENTI RE 175 175 INCOME WILL BE SUBJECT TO NORMAL RATE OF TAX. IT IS CLARIFIED THAT THE COST OF RS. 19,320/- HAS ALREADY BEEN TAXED IN THE A.Y. 2002-03 THEREFORE ONLY THE DIFFER ENCE AMOUNT I.E. RS. 6,10,080/- IS BEING TAXED HERE. VER Y INTERESTINGLY THE SAME ISSUE WITH THE SAME SHARES, SAME DATES AND SAME AMOUNTS HAVE BEEN SHOWN IN THE ANOTHER GROUP CASE OF SMT. CHANDANI PANJWANI AND SM T. KAVITA PANJWANI IN THE SAME ASSESSMENT YEARS. THIS FACT ALSO GOES TO PROVE THAT THE ENTIRE AFFAIR HAS BEEN ARRANGED TO TAKE UNDUE ADVANTAGE OF LOWER RATE OF TAX RATE A ND ALSO OF EXEMPTIONS AVAILABLE IN THIS RESPECT. 63. AFTER CONSIDERING THE REMAND REPORT RECEIVED F ROM THE ASSESSING OFFICER AND THE REPLY BY THE ASSESSEE, TH E CIT(A) RECORDED A FINDING TO THE EFFECT THAT IT WAS A BOGU S TRANSACTION. THE FINDING RECORDED BY LOWER AUTHORIT IES HAVE NOT BEEN CONTROVERTED BY LD. AUTHORIZED REPRESENTAT IVE BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDING LY, WE CONFIRM THE ACTION OF THE CIT(A) FOR DISALLOWING SH ORT TERM CAPITAL GAIN OF RS. 19,320/-. 64. AGAINST THE ABOVE ADDITION, THE ASSESSEE IS IN APPEAL BEFORE US. 176 176 65. WE HAVE ALREADY DISCUSSED HEREINABOVE IN DETAIL THE BOGUS NATURE OF SAID TRANSACTION UNDERTAKEN BY THE ASSESSEE AND FOR WHICH CAPITAL GAIN WAS DECLINED BY THE ASSESSING OFFICER. FOLLOWING THE SAME REASONING, AS DISCUSSED HEREINABOVE AND IN VIEW OF THE FINDINGS R ECORDED BY THE ASSESSING OFFICER AND CIT(A), GROUND TAKEN B Y THE ASSESSEE IS HEREBY DISMISSED. 66. IN THE ASSESSMENT YEAR 2005-06, AN ADDITION OF RS. 8,29,700/- WAS MADE ON ACCOUNT OF UNEXPLAINED DEPOS IT. AFTER TAKING INTO ACCOUNT THE POST SEARCH ENQUIRY C ONDUCTED BY INVESTIGATION WING, THE ASSESSING OFFICER HAS MA DE THIS ADDITION. 67. BY THE IMPUGNED ORDER AFTER CALLING THE REMAND REPORT, THE LD. CIT(A) DELETED THE ADDITION AFTER RECORDING FOLLOWING FINDINGS :- THE CONTENTIONS OF THE APPELLANT ALONG WITH THE DOCUMENTARY EVIDENCES HAVE BEEN CONSIDERED CAREFULLY. THE APPELLANT HAS SUBSTANTIATED SOURCES OF CASH DEPOSITS AGGREGATING TO RS. 2,49,OOO/- IN HIS BANK ACCOUNT ON THREE OCCASIONS WITH THE CASH FLOW STATEMENT. SUCH CASH FLOW STATEMENT WAS ALSO FILED 177 177 BEFORE THE AO AND AO DID NOT FIND ANY DISCREPANCY I N SUCH STATEMENT. THE APPELLANT SATISFACTORILY EXPLAINED THE SOURCES AND AVAILABILITY OF CASH WITH HER BEFORE MAKING CASH DEPOSITS IN HER BANK ACCOUNTS. THE APPELLANT ALSO EXPLAINED THE SOURCES OF DEPOSITS OF RS. 6,43,700/MADE IN HER BANK ACCOUNTS THROUGH ACCOUNT PAYEE CHEQUES. THE APPELLANT HAD RECEIVED LOANS OF RS. 3,50,OOO/- AND RS. 2,50,OOO/- FROM HER FAMILY MEMBERS, WHOSE CASES WERE ALSO FALLING WITHIN THE JURISDICTION OF THE SAME AO. IN RESPECT OF ONE OF THE LOAN CREDITORS NAMELY SHRI DEEPAK PANJWANI, SIMULTANEOUS ASSESSMENT PROCEEDINGS U/S. 153C WAS CARRIED OUT BY THE SAME AO. 68. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT AFTER EXAMINING DOCUMENTARY EVIDENCES WITH REG ARD TO DEPOSIT IN BANK ACCOUNT, THE CIT(A) HAS RECORDED A FINDING TO THE EFFECT THAT SOURCE OF CASH DEPOSIT W AS FULLY JUSTIFIED AS PER THE CASH FLOW STATEMENT FILED BEFO RE THE ASSESSING OFFICER, WHEREIN THE ASSESSING OFFICER HA S NOT FOUND ANY DISCREPANCY. THE LD. CIT(A) ALSO OBSERVED THAT 178 178 THE ASSESSEE HAS SATISFACTORILY EXPLAINED THE SOURC E AND AVAILABILITY OF CASH WITH HER BEFORE MAKING CASH DE POSIT IN HER BANK ACCOUNT. THE FINDINGS SO RECORDED BY TH E LD.CIT(A) HAVE NOT BEEN CONTROVERTED, ACCORDINGLY, WE CONFIRM THE ACTION OF THE CIT(A) FOR DELETING THE A DDITION MADE ON ACCOUNT OF CASH DEPOSIT IN THE BANK ACCOUNT . KAVITA PANJWANI : 69. IN CASE OF KAVITA PANJWANI, THE ADDITION WAS MADE B Y THE ASSESSING OFFICER ON ACCOUNT OF SHORT TERM CAP ITAL GAIN AND LONG TERM CAPITAL GAIN. THE ADDITION SO MADE IN ALL THE YEARS STARTING FROM ASSESSMENT YEARS 2002-03 TO 200 8-09 HAS BEEN CONFIRMED BY THE LD.CIT(A) AFTER HAVING TH E FOLLOWING OBSERVATIONS :- IN GROUND NO.3, THE APPELLANT HAS CHALLENGED AO'S ACTION IN NOT ACCEPTING LONG TERM CAPITAL GAIN (LT CG) ON SALE OF SHARES IN TWO COMPANIES (1) MANTRA ONLINE L TD, IN SHORT MOL AND (2) MEDIA MATRIX WORLDWIDE LIMITED IN SHORT MMWWL. IN ORDER TOO APPRECIATE THE SURROUNDING FACTS AND VERY DETAILED AND ELABORATE FINDINGS RECORDED BY AO IN THIS BEHALF, IT WOULD BE 179 179 APPROPRIATE TO EXTRACT THE RELEVANT PORTION OF ASSESSMENT ORDER AS UNDER:- ' LONG TERM CAPITAL GAINS: THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAINS ON SALE OF 6,000 SHARES OF MANTRA ONLINE LTD.. IN THE COMPUTATION OF INCOME, THE ASSESSEE . HAS SHOWN THE DATE OF PURCHASE AS 06.04.01 AND COST AT RS 19,320/- THE SAME HAS BEEN SHOWN TO HAVE BEEN SOLD 011 16.06.02 FOR RS 6,29,400/- SHOWING A GAIN OF RS. 6,10,080/-. DEDUCTION U/S 54F HAS ALSO BEEN CLAIMED IN RESPECT OF A PROPERTY PURCHASED FOR RS. 5,56,000/- AND BALANCE AMOUNT OF RS. 54,080/-/- HAS BEEN OFFERED AS INCOME FROM LONG TERM CAPITAL GAIN THE ASSESSEE HAS STATED THAT THE DOCUMENTS EVIDENCING PURCHASE AND SALE WERE FILED WITH THE RETURN OF INCOME. HOWEVER, NO SUCH DOCUMENTS HAVE BEEN FOUND ATTACHED TO THE RETURN OF INCOME. IN THE REPLY, DATED 14.10.09 180 180 THE ASSESSEE HAS BRIEFLY GIVEN THE PARTICULARS OF THE SHARES AND STATED THAT THE SHARES PURCHASE FOR RS. 19,320/- WERE SHOWN IN STATEMENT OF AFFAIRS AS ON 31.03.2002. THE ASSESSEE WAS AGAIN ASKED TO SUBSTANTIATE THE LONG TERM CAPITAL GAINS. VIDE LETTER DATED 08.12.09 THE ASSESSEE HAS EXPLAINED THE SAID TRANSACTION' IN DETAIL. THE FOLLOWING IMPORTANT OBSERVATIONS IN THIS CONNECTION ARE AS UNDER: I) THE ASSESSEE HAS STATED THAT, IN THE FIRST WEEK OF APRIL 2001, THE ASSESSEE CAME INTO CONTACT WITH SHRI PRAKASH NAHATA, A SHARE BROKER OF KOLKATA AND ON WHOSE ADVISE, THE ASSESSEE PURCHASED THE SHARES ON 06.04.01 FOR A CONSIDERATION OF RS. 19,320/-. HOWEVER, IN THE LETTER DATED 08.12.09, FILED FOR A. Y 2002-03, THE ASSESSEE STATED THAT ON ADVISE, OF ONE OF THEIR FAMILY FRIEND IN FIRST WEEK OF APRIL 2001 THE ASSESSEE ASKED SHRI PRAKASH NAHATA TO SALE SOME OTHER SHARES. THEREFORE, THE STATEMENT OF THE ASSESSEE IN TWO LETTERS OF SAME DATE BUT FILED 181 181 IN TWO DIFFERENT ASSESSMENT YEARS, GIVES DIFFERENT VERSION. II) THE ASSESSEE HAS FURTHER STATED THAT THE SHARES OF RS. 19,320/- OF MANTRA ONLINE LTD. WERE PURCHASED ON 06.04.01 AND IN THE ASSESSEE HAS ALSO ENCLOSED A CONTRACT NOTE AND A BILL DATED 06.04.01. THE ASSESSEE. HAS FURTHER STATED THAT THE BROKER DID NOT INSISTED FOR THE PAYMENT OF RS. 19,320/- FOR SHARES PURCHASED ON 06.04.01, SINCE IN THE VERY SAME SETTLEMENT THE ASSESSEE EARNED SOME GAIN THROUGH THE SAME BROKER AND THEREFORE THE AS SESSEE WAS NOT REQUIRED TO MAKE ANY PAYMENT. IT MAY BE POINTED OUT THAT AS DISCUSSED IN THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2002-03 , THERE, THE ASSESSEE HAS SHORT SOLD SHARES ON 06.04.01 WHICH WERE LATER ON PURCHASED 11.04.01 AND HENCE NO PAYMENT WAS DUE TO THE ASSESSEE ON 06.04.01. 182 182 WHATEVER PROFIT THE ASSESSEE STATED TO HAVE EARNED, WOULD ONLY ACCRUE AFTER 11. 04. O1. HENCE, THE STORY PROPOUNDED BY THE ASSESSEE, THAT HE WAS NOT SUPPOSED TO PAY PURCH ASED PRICE OF MANTRA ONLINE LTD PURCHASED ON 06.04.01, I S NOT SUSTAINABLE. III) IT IS SURPRISING TO NOTE THAT THE ASSESSEE AND THE BROKER WERE VERY CONFIDENT OF EARNING PROFIT OF RS. 19,320 /- ON 06.04.01 ITSELF,' WHEN THE SHARES FOR RS. 19,320/- WERE PURCHASED. INFACT, THE PROFIT OF RS. 19,320/- ACCRU ED TO THE ASSESSEE ONLY ON 11.04.01 WHEN HE RECOVERED THE-SHO RT SALE AS DISCUSSED IN THE ASSESSMENT ORDER FOR THE A. Y 2 002-03. BY ANY STRETCH OF IMAGINATION, IT CAN NOT BE ACCEPT ED THAT THE ASSESSEE PURCHASES SHARES OF MANTRA FOR RS. 19,320/ - ON 06.04.01 AND EARNS, AN EXACT PROFIT OF RS. 19,320/- ON 11.04.01 ON SOME OTHER SHARES. IT IS CLEAR THAT THE ASSESSEE HAS ACTED IN CONCERT WITH THE BROKER AND HAS MANAGE D THIS ENTIRE AFFAIR AT A LATER DATE. IV) IT IS ALSO WORTH POINTING OUT THAT THE ASSESSEE HAS FILED A RETURN FOR A. Y 2002-03 ON 30.07.02 (AS MENTIONED B Y THE ASSESSEE IN RETURN FILED U/S 153A) AND THE LONG TER M CAPITAL GAIN IN A. Y 2003-04 HAS BEEN SHOWN TO HAVE EARNED ON 183 183 16.06.02. THEREFORE THE RETURN FOR A. Y 2002-03 WAS FILED AT A LATER DATE AFTER SHOWING ALL THESE TRANSACTIONS. TH IS FACT ALONG WITH THE FACT THAT THERE WAS NO ACTUAL PAYMEN T BY THE ASSESSEE OF RS. 19,320/- FOR PURCHASE OF SHARES OF MANTRA, ALSO SUBSTANTIATE THAT THESE TRANSACTIONS CAN NOT B E TREATED AS NORMAL AND GENUINE TRANSACTIONS. V) IT IS SURPRISING TO NOTE THAT THE SHARES HAVE B EEN TRANSFERRED IN THE NAME OF THE ASSESSEE ON THE BASI S OF INCOMPLETE TRANSFER DEED THIS TRANSFER DEED IS NOT COMPLETE IN RESPECT OF THE DATE ON WHICH IT WAS SIGNED BY TH E TRANSFEREE, IT DOES NOT MENTIONED THE VALUE OF STAM PS AFFIXED AND IT DOES NOT MENTION THE NAME OF THE STOCK EXCHA NGE AND THE CONSIDERATION IN WORDS AND IN FIGURES. VERY IMP ORTANT THE TRANSFER DEED DOES NOT CONTAIN THE ADDRESS OF THE A SSESSEE NOR DOES IT CONTAIN THE NAME OF ASSESSEE'S HUSBAND ANOTHER GLARING MISTAKE IS THAT IN THE TRANSFER DEED THE NA ME-OF THE TRANSFEREE I.E THE ASSESSEE WAS MENTIONED AS SANGEE TA AND LATER ON CORRECTED TO SUNITA. HOWEVER EVEN AFTER THE CORRECTION OF THE NAME IN TH E TRANSFER DEED, THE COMPANY TRANSFERRED THE SHARES I N THE NAME OF SANGEETA WHICH WAS LATER ON RECTIFIED TO SU N ITA. 184 184 IF THE CORRECTION IN THE TRANSFER DEED WAS MADE BEF ORE SENDING THE SAME TO THE COMPANY FOR TRANSFER, HOW C OME THE COMPANY ALSO COMMITTED THE SAME MISTAKE AND HOW THE SAME WAS RECTIFIED ON THE SAME DATE, IS NOT EXPLAINABLE. VI) THE SHARES WERE STATED TO HAVE BEEN PURCHASED O N 06.04.01 AS PER ANNEXURE A-1.1 AND THE SETTLEMENT P ERIOD MENTIONED ON THE BROKER NOTE IS 06.04.01 TO 12.04.0 1. AS PER THE EARLIER SETTLEMENT SYSTEM, AFTER THE SETTLE MENT PERIOD, THE PURCHASER BROKER HAS TO DEPOSIT THE MON EY WITH THE STOCK EXCHANGE AND THE SELLER BROKER HAS T O DEPOSIT THE SHARES WITH TRANSFER DEED.' AFTER CLEAR ANCE OF THE PAYMENTS THE STOCK EXCHANGE THROUGH THE CLEARIN G HOUSE USED TO DELIVER THE SHARE CERTIFICATE WITH TH E TRANSFER DEED TO THE PURCHASER BROKER. THIS ENTIRE EXERCISE USE TO TAKE 7 TO 10 DAYS. AFTER THIS THE BROKER WILL HANDO VER THE SHARES TO HIS CLIENT. IN THE PRESENT CASE, SURPRISI NGLY THE SHARES HAVE BEEN TRANSFERRED IN THE NAME OF THE ASS ESSEE ON 23.04.01. THIS IS PRACTICALLY NOT POSSIBLE FOR T HE REASON THAT AFTER THE END OF THE SETTLEMENT ON 12.04.01 TH E BROKER OF THE ASSESSEE MUST HAVE RECEIVED THESE SHARES FRO M THE 185 185 STOCK EXCHANGE NOT BEFORE THAN 19.04.01. THE ASSESS EE HER SELF HAS FILED THE BROKER BILL NO.232 DATED 19. 04.01 WHICH IS AT ANNEXURE B2.02 WHICH PROVES THAT THE SA ID SHARES COULD NOT BE RECEIVED BY THE ASSESSEE FROM T HE BROKER BEFORE 19.04.01. AFTER RECEIVING THE SHARES FROM. THE STOCK EXCHANGE, THE BROKER FROM KOLKATTA MUST H AVE SENT THE SAME TO THE ASSESSEE IN INDORE, WHICH WILL TAKE AT LEAST TWO DAYS AND THEN THE ASSESSEE WILL FILL UP T HE DEED SIGNED THE SAME AND AFFIX THE STAMPS AND WILL THE S AME TO THE COMPANY FOR TRANSFER WHICH IS GOING TO TAKE 3-4 DAYS TIME. THAN THE BOARD OF DIRECTORS/ SHARE TRANSFER COMMITTEE MEETS (AT FIXED INTERVALS AND NOT DAILY) AND APPROVES THE TRANSFERS. THEREFORE -IT IS NOT POSSIB LE TO GET THE PHYSICAL SHARES TRANSFERRED IN THE NAME OF THE PURCHASER WITHIN 10 DAYS OF THE END OF THE SETTLEME NT IN WHICH THESE WERE PURCHASED. IT IS A WELL KNOWN FACT THAT IN THOSE DAYS THE ENTIRE PROCESS OF SHARE TRANSFER USED TO TAKE AT LEAST A MONTHS TIME. MORESO WHEN THERE WE RE SO MANY DEFECTS IN THE TRANSFER DEED, IT TAK.ES MUCH M ORE TIME T O HAVE THE SHARES TRANSFER. VII) IT IS AGAIN SURPRISING TO NOTE THAT THE LETTER OF 186 186 MANTRA FILED CIS ANNEXURE 8-6 DATED 23.04.01 ENCLOSING THE SIX THOUSAND SHARES DULY TRANSFER IN THE NAME OF THE ASSESSEE DOES NOT MENTION THE FULL ADDRESS OF THE ASSESSEE. IT ONLY STATES SUNITA PANJWANI, INDORE, MP. ON THE BASIS OF THIS ADDRESS THE CERTIFICATES CAN NOT BE DELIVERED TO THE ASSESSEE. IN THIS CASE THE ASSESSEE HAS NOT MENTIONED HER ADDRESS THE SHARE TRANSFER DEED ALSO. VIII) AS PER THE BROKER NOTE THE DATE OF SALE IS 06.06.02. THE ASSESSEE HAS RECEIVED THE PAYMENT OF RS. 6,29,400/-. RS. 6,00,000/- HAS BEEN CREDITED TO THE ASSESSEE'S BANK ACCOUNT WITH STATE BANK OF INDORE ON 14.0602 AND RS. 29,400/- ON 17.07.02. THE INTERESTING ISSUES EMERGING HERE ARE THAT AGAIN THE SALES HAVING MADE ON 06.06.02, THE PAYMENT THEREOF CAN NOT BE RECEIVED AS EARLY AS ON 14.06.02 THAT IS WITH IN EIGHT DAYS THAT TOO CREDITED IN THE ACCOUNT OF THE ASSESSEE AT INDORE FROM THE ACCOUNT OF THE BROKER AT KOLKATTA. AFTER SELLING THE SHARES ON 06.06.02 AND AFTER THE END OF THE SETTLEMENT THE 187 187 BROKER WILL DEPOSIT THE SHARES WITH THE STOCK EXCHANGE AFTER WHICH TO EXCHANGE WILL RELEASE THE PAYMENTS TO THE BROKER WHICH IS NEVER SO FAST. THAN THE BROKER FROM KOLKATTA WILL ISSUE THE CHEQUE TO ASSESSEE AT INDORE. AS KNOWN IN THOSE DAYS OUTSTATION CHEQUES USED TO TAKE A LONG TIME FOR CLEARANCE. IX) THE RECEIPTS OF SALE CONSIDERATION IN TWO PARTS OF RS. 6,00,000/- AND BALANCE RS. 29,400/- THAT TOO AFTER MORE THAN A MONTH, IS ALSO NOT UNDERSTANDABLE. WHEN THE ENTIRE AMOUNT WAS DUE TO THE ASSESSEE AND THE ASSESSEE HAS NOT UNDER TAKEN ANY OTHER TRANSACTION THEN WHY THE FULL PAYMENT WAS NOT MADE BY THE BROKER IMMEDIATELY. X) THE ASSESSEE HAS FILED AS ANNEXURE B-9 A LETTER FROM THE ASSESSEE TO THE BROKER STATING TO ENCLOSED THE DELIVERY OF SIX THOUSAND SHARES. THIS LETTER IS UNDATED AND ITS MODE AND PROOF OF DELIVERY IS ALSO NOT AVAILABLE. THEREFORE THE SAME AS NO SANCTITY . XI) THE ASSESSEE HAS ALSO FILED A QUOTATION INFORMATION FOR 06. 06. 02, WERE IN THE RATE OF 188 188 MANTRA ONLINE LTD. HAS BEEN SHOWN AT RS.101/- TO RS. 96/-. HOWEVER WHEN THE SAME WAS CHECKED ONLINE AT THE OFFICIAL SITE KOLKATTA STOCK EXCHANGE THE SAME WAS NOT REFLECTING THEREON. CONSIDERING THE ABOVE FACTS AND DISCUSSIONS' HAVING POINTED OUT SO MANY DISCREPANCIES AND RAISED SO MANY ISSUES, IT IS CLEAR THAT THE ENTIRE TRANSACTION HAS BEEN COOKED UP WITH THE SOLE VIEW OF CONVERTING THE ASSESSEE'S INCOME FROM UNDISCLOSED SOURCES AND GIVING IT A COLOR OF LONG TERM CAPITAL GAINS WHICH IS TAXABLE AT A LOWER RATE OF ONLY 10%. IN VIEW OF THE ABOVE DISCUSSION, IT IS PRACTICALLY NOT POSSIBLE THAT THE ASSESSEE HAS PURCHASED AND SOLD THESE SHARES. THEREFORE THE PROFIT OF RS. 6,10,080/-SHOWN UNDER THE GRAB OF LONG TERM CAPITAL GAIN IS TREATED AS INCOME FROM OTHER SOURCES AND ACCORDINGLY NO EXEMPTION U/S 54F AS CLAIMED IN THE RETURN, WILL BE ALLOWED. THIS ENTIRE INCOME WILL BE SUBJECT TO NORMAL RATE OF TAX . IT IS CLARIFIED THAT THE COST OF RS.19,320/- HAS ALREADY BEEN TAXED IN THE A. Y 2002-03 THEREFORE 189 189 ONLY THE DIFFERENCE AMOUNT I.E. RS. 6,10,080/- IS BEING TAXED HERE. VERY INTERESTINGLY THE SAME ISSUE WITH THE SAME SHARES, SAME DATES AND SAME AMOUNTS HAVE BEEN SHOWN IN THE ANOTHER GROUP CASE OF SMT. CHANDANI PANJWANI AND SMT. SUNITA PANJWANI IN THE SAME ASSESSMENT YEARS. THIS FACT ALSO GOES TO PROVE THAT THE ENTIRE AFFAIR HAS BEEN ARRANGED TO TAKE UNDUE ADVANTAGE OF LOWER RATE OF TAX RATE AND ALSO OF EXEMPTIONS AVAILABLE IN THIS RESPECT. SINCE, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND ALSO CONCEALED THE PARTICULARS THEREOF, IT IS A FIT CASE FOR IMPOSITION OF PENALTY AND THEREFORE PENALTY PROCEEDINGS U/S 271 (L)(C) IS BEING INITIATED SEPARATELY. 70. AGAINST THE ABOVE ORDER OF CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 71. THE ISSUE WITH REGARD TO BOGUS SHARE TRANSACTIO N HAVE ALREADY BEEN DEALT WITH BY US HEREINABOVE. FOLLOWIN G THE SAME REASONING, WE DISMISS THE GROUND TAKEN BY THE ASSESSEE. 190 190 1. LONG TERM CAPITAL GAIN ON SALE OF SHARES OF MEDIA M ATRIX WORLD WIDE LTD(MMWWL): THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN OF RS . 2,57,710/- ON SALE OF 6,000 SHARES OF MMWWL AND PA ID TAX ON @ 10%. IN THE COMPUTATION SALE REALISATION 16.02 .03 HAS BEEN SHOWN AS RS. 2,72,060/- AND COST OF PURCHASE ON 10.07.01 AT RS. 19,350/-. AGAIN THIS IN SUMMARY OF HAVING ACCOUNT WITH SBI ATTACHED WITH THE RETURN, THE ASSE SSEE HAS SHOWN AS AMOUNT DEPOSITED OUT OF SALE OF SHORES OF MMWWL AT RS. 2,72,060/- ON BEING ASKED TO SUBSTANTIATE TH E TRANSACTION THE ASSESSEE HAS FILED COPIES OF BROKER NOTE AS ANNEXURE A-I.OJ TO A-I.07 WITH REPLY DATED 14. JO.0 9 AND ANOTHER EXPLANATION VIDE LETTER DATED 08.12.2009. O N PERUSAL OF THE EXPLANATION AND THE DOCUMENT FILED F OLLOWING ISSUES HAVE EMERGED: I) THE ASSESSEE HAS STATED THAT 6,000 SHARES OF MMWWL WERE PURCHASED IN A. Y. 2002-03 IN CASH FOR RS. 19,350/- WHICH WAS SHOWN IN THE STATEMENT OF AFFAIRS AS ON 31.03.02. THESE SHARES HAVE BEEN STATED TO HAVE PURCHASED FROM ONE CAPITIALINE SECURITIES, MUMBAI. THE 191 191 ASSESSEE HAS FILED THE RELEVANT BROKER NOTE. HOWEVER, THE ASSESSEE HAS NOT FILED ANY OTHER DOCUMENT EVIDENCING THE DELIVERY OF THE SAID SHARES BY THE BROKER TO THE ASSESSEE NOR THE MODE OF DELIVERY HAS BEEN SHOWN. THE ASSESSEE ALSO NOT FILED THE COPY OF PHYSICAL SHARE CERTIFICATE RECEIVED FROM THE BROKER AND HAS ALSO NOT FILED THE COPY OF SHARE TRANSFER DEED. IN FACT THE ASSESSEE HAS NOT FILED ANY DOCUMENT EVIDENCING THE TRANSFER OF THESE SHARES IN THE NAME OF THE ASSESSEE SUCH AS THE DETAILS OF SHARES SENT FOR TRANSFER TO THE COMPANY OR THE DETAILS/DOCUMENTS EVIDENCING THE DISPATCH OF THESE SHARES AFTER TRANSFER BY THE COMPANY. II) THE ASSESSEE HAS FILED A COPY OF PHYSICAL SHARE CERTIFICATE ISSUED ON 26.11.02 FOR 6,000 SHARES FOR MMWWL. THE SHARES HAVE BEEN SOLD BY THE ASSESSEE ON 16.02.03. HOWEVER, THE ASSESSEE HAS NOT FILED ANY DOCUMENT EVIDENCING THE HOLDING OF SHARES OR PROVING THE OWNERSHIP OF SHARES PRIOR TO ONE YEAR FROM THE 192 192 DATE OF SALE. THE SALE DOCUMENT, WHICH THE ASSESSEE IS RELYING 011., FOR THIS PURPOSE IS THE PURCHASE BILL OF THE BROKER. SINCE, THE PAYMENT HAS BEEN STATED TO MADE IN CASH, THE SAID PURCHASE BILL AND THE ENTIRE CASH TRANSACTION IS NOT ACCEPTABLE. THE ASSESSEE HAS NOT EXPLAINED, AS TO WHY HE WAS REQUIRED TO PAY THE PURCHASE PRICE IN CASH OF RS. 19,350/- THAT TOO, TO A BROKER OF MUMBAI, WHAT WAS THE METHOD OF PAYMENT, WHO COLLECTED THE CASH AND SO MANY THINGS. AS PER THE SUBSEQUENT DISCUSSION IN THE ORDER ,THIS TRANSACTION HELD TO BE BOGUS AND A COLORFUL DEVICE TO CONVERT THE UNACCOUNTED INCOME IN THE FORM OF LONG TERM CAPITAL GAIN, WHICH ARE TAXED AT A LOWER RATE. IT MAY BE POINTED OUT THAT THE ASSESSEE AND HIS OTHER FAMILY MEMBERS HAVE BEEN REGULARLY FOLLOWING THIS TACTICS AND HAVE SHOWN LONG TERM CAPITAL GAINS IN THE CASE OF SHRI NEERAJ PANJWANI A. Y 2003-04, IN SMT. SUNITA PANJWANI A. Y 193 193 2002-03 & 2003-04 AND SMT. CHANDANI PANJWANI IN A.Y . 2002-03 & 2003-04 AND SMT. KAVITA PANJWANI HERSELF IN A. Y. 2002-03, 2004- 05 & 2006-07, WHERE IN ALL CASES, IT HAS BEEN HELD THAT THE CAPITAL GAINS ARE NOT GENUINE. IT MAY ALSO BE POINTED OUT THAT IN ALL THESE YEARS THE ASSESSEE COME UP WITH SOME STORY OF GETTING SOME ADVICE EITHER FROM SOME RELATIVE OR SOME BROKER, I.E. THE ASSESSEE HAS STATED THAT THEY HAVE ACTED ON THE BASIS OF SOME 'TIP'. IT IS SURPRISING TO NOTE THAT IN THE CASE OF ASSESSEE AND HIS FAMILY MEMBERS, EACH AND EVERY TIME SUCH 'TIP' HAS RESULTED HUGE PROFIT AND THEY HAVE NOT SUFFERED A SINGLE LOSS ON THIS ACCOUNT IN ALL THESE FILES IN ALL THESE YEARS. IN ALL THE CASES, PAYMENTS FOR PURCHASE OF SHARES HAVE EITHER BEEN MADE IN CASH OR BY WAY OF ADJUSTMENT AGAINST ARTIFICIALLY CREATED SHORT TERM CAPITAL GAIN. THE. ASSESSEE AND HIS FAMILY MEMBERS ARE RESIDING IN INDORE AND IN ALL THE CASES OF CAPITAL GAIN THE MAXIMUM BROKERS ARE 194 194 FROM KOLKATA AND FEW ARE FROM MUMBAI. ALL THESE FACTS MAKE THE CASE OF THE ASSESSEE AS NOT CONVINCING. III) COMING TO THE DELIVERY OF SHARES TO THE BROKER, AT THE TIME OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FILED A DELIVERY INSTRUCTION SLIP DATED 20.01.03 ANNEXED AT ANNEXURE B-7.00 OF SUBMISSION DATED 08.12.09. IN THIS CONNECTION, TWO IMPORTANT ISSUES ARE WORTH MENTIONING. FIRSTLY, THE DELIVERY INSTRUCTION IS FOR 'OFF MARKE T TRADES' AND NOT FOR 'MARKET TRADES. THIS CLEARLY SHOWS THAT THE SAID TRANSACTION WAS NOT CARRIED OUT THROUGH THE STOCK EXCHANGE. THAT THE CMBPID OF THE BROKER THROUGH WHOM THE SHARES HAVE BEEN SOLD, AS PER THE BROKER NOTE IS IN 300476, WHERE AS THE CLIENT ID MENTIONED IN THE DELIVERY INSTRUCTION IS 40214307. SECONDLY, INSPITE OF REPEATED REQUEST THE ASSESSEE HAS NOT FILED HIS D-MAT STATEMENT. THE SHARES HAVE BEEN DELIVERED FROM THE D-MAT ACCOUNT AS PER THE DELIVERY INSTRUCTION ON 05.02.03. AS PER THE 195 195 SHARES CERTIFICATE THESE 6,000 SHARES WERE RECEIVED BY THE ASSESSEE AFTER 26.11.02 (AS PER THE DATE ON THE SHARE CERTIFICATE). THEREFORE, THESE SHARES WERE FOR JUST A FEW DAYS IN THE D- MAT ACCOUNT. V) THEREFORE, THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE LONG TERM CAPITAL GAINS. MERELY FILING OF BROKERS NOTE AND RECEIVING THE SALE PROCEEDINGS THROUGH CHEQUE IS NOT SUFFICIENT. Z; IN VIEW OF THE ABOVE DISCUSSION. IT IS HELD THAT THE CREDIT OF RS. 2,72,060/- IN THE ACCOUNTS OF THE ASSESSEE, IN THE FORM OF SALE PROCEEDS CAN NOT BE ACCEPTED AT GENUINE AND IS BEING ADDED U/S 68. SINCE THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND ALSO CONCEALED THE PARTICULARS THEREOF, IT IS A FIT CASE FOR IMPOSITION OF PENALTY AND THEREFORE PENALTY PROCEEDINGS U/S 271 (1 ) (C) IS BEING INITIA TED SEPARATELY. 4.2.1. THE APPELLANT IN WRITTEN SUBMISSION FILED HAS 196 196 INCLUDED A SET OF VARIOUS DOCUMENTS WHICH ACCORDING TO APPELLANT FULLY SUPPORT THE CLAIM OF LONG TERM CAPITAL GAIN. THE APPELLANT IN WRITTEN SUBMISSION HAS ALSO TRIED TO MEET THE VARIOUS DISCREPANCIES AND FINDINGS NOTED BY AO IN THIS BEHALF AS HAS BEEN EXTRACTED ABOVE, AND HAS ALSO RELIED ON SEVERAL TRIBUNAL DECISIONS TO SUPPORT THE CLAIM OF LONG TERM CAPITAL GAIN. ON CAREFULLY CONSIDERING THE COPY OF DOCUMENTS FILED AND THE DETAILED FINDING RECORDED BY AO AND CONSIDERING THE APPELLANT'S FACTUAL AND LEGAL CONDITIONS IN THI S BEHALF THE FOLLOWING FACTS CLEARLY EMERGE: (1) SHARES IN BOTH THESE COMPANIES ARE NOT WIDELY TRADED AND NOT OTHERWISE THESE COMPANIES ARE NOT KNOWN TO BE COMPANIES OF SOUND FINANCIAL AND BUSINESS ANTECEDEN TS AND SHARES IN BOTH THESE COMPANIES APPARENTLY FALL IN T HE CATEGORY OF SPECULATIVE SHARES KNOWN AS PENNY STOCK S. (2) THERE WAS MULTIFOLD RISE IN THE PRICE OF SUCH SHARES FROM THE DATE OF PURCHASE BY THE APPELLANT AND DATE OF SALE AFTER A PERIOD OF ONE YEAR AGAINST OVERALL INCREASE IN SHARE PRICES OF MOST WIDELY TRADED SHARES, WHICH DEFIES N ORMAL 197 197 COMMON SENSE. (3) THE ASSESSEE/APPELLANT AND OTHER MEMBERS OF SE ARCH GROUP DO NOT REGULARLY DEAL IN SHARES OR HAD THE EX PERIENCE OR EXPERTISE OF INVESTING IN SHARE MARKET. NO OTHER WO RTHWHILE INVESTMENT IN EQUITY SHARES IN ANY OTHER COMPANY YI ELDING DIVIDEND INCOME HAS BEEN DISCLOSED IN ANY OF THE CA SE OF SEARCH GROUP. (4) VARIOUS ASSESSES OF THE SEARCH GROUP AS NOTED BY AO HAVE SIMULTANEOUSLY TRADED IN THE SAME SCRIP AT THE SAME TIME RESULTING IN SIMILAR CAPITAL GAIN IN VARIOUS C ASES. THE APPELLANT HAS MISERABLY FAILED TO REBUT THAT VARIOU S CONTENTIONS AND FINDINGS RECORDED BY AO ABOUT SERIO US DISCREPANCIES, CAUSING SERIOUS DOUBTS ON THE GENUIN ENESS OF THESE TRANSACTIONS. 4.2.2 THE APPELLANT'S EMPHASIS AND RELIANCE ON THE SET OF DOCUMENTS TO SUPPORT SUCH TRANSACTION IS ENTIREL Y MISPLACED AS COOKED UP SUPPORTING DOCUMENTS HAVE BE EN PREPARED WITH THE HELP OF CONNIVING BROKERS WHO HAV E ACTIVE INTEREST IN EXECUTION OF SUCH DUBIOUS TRANSACTION A ND CONSEQUENTLY THEY CANNOT BE GIVEN ANY IMPORTANCE. R ELIANCE CAN BE PLACED TO THE THREE AUTHORITATIVE DECISIONS OF HON 'BLE 198 198 SUPREME COURT IN THIS BEHALF LAYING DOWN PREPOSITIO N THAT WITHOUT APPRECIATING THE GENUINENESS OF TRANSACTION SOLE RELIANCE CANNOT BE PLACED ON DOCUMENTS AND THE SAME ARE TO BE EXAMINED 111 THE LIGHT OF SURROUNDING CIRCUMSTANCES AND HUMAN PROBABILITIES: (I) CIT VS. DURGA PRASAD MORE 82 ITR 540 (SC) (II) SUMATI DAYAL. VS. CIT 214 ITR 801(SC) (III) CIT VS. P. MOHANKALA (2007) 291 ITR 278 (SC) 4.2.3 IT HAS TO BE APPRECIATED THAT THE REVENUE AUTHORITIES ARE FUNCTIONING IN A DEMOCRATIC SET-UP AND ARE NOT DISCHARGING THEIR DUTIES IN A POLICE STATE WHEREBY THEY CAN FORCE THE ASSESSEE/APPELLANT AND CO-CONSPIRATORS TO ADMIT THE TRUTH OF THE TRANSACTIONS THOUGH THE SAME APPEARS TO BE OBVIOUS AND APPARENT AND IT IS USUAL ON THE PART OF THE APPELLANT/ASSESSEE AND THERE ARE CO-CONSPIRATORS/ABETTOR AND THEN FOR THE AR TO CLAIM AND CONTEND THAT THERE IS NO DIRECT EVIDENCE THAT SUCH TRANSACTIONS WERE NOT GENUINE AND THE TRANSACTIONS WERE SUPPORTED BY VALID 199 199 DOCUMENTS AND WERE CARRIED OUT THROUGH BANKING CHANNEL AND HENCE SHOULD BE ACCEPTED AS GENUINE KNOWING FULLY WELL THAT SUCH TRANSACTIONS WERE NOT GENUINE. THE AFORESAID FACTS HAVE TO BE AGAIN EXAMINED AND ANALYZED WITH APPRECIATION OF THE CONSTRAINTS AND LIMITATIONS WITHIN WHICH THE AO HAS TO FUNCTION AND OPERATE. FIRSTLY, THESE TRANSACTIONS WHICH ARE NORMALLY WELL-DOCUMENTED AND ARE SECRETLY NEGOTIATED ARE SCRUTINIZED BY THE AO AFTER A SUFFICIENT GAP OF TIME I.E. NEARLY TWO YEARS FROM THE END OF THE RELEVANT F. Y. AND THEN WHEN THE APPELLANT/ASSESSEE AND THE OTHER PERSONS ABETTING THE ASSESSEE IN SUCH MANIPULATION ARE CONFRONTED BY THE AO, THERE IS USUAL TENDENCY TO EVADE THE REPLIES OR IN THE LEAST TO DELAY THE REPLIES. THE AO AGAIN HAS TO FINALIZE THE PROCEEDINGS WITHIN THE STATUTORY LIMITATION INVOLVED AND THEN HE CANNOT DEVOTE THE ENTIRE TIME AVAILABLE AT HIS DISPOSAL TO A PARTICULAR CASE. HERE, IT WILL BE PERTINENT TO MAKE REFERENCE TO THE OBSERVATION OF THE HON'BLE SUPREME COURT IN THE 200 200 CASE OF SUMATI DAYAL V. CIT 214 ITR 801 (SC) MADE IN THE CONTEXT OF SALE AND PURCHASE TRANSACTIONS OF PRIZE WINNING LOTTERY TICKETS WHICH ARE VERY MUCH APPLICABLE TO THE FACTS OF THE CASE. THE SAME ARE AS EXTRACTED HERE UNDER: 'THE MATTER HAS TO BE CONSIDERED IN THE LIGHT OF HUMAN PROBABILITIES. THE CHAIRMAN OF THE SETTLEMENT COMMISSION HAS EMPHASISED THAT THE APPELLANT DID POSSESS THE WINNING TICKET WHICH WAS SURRENDERED TO THE RACE CLUB AND IN RETURN. A CROSSED CHEQUE WAS OBTAINED. IT IS, IN OUR VIEW, A NEUTRAL CIRCUMSTANCE, BECAUSE IF THE APPELLANT HAD PURCHASED THE WINNING TICKET AFTER THE EVENT SHE WOULD BE HAVING THE WINNING TICKET WITH HER WHICH SHE COULD SURRENDER TO THE RACE CLUB. THE OBSERVATION BY THE CHAIRMAN OF THE SETTLEMENT COMMISSION THAT , 'FRAUDULENT SALE OF WINNING TICKET IS NOT AN USUAL PRACTICE BUT IS VERY MUCH OF AN UNUSUAL PRACTICE' IGNORES THE PREVALENT. 201 201 MALPRACTICE THAT WAS NOTICED BY THE DISTRICT TAXES ENQUIRY COMMITTEE AND THE RECOMMENDATIONS MADE BY THE SAID COMMITTEE WHICH LED TO THE AMENDMENT OF THE ACT BY THE FINANCE ACT OF 1972 WHEREBY THE EXEMPTION FROM TAX THAT WAS AVAILABLE IN RESPECT OF WINNINGS FROM LOTTERIES, CROSSWORD PUZZLES, RACES, ETC. WAS WITHDRAWN. SIMILARLY THE OBSERVATION BY THE CHAIRMAN THAT IF IT IS ALLEGED THAT THESE TICKETS WERE OBTAINED THROUGH FRAUDULENT MEANS, IT IS UPON THE ALLEGER TO PROVE THAT IT IS SO, IGNORES THE REALITY. THE TRANSACTION ABOUT PURCHASE OF WINNING TICKET TAKES PLACE IN SECRET AND DIRECT EVIDENCE ABOUT SUCH PURCHASE WOULD BE RARELY AVAILABLE. AN INFERENCE ABOUT SUCH A PURCHASE HAS TO BE DRAWN ON THE BASIS OF THE CIRCUMSTANCES AVAILABLE ON THE RECORD. HAVING REGARD TO THE CONDUCT OF THE APPELLANT AS DISCLOSED IN HER SWORN STATEMENT AS WELL AS OTHER MATERIAL ON THE RECORD AN INFERENCE 202 202 COULD REASONABLY BE DRAWN THAT THE WINNING TICKETS WERE PURCHASED BY THE APPELLANT AFTER THE EVENT. WE ARE, THEREFORE, UNABLE TO AGREE WITH THE VIEW OF THE CHAIRMAN IN HIS DISSENTING OPINION. IN OUR OPINION, THE MAJORITY OPINION AFTER CONSIDERING SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES HAS RIGHTLY CONCLUDED THAT THE APPELLANT'S CLAIM ABOUT THE AMOUNT BEING HER WINNING FROM RACES IS NOT GENUINE. IT CANNOT BE SAID THAT THE EXPLANATION OFFERED BY THE APPELLANT IN RESPECT OF THE SAID AMOUNTS HAS BEEN REJECTED UNREASONABLY, AND THAT THE FINDING THAT THE SAID AMOUNTS ARE INCOME OF THE APPELLANT FROM OTHER SOURCES IS NOT BASED ON EVIDENCE.' SO ALSO, REFERENCE CAN BE MADE TO THE OBSERVATION O F THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. DURGA PRASAD MORE 82 ITR 540 (SC) ON PAGE 545 TO THE EFFECT THAT THE CONTENTS IN THE DOCUMENTS CANNOT BE GIVEN UNDUE IMP ORTANCE AND THE REALITY AND SUBSTANCE OF THE TRANSACTION IS TO BE 203 203 CONSIDERED. 4.2.4 FURTHER STILL, WHEN THE APPELLANT HAD NO EXPE RIENCE IN THE LINE OF INVESTMENT IN STOCK MARKET, AND YET SHE WAS ABLE TO EARN A FORTUNE BY MULTIPLYING HER INVESTMENT BY OVER 100 TIMES IN A SHORT SPAN OF LESS THAN 2 YEARS THEN A H EAVY ONUS IS CAST ON HER TO EXPLAIN AND SUBSTANTIATE THAT ALL SUCH TRANSACTIONS WERE GENUINE TRANSACTIONS WHICH THE AP PELLANT HAS MISERABLE FAILED IN THE PRESENT CASE AS DISCUSS ED ABOVE IN DETAIL AND HERE IN AFTER ALSO. 4.2.5 FURTHER JUDICIAL NOTICE IN THE AFORESAID FACT S IS REQUIRED TO BE TAKEN OF PREVAILING MALPRACTICE IN THE FIELD OF MANIPULATION OF STOCK PRICES OF SUCH DUBIOUS COMPANIES BY THE OPERATOR AND MANIPULATORS WITH OR WITHOUT THE A CTIVE HELP AND ASSISTANCE OF MANAGEMENT TO SPREAD RUMOURS OR HIGHLY EXAGGERATED GROWTH/PROFIT PROSPECTS OF SUCH COMPANIES LEADING TO SUCH PHENOMENAL PRICE RISE. REFERENCE CAN BE MADE TO BE MADE TO THE FOLLOWING DECISIONS: (A) CWT V. ROHTAS INDUSTRIES LTD., 67 ITR 283 (SC ), WHEREIN IT WAS HELD THAT : 'IN THE ABSENCE OF ANY DIRECT EVIDENCE, A JUDICIAL OR 204 204 QUASI-JUDICIAL TRIBUNAL CALL BASE ITS CONCLUSIONS O N THE BASIS OF WHAT ARE KNOWN AS NOTORIOUS FACTS BEARING IN MIND THE PRINCIPLES OF SECTION 144 OF TH E EVIDENCE ACT. ' (B) ATTAR SINGH GURMUKH SINGH V. ITO 191 ITR 667 ( SC) WHEREIN, WHILE INTERPRETING THE PROVISIONS OF SECTI ON 40A(3), IT WAS HELD THAT 'IN INTERPRETING A TAXING STATUTE, THE COURT CANNOT BE OBVIOUS OF THE PROLIFERATION OF BLACK MONEY WHICH I S UNDER CIRCULATION IN OUR COUNTRY.' 4.2.6 AO'S FINDING THAT IT IS A CASE OF DUBIOUS TAX PLANNING, IT HAS TO BE NECESSARILY UPHELD FOR THE SIMPLE REAS ONS THAT: I) THE APPELLANT HAD NO GENUINE OR BONA FIDE ECONOM IC OR FINANCIAL BACKGROUND WHILE ENTERING INTO SUCH DUBIO US TRANSACTIONS; AND II) THE ONLY OBJECT OF THE APPELL ANT IN SO ENTERING INTO SUCH DUBIOUS TRANSACTIONS WAS EVADING/AVOIDING INCIDENTS OF TAX BY BRINGING UNACC OUNTED CASH NEEDED FOR INVESTMENT IN THE FORM OF EXEMPT IN COME. IN THE RESULT, THE AO'S ACTION IS FULLY SUPPORTED B Y THE APEX COURT'S JUDGMENT IN THE CASE OF MCDOWELL V. CTO (19 85) 154 ITR 148 (SC) AND THE APPELLANT'S CASE CAN NOT D ERIVED 205 205 ANY BENEFIT FROM THE SERIOUS OF JUDGMENTS LIKE CWT V. ARVIND NAROTTAMDAS (1988) 173 ITR 479 (SC) AND UNIO N OF INDIA V. PLAYWORLD ELECTRONICS P. LTD. (1990) 184 I TR 308 (SC) IN VIEW OF DETAILED DISCUSSION BELOW. 4.2.7 THE RELIANCE PLACED BY APPELLANT ON OTHER TRI BUNAL DECISIONS TO SUPPORT SUCH DUBIOUS TRANSACTIONS IS A GAIN OF NO AVAIL AS IT IS SETTLED PROPOSITION OF LAW THAT E ACH AND EVERY DECISION IS RENDERED ON THE PREMISES OF ENTIR E SET OF FACTS AND CIRCUMSTANCES OF THE CASE AND ANY SLIGHT VARIATION IN ANYONE OF THE MATERIAL FACTS OR PARTIC ULARS MAY RENDER THE DECISION INAPPLICABLE TO OTHER CASES . REFERENCE CAN BE MADE TO THE DECISION OF HON'BLE SU PREME COURT IN THE CASE OF SUN ENGINEERING PVT. LTD. VS. CIT 198 ITR. FURTHER SINCE THAT APPELLANT HAS REFERRED TO D ECISIONS OF VARIOUS BENCHES OF THE TRIBUNAL IN HIS SUPPORT I T WOULD BE WORTHWHILE TO REFER THAT IN THE CASE CITED BELOW TRIBUNAL ON APPRECIATION OF FACTS AND SURROUNDING CIRCUMSTANCES OF THE CASE UPHELD THE AO'S ACTION 111 NOT ACCEPTING THE CLAIM OF ASSESSEE IN LONG TERM CAPITA L GAIN ON SALE OF SHARES: I) ITO VS. SHANTILAL MUNNALAL (2009) 31 DTR 206 206 (BANG)(TRIB) 388 II) ACIT VS. RAMESH CHAND R. PATEL (200S) 94 TTJ (AHD) 361 THUS, IN VIEW OF DETAILED DISCUSSION ABOVE, THE AO'S ACTION IS FOUND TO BE FULLY JUSTIFIED IN THIS BEHALF AND GROUND NO.3 IS ALSO REJECTED BEING DEVOID OF ANY MERIT AND SUBSTANCE. 72. AGAINST THE ABOVE ORDER OF CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 73. THE ISSUE WITH REGARD TO BOGUS SHARE TRANSACTIO N HAVE ALREADY BEEN DEALT WITH BY US HEREINABOVE. FOLLOWIN G THE SAME REASONING, WE DISMISS THE GROUND TAKEN BY THE ASSESSEE. 74. THE ISSUE RAISED BY THE ASSESSEE WITH REGARD T O COMPLETION OF ASSESSMENT U/S 153C WAS ALSO ADJUDICA TED BY CIT(A). BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFI RMED THE ACTION OF ASSESSING OFFICER FOR FRAMING THE ASSESSM ENT U/S 153C READ WITH SECTION 143(3) OF THE INCOME-TAX ACT , 1961, AFTER HAVING THE FOLLOWING OBSERVATIONS :- 4.1 GROUND NO.1 AND 2 ARE BROADLY DIRECTED AGAINST ISSUE OF NOTICE UNDER SECTION 153C 207 207 AND COMPLETION OF ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 153C WHEREIN THE APPELLANT HAS RAISED LEGAL ISSUE THAT PROCEEDING UNDER SECTION 153C WERE NOT VALIDLY INITIATED IN TH E CASE OF THE APPELLANT AS NO ASSET OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE APPELLANT WERE SEIZED. TO EXAMINE AND APPRECIATE LEGAL ISSUE INVOLVED IT WOULD BE APPROPRIATE TO TAKE NOTE OF PROVISIONS OF SECTION 153C WHICH BY WAY OF OVERRIDING PROVISIONS LAYS DOWN THAT WHERE THE AO IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THINGS OR BOOKS OF ACCOUN T OR DOCUMENT SEIZED BELONGS TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN SUBJEC T TO OTHER CONDITIONS SPECIFIED THE AO SHALL PROCEED AGAINST SUCH PERSON AND ISSUE NOTICE FOR ASSESSMENT OR RE-ASSESSMENT OF INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. THUS TWO BASIC REQUIREMENTS WHICH EMERGE FROM SECTION 153C ARE THAT FIRSTLY SOME VALUABLE ASSET OR BOOKS OF ACCOUNT OR DOCUMENT 208 208 BELONGING TO SUCH OTHER PERSON MUST BE SEIZED IN SEARCH AND SEIZURE OPERATION AND SECONDLY THE AO SHOULD RECORD SATISFACTION IN THIS BEHALF BEFORE PROCEEDING AGAINST SUCH PERSON UNDER SECTION 153C. 4.1.1 IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT SATISFACTION WAS NOT RECORDED BY THE AO BUT WHAT IS BEING CONTENDED THAT THERE WAS NO PROPER AND VALID SATISFACTION AS THERE WAS NO REFERENCE TO SEIZED DOCUMENTS AS HAS BEEN LATER REFERRED BY AO IN HIS COMMENTS AND THEN SECONDLY THAT THESE DOCUMENTS CANNOT BE SAID TO BELONG TO THE APPELLANT. HENCE BEFORE PROCEEDING FURTHER IT WILL BE APPROPRIATE TO TAKE NOTE OF THE DEFINITION OF ASSESSING OFFICER AS CONTAINED IN SECTION 2(7 A) OF THE ACT. THE SECTION 2(7 A) READS AS UNDER: (7A) ASSESSING OFFICER MEANS THE ASSISTANT COMMISSIONER OR DEPUTY COMMISSIONER OR ASSISTANT DIRECTOR OR DEPUTY DIRECTOR OR THE INCOME-TAX OFFIC ER 209 209 WHO IS VESTED WITH THE RELEVANT JURISDICTION BY VIR TUE OF DIRECTIONS OR ORDERS ISSUED UNDER SUB-SECTION (1 ) OR SUB-SECTION (2) OF SECTION 120 OR ANY OTHER PROVISION OF THIS ACT, AND THE ADDITIONAL COMMISSIONER OR ADDITIONAL DIRECTOR OR SMT. KAVITA PANJWANI - APPEAL NO. IT- 238/09-10 TO 244/09-10 (SEVEN APPEALS) AND LOOSE PAPERS SEIZED IN COURSE OF SEARCH AND SEIZURE OPERATION IN THE LIGHT OF SATISFACTION RECORDED IN THE COURSE OF SEARCH AND SEIZURE OPERATION AND POST SEARCH ENQUIRIES CONDUCTED AND THEN ARRIVES AT SATISFACTION TO THE EFFECT IN WHICH NOTICES UNDER SECTION 153A AND 153C ARE TO BE ISSUED. 4.1.3 IN THE CASE OF PRESENT APPELLANT ALSO THE ASSISTANT DIRECTOR IN APPRAISAL REPORT HAS CLEARLY ARRIVED AT SATISFACTION THAT IN THE CASE OF PRESENT APPELLANT A NOTICE UNDER SECTION 153C WAS TO BE ISSUED. THUS, IN THE FACTS OF THE PRESENT CASE, THE AO, BEING ASSISTANT DIRECTOR HAS RECORDED HIS SATISFACTION THAT NOTICE UNDER 210 210 SECTION 153C IS TO BE ISSUED TO THE ASSESSEE APPELLANT. THEREAFTER THE AO HAS CARRIED OUT ASSESSMENT PROCEEDINGS AS ALSO FURTHER RECORDED HIS SATISFACTION ON 12.9.2008 TAKING NOTE OF THE FACT OF SEARCH AND SEIZURE OPERATION CARRIED OUT IN THE GROUP. FURTHER, ACTION UNDER SECTION 153A WAS CARRIED OUT IN OTHER CASES. JUST BECAUSE THERE IS NO SPECIFIC MENTION OF ANY SEIZED DOCUMENT OR ASSET IN SUCH SATISFACTION RECORDED BY THE AO WOULD NOT BE FATAL SO AS TO INVALIDATE THE ASSESSMENT PROCEEDINGS SO INITIATED ONCE THE BASIC JURISDICTION GOT VESTED WITH HIM BY SEIZURE OF DOCUMENTS BELONGING TO THE ASSESSEE AS MENTIONED BY THE PRESENT SUCCESSOR AO IN HIS COMMENTS. 4.1.4 BEFORE PROCEEDING FURTHER TO EXAMINE THE APPELLANT'S CONTENTION WHETHER SUCH DOCUMENTS CAN BE SAID TO BELONGING TO THE ASSESSEE APPELLANT OR NOT, IT WOULD BE APPROPRIATE TO TAKE NOTE OF THE RECENT DECISION OF HON'BLE CHHATTISGARH HIGH COURT IN THE CASE OF TRILOK 211 211 SINGH DHILLON VS. CIT 17 ITJ 446 (CG) WHEREIN DISTINGUISHING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI VS. ACIT 289 ITR 341 (SC). THE HON'BLE HIGH COURT HAS APPROVED THE FINDINGS RECORDED BY HON'BLE IT AT IN THIS BEHALF AS PER PARA 42 OF THE ORDER. THUS, IN THIS DECISION IT HAS BEEN LAID DOWN THAT IF THE ASSESSING OFFICER HAVING JURISDICTION OVER SEARCH CASES WHERE NOTICE UNDER SECTION 153A ARE ISSUED, ISSUES NOT ICES UNDER SECTION 153C, WHICH ARE IN A WAY CONSEQUENTIAL NOTICES, THERE IS NO SPECIFIC REQUIREMENT OF RECORDING SATISFACTION AND THE SAME CAN BE INFERRED FROM THE FACTS AND CIRCUMSTANCES OF THE CASE. THUS THIS DECISION STRONGLY SUPPORTS THE CASE OF AO IN THE MATTER OF VALIDITY OF PROCEEDINGS UNDER SECTION 153C. 4.1.5 NOW COMING TO THE CONTENTION THAT THESE DOCUMENTS CANNOT BE SAID TO BE BELONGING TO THE ASSESSEE/APPELLANT IN VIEW OF THE DICTIONARY MEANING, 'BELONG' LAYS DOWN THE TEST 212 212 OF OWNERSHIP AND POSSESSION. BEFORE ANALYZING THIS CONTENTION IT WOULD BE APPROPRIATE TO NOTE THAT WHERE THE BOOKS OF ACCOUNT OR DOCUMENTS OR EVEN ASSETS FOUND AND SEIZED WERE DISCLOSED OR UNDISCLOSED, ACCOUNTED FOR OR UNACCOUNTED FOR IS NOT MATERIAL SO FAR AS INITIATION OF PROCEEDINGS UNDER SECTION 153C IS CONCERNED, AS HAS BEEN HELD BY HON'BLE CHHATISGARH HIGH COURT IN THE DECISION (SUPRA). AS IS CLEARLY DISCERNIBLE FROM THE PROVISION OF THE SECTION 153C ALSO. THERE IS NO REQUIREMENT OF THE LAW THAT THE SEIZED ASSETS 01' DOCUMENTS MUST LEAD TO OR RELATE TO UNACCOUNTED OR UNDISCLOSED INCOME AS THE SAME COULD BE ASCERTAINED ONLY AFTER PROPER ENQUIRY IN COURSE OF ASSESSMENT PROCEEDINGS, AND HENCE JURISDICTION WOULD BE VESTED ON MERELY SEIZURE OF THE ASSETS AND/OR DOCUMENTS ETC. BELONGING TO THE ASSESSEE. THE REGISTERED DEED RELATING TO LAND PURCHASE TRANSACTION CLEARLY BELONG TO THE ASSESSEE AS ASSESSEE WAS ONE OF THE PARTY TO THE TRANSACTION 213 213 AND CANNOT BE SAID TO BE JUST MERELY RELATED AS THE EXPRESSION HAS BEEN DEFINED TO MEAN IN THE OXFORD DICTIONARY AS OFFERED BY THE APPELLANT'S AR HIMSELF BEING 'CASUALLY CONNECTED'. THE DOCUMENTS CONFER THE TITLE OF OWNERSHIP OVER THE DEMISED PROPERTY REFERRED IN SUCH DOCUMENTS AND MERELY BECAUSE THE PROPERTY WAS PURCHASED IN CO-OWNERSHIP THE CONTENTION CANNOT BE ACCEPTED THAT THE RIGHTFUL POSSESSION OR PER-SON HAVING CONTROL OVER THE DOCUMENTS WAS ONE OF THE OTHER CO-OWNERS AND NOT THE APPELLANT HERSELF. 4.1.6 THUS, THERE IS NO MERIT IN THE APPELLANT'S CONTENTION IN THIS BEHALF. IT MAY BE FURTHER OBSERVED THAT RECORDING SATISFACTION IS BROADLY A MATTER OF PROCEDURE AND NO SPECIFIC FORMAT OR LANGUAGE IN THIS BEHALF HAS BEEN PROVIDED IN THE STATUTE AND IF THE SATISFACTION SO RECORDED IS FOUND TO CONTAIN SOME AVOIDABLE REFERENCES ABOUT MAKING FURTHER ENQUIRIES ETC. THAT WILL NOT OUST THE JURISDICTION OF AO TO ISSUE NOTICE UNDER SECTION 153C, IF IT IS VALIDLY ATTRACTED ON ACCOUNT 214 214 OF SEIZURE OF DOCUMENTS AS DISCUSSED ABOVE. AS A RESULT BOTH GROUNDS NO. 1 AND 2 ARE REJECTED SMT. CHANDNI PANJWANI: 75. IN THE CASE OF CHANDNI PANJWANI, THE ADDITION W AS MADE BY THE ASSESSING OFFICER IN RESPECT OF INCOME SHOWN UNDER THE HEAD SHORT TERM AND LONG TERM CAPITAL GAI N IN THE ASSESSMENT YEAR 2002-03, WHICH WAS CONFIRMED BY THE LD.CIT(A), ON THE SAME REASONING AS GIVEN IN THE CA SE OF KAVITA PANJWANI, ADDITIONS WERE CONFIRMED BY THE LD .CIT(A) AND THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 76. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D FOUND FROM RECORD THAT THE ASSESSEE HAS CHALLENGED THE VA LIDITY OF ASSESSMENT FRAMED U/S 153C IN THE CASE OF KAVITA PANJWANI, SUNEETA PANJWANI. FROM THE RECORD, WE FOU ND THAT INCRIMINATING MATERIAL WAS FOUND DURING COURSE OF SEARCH, THEREFORE, FRAMING OF ASSESSMENT U/S 153C W AS JUSTIFIED. ACCORDINGLY, WE CONFIRM THE DETAILED FIN DINGS OF THE CIT(A) WITH REGARD TO VALIDITY OF ASSESSMENT FRAMED U/S 153C. 215 215 77. WITH REGARD TO LONG TERM AND SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE IN THEIR RETURNS OF INCOME , WHICH WERE DECLINED BY THE ASSESSING OFFICER AND TREATED AS INCOME FROM OTHER SOURCES AND THE ACTION OF ASSESSI NG OFFICER WAS CONFIRMED BY THE LD.CIT(A), WE FOUND TH AT SHARES OF BOTH THE COMPANIES WIDELY TRADED AND THESE COMPA NIES WERE ALSO NOT KNOWN TO THE COMPANIES OF SOUND FOUND ATION MEANS AND BUSINESS ANTECEDENTS. IT WAS ALSO FOUND T HAT THERE WAS MULTIPLE RISE OF PRICE IN SUCH SHARES WIT HOUT ANY REASON MUCH LESS A COGENT REASON. FROM THE DATE OF PURCHASE AND TILL DATE OF SALE, SHARES WERE HELD FO R ABOUT A YEAR. THERE WAS MULTIPLE RISE IN ITS PRICES. IT WAS ALSO FOUND DURING SEARCH THAT VARIOUS MEMBERS OF THE FAMILY DO NOT REGULARLY DEAL IN SHARES OR HAD ANY EXPERIENCE OF I NVESTING IN SHARE MARKET. AFTER RECORDING DETAILED FINDING A S DISCUSSED HEREINABOVE, THE ASSESSING OFFICER AND CI T(A) REACHED TO THE CONCLUSION THAT CAPITAL GAINS BOOKED BY THE ASSESSEES WERE BOGUS AND THE TRANSACTIONS WERE NOT GENUINE. THE FINDING SO RECORDED BY THE LOWER AUTHO RITIES ARE AS PER MATERIAL ON RECORD AND DO NOT WARRANT AN Y INTERFERENCE. ACCORDINGLY, WE CONFIRM THE ACTION OF THE 216 216 CIT(A) FOR TREATING THE LONG TERM AND SHORT TERM CA PITAL GAINS AS BOGUS AND NON-GENUINE. HIRALAL PANJWANI: 78. IN THE CASE OF HIRALAL PANJWANI, THE ASSESSMENT FRAMED Y/S 153A WAS ALSO CHALLENGED BY THE ASSESSEE. WE DO NOT FIND ANY INFIRMITY IN THE ORDER FRAMED U/S 153A IN SO FAR AS INCRIMINATING DOCUMENTS WERE FOUND DURING COURSE OF SEARCH AND BY DISCUSSING IN DETAIL, THE CIT(A) HAS CONFIRMED THE ACTION U/S 153A. DETAILED FINDING RECORDED BY T HE LD.CIT(A) CONSIDERING THE LEGAL PROVISIONS HAS NOT BEEN CONTROVERTED, ACCORDINGLY, WE CONFIRM THE ACTION OF CIT(A) ON THE PLEA OF LEGALITY OF ASSUMING JURISDICTION U/S 1 53A. 79. THE ASSESSING OFFICER HAS ALSO MADE ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN IN RESPECT OF SHA RES TRANSACTIONS, WHICH WERE FOUND TO BE BOGUS. BY THE IMPUGNED ORDER, IN ALL THE YEARS UNDER CONSIDERATIO N, THE LD. CIT(A) HAS CONFIRMED THE ACTION OF ASSESSING OFFICE R AFTER RECORDING DETAILED REASONING AT PARA 8.2 FOR THE AS SESSMENT YEAR 2003-04 WHICH READS AS UNDER :- 8. FACTS ON RECORD, FINDING GIVEN BY THE AO IN ASSESSMENT ORDER, APPELLANT'S DETAILED AND 217 217 ELABORATE WRITTEN SUBMISSIONS ARE VERY CAREFULLY TAKEN INTO CONSIDERATION. 8.1 GROUND NO. 1 IS GENERAL IN NATURE HENCE NO SEPARATE ADJUDICATION IS NECESSARY. IN ANY CASE, IT IS UNDISPUTED THAT A SEARCH ACTION U/S. 132 WAS CARRIED OUT IN THE CASE OF THE APPELLANT AND THEREFORE THE AO WAS WELL WITHIN HIS POWER TO FRAME THE ASSESSMENT IN ACCORDANCE WITH PROVISIONS OF SECTION 153A OF THE ACT. 8.2 IN GROUND NO. 2, THE APPELLANT HAS CHALLENGED AO'S ACTION IN NOT ACCEPTING LONG TERM CAPITAL GAIN (LTCG) ON SALE OF SHARES IN ONE COMPANY NAMELY MANTRA ONLINE LTD. WITH THE RESULTANT DENIAL OF CONCESSIONAL RATE OF TAX @ 20% AS PROVIDED UNDER SECTION 112 OF THE ACT. THE FACTS OF THE CASE, CONTENTIONS OF THE APPELLANT AND FINDINGS OF THE AO ON THE ISSUE .OF LONG-TERM CAPITAL GAIN ARE SIMILAR TO THAT OF APPEAL NO. IT- 238/09-10 IN CASE OF SMT. KAVITA PANJWANI, 218 218 BELONGING TO THE SAME SEARCH GROUP. IN THE CASE OF SMT. KAVITA PANJWANI, IN THE SIMILAR SET OF FACTS, THE ACTION OF THE AO IN REGARDING THE SHARE TRANSACTIONS SHOWN BY THE APPELLANT AS NON- GENUINE WAS FOUND JUSTIFIED. FOR THE READY REFERENCE, THE FINDINGS GIVEN BY THE UNDERSIGNED IN THE CASE OF SMT. KAVITA PANJWANI ARE REPRODUCED AS UNDER: '4.2.1 THE APPELLANT ILL WRITTEN SUBMISSION FILED HAS INCLUDED A SET OF VARIOUS DOCUMENTS WHICH ACCORDING TO APPELLANT FULLY SUPPORT THE CLAIM OF LONG TERM CAPITAL GAIN. THE APPELLANT IN WRITTEN SUBMISSION HAS ALSO TRIED TO MEET THE VARIOUS DISCREPANCIES AND FINDINGS NOTED BY AO ILL THIS BEHALF AS HAS BEEN EXTRACTED ABOVE, AND HAS ALSO RELIED ON SEVERAL TRIBUNAL DECISIONS TO SUPPORT THE CLAIM OF LONG TERM CAPITAL GAIN. ON CAREFULLY CONSIDERING THE COPY OF DOCUMENTS FILED AND THE DETAILED FINDING RECORDED BY AO AND CONSIDERING THE 219 219 APPELLANT'S FACTUAL AND LEGAL CONDITIONS IN THIS BEHALF THE FOLLOWING FACTS CLEARLY EMERGE: (1) SHARES IN BOTH THESE COMPANIES ARE NOT WIDELY TRADED AND NOT OTHERWISE THESE COMPANIES ARE NOT KNOWN TO BE COMPANIES OF SOUND FINANCIAL AND BUSINESS ANTECEDENTS AND SHARES IN BOTH THESE COMPANIES APPARENTLY FALL IN THE CATEGORY OF SPECULATIVE SHARES KNOWN AS PENNY STOCKS. (2) THERE WAS MULTIFOLD RISE IN THE PRICE OF SUCH SHARES FROM THE DATE OF PURCHASE BY THE APPELLANT AND DATE OF SALE AFTER A PERIOD OF ONE YEAR AGAINST OVERALL INCREASE IN SHARE PRICES OF MOST WIDELY TRADED SHARES, WHICH DEFIES NORMAL COMMON SENSE. (3) THE ASSESSEE/APPELLANT AND OTHER MEMBERS OF SEARCH GROUP DO NOT REGULARLY DEAL ILL SHARES OR HAD THE EXPERIENCE OR EXPERTISE OF INVESTING IN SHARE MARKET. NO OTHER WORTHWHILE 220 220 INVESTMENT IN EQUITY SHARES IN ANY OTHER COMPANY YIELDING DIVIDEND INCOME HAS BEEN DISCLOSED IN ANY OF THE CASE OF SEARCH GROUP. (4) VARIOUS ASSESSES OF THE SEARCH GROUP AS NOTED BY AO HAVE SIMULTANEOUSLY TRADED IN THE SAME SCRIP AT THE SAME TIME RESULTING IN SIMILAR CAPITAL GAIN IN VARIOUS CASES. THE APPELLANT HAS MISERABLY FAILED TO REBUT THAT VARIOUS CONTENTIONS AND FINDINGS RECORDED BY A 0 ABOUT SERIOUS DISCREPANCIES, CAUSING SERIOUS DOUBTS ON THE GENUINENESS 4 THESE TRANSACTIONS. 4.2.2 THE APPELLANT'S EMPHASIS AND RELIANCE ON THE SET OF DOCUMENTS TO SUPPORT SUCH TRANSACTION IS ENTIRELY MISPLACED AS COOKED UP SUPPORTING DOCUMENTS HAVE BEEN PREPARED WITH THE HELP OF CONNIVING BROKERS WHO HAVE ACTIVE INTEREST IN EXECUTION OF SUCH DUBIOUS TRANSACTION AND CONSEQUENTLY THEY CANNOT BE GIVEN ANY IMPORTANCE . RELIANCE CAN BE PLACED 221 221 TO, THE THREE AUTHORITATIVE DECISIONS OF HON'BLE SUPREME COURT IN THIS BEHALF LAYING DOWN PREPOSITION THAT WITHOUT APPRECIATING THE GENUINENESS OF TRANSACTION SOLE RELIANCE CANNOT BE PLACED ON DOCUMENTS AND THE SAME ARE TO BE EXAMINED IN THE LIGHT OF SURROUNDING CIRCUMSTANCES AND HUMAN PROBABILITIES: (I) CIT VS. DURGA PRASAD MORE 82 ITR 540 (SC) (II) SUMATI DAYAL. VS. CIT 214 I TR 801 (SC) (III) CIT VS. P. MOLIANKALA (2007) 291 ITR 278 (SC) 4.2.3 IT HAS TO BE APPRECIATED THAT THE VENUE AUTHORITIES ARE FUNCTIONING IN A DEMOCRATIC SET-UP AND ARE NOT DISCHARGING THEIR DUTIES ILL A POLICE STATE WHEREBY THEY CAN FORCE THE ASSESSEE/APPELLANT AND CO-CONSPIRATORS TO ADMIT THE TRUTH OF THE TRANSACTIONS THOUGH THE SAME APPEARS TO BE OBVIOUS AND APPARENT AND IT IS USUAL ON THE PART OF THE APPELLANT/ASSESSEE AND THERE ARE CO- CONSPIRATORS/ABETTOR AND THEN FOR THE AR TO 222 222 CLAIM FIND CONTEND THAT THERE IS NO DIRECT EVIDENCE THAT SUCH TRANSACTIONS WERE NOT GENUINE AND THE TRANSACTIONS WERE SUPPORTED BY VALID DOCUMENTS AND WERE CARRIED OUT THROUGH BANKING CHANNEL AND HENCE SHOULD BE ACCEPTED AS GENUINE KNOWING FULLY WELL THAT SUCH TRANSACTIONS WERE NOT GENUINE. THE AFORESAID FACTS HAVE TO BE AGAIN EXAMINED AND ANALYZED WITH APPRECIATION OF THE CONSTRAINTS AND LIMITATIONS WITHIN WHICH THE A 0 HAS TO FUNCTION AND OPERATE. FIRSTLY, THESE TRANSACTIONS WHICH ARE NORMALLY WELL DOCUMENTED AND ARE SECRETLY NEGOTIATED ARE SCRUTINIZED BY THE AO AFTER A SUFFICIENT GAP OF TIME I. E. NEARLY TWO YEARS FROM THE END OF THE RELEVANT F. Y. AND THEN WHEN THE APPELLANT/ASSESSEE AND THE OTHER PERSONS ABETTING THE ASSESSEE IN SUCH MANIPULATION ARE CONFRONTED BY THE .1'10, THERE IS USUAL TENDENCY TO EVADE THE REPLIES OR IN THE LEAST TO DELAY THE REPLIES. THE .1'10 AGAIN HAS TO FINALIZE THE PROCEEDINGS WITHIN THE STATUTORY LIMITATION 223 223 INVOLVED AND THEN HE CANNOT DEVOTE THE ENTIRE TIME AVAILABLE AT HIS DISPOSAL TO A PARTICULAR CASE. HERE, IT WILL BE PERTINENT TO MAKE REFERENCE TO THE OBSERVATION OF THE HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAL V. CIT 214 ITR 801 (SC) MADE IN THE CONTEXT OF SALE AND PURCHASE TRANSACTIONS OF PRIZE WINNING LOTTERY TICKETS WHICH ARE VERY MUCH APPLICABLE TO THE FACTS OF THE CASE. THE SAME ARE AS EXTRACTED HERE UNDER: 1. 'THE MATTER HAS TO BE CONSIDERED IN THE LIGHT OF HUMAN PROBABILITIES. THE CHAIRMAN OF THE SETTLEMENT COMMISSION HAS EMPHASIZED THAT THE APPELLANT DID POSSESS THE WINNING TICKET WHICH WAS SURRENDERED TO THE RACE CLUB AND IN RETURN A CROSSED CHEQUE WAS OBTAINED. IT IS, IN OUR VIEW, A NEUTRAL CIRCUMSTANCE, BECAUSE IF THE APPELLANT HAD PURCHASED THE WINNING TICKET AFTER THE EVENT SHE WOULD BE HAVING THE WINNING TICKET WITH HER WHICH SHE COULD SURRENDER TO THE RACE CLUB. THE 224 224 OBSERVATION BY THE CHAIRMAN OF THE SETTLEMENT COMMISSION THAT 'FRAUDULENT SALE OF WINNING TICKET IS NOT AN USUAL PRACTICE BUT IS VERY MUCH OF AN UNUSUAL PRACTICE' IGNORES THE PREVALENT MALPRACTICE THAT WAS NOTICED BY THE DISTRICT TAXES ENQUIRY COMMITTEE AND THE RECOMMENDATIONS MADE BY THE SAID COMMITTEE WHICH LED TO THE AMENDMENT OF THE ACT BY THE FINANCE ACT OF 1972 WHEREBY THE EXEMPTION FROM TAX THAT WAS AVAILABLE IN RESPECT OF WINNINGS FROM LOTTERIES, CROSSWORD PUZZLES, RACES, ETC. WAS WITHDRAWN. SIMILARLY THE OBSERVATION BY THE CHAIRMAN THAT IF IT IS ALLEGED THAT THESE TICKETS WERE OBTAINED THROUGH FRAUDULENT MEANS, IT IS UPON THE ALLEGER TO PROVE THAT IT IS SO, IGNORES THE REALITY. THE TRANSACTION ABOUT PURCHASE OF WINNING TICKET TAKES PLACE IN SECRET AND DIRECT EVIDENCE ABOUT SUCH PURCHASE WOULD BE RARELY AVAILABLE. AN INFERENCE ABOUT SUCH A PURCHASE HAS TO BE DRAWN ON THE BASIS OF 225 225 THE CIRCUMSTANCES AVAILABLE ON THE RECORD. HAVING REGARD TO THE CONDUCT OF THE APPELLANT AS DISCLOSED IN HER SWORN STATEMENT AS WELL AS OTHER MATERIAL ON THE RECORD AN INFERENCE COULD REASONABLY BE DRAWN THAT THE WINNING TICKETS WERE PURCHASED BY THE APPELLANT AFTER THE EVENT. WE ARE, THEREFORE, UNABLE TO AGREE WITH THE VIEW OF THE CHAIRMAN IN HIS DISSENTING OPINION. IN OUR OPINION, THE MAJORITY OPINION AFTER CONSIDERING SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES HAS RIGHTLY CONCLUDED THAT THE APPELLANT'S CLAIM ABOUT THE AMOUNT BEING HER WINNING FROM RACES IS NOT GENUINE. IT CANNOT BE SAID THAT THE EXPLANATION OFFERED BY THE APPELLANT IN RESPECT OF THE SAID AMOUNTS HAS BEEN REJECTED UNREASONABLY AND THAT THE FINDING THAT THE SAID AMOUNTS ARE INCOME OF THE APPELLANT FROM OTHER SOURCES IS NOT BASED ON EVIDENCE. 226 226 SO ALSO, REFERENCE CAN HE MADE TO THE OBSERVATION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. DURGA PRASAD MORE 82 ITR 540 (SC) 0/1 PAGE 545 TO THE EFFECT THAT THE CONTENTS IN THE DOCUMENTS CANNOT BE GIVEN UNDUE IMPORTANCE AND THE REALITY AND SUBSTANCE OF THE TRANSACTION IS TO BE CONSIDERED. 4.2.4 FURTHER STILL, WHEN THE APPELLANT HAD NO EXPERIENCE IN THE LINE OF INVESTMENT IN STOCK MARKET, AND YET SHE WAS ABLE TO EARN A FORTUNE BY MULTIPLYING HER INVESTMENT BY OVER 100 TIMES ILL (F SHORT SPAN OF LESS THAN 2 YEARS THEN A HEAVY ONUS IS CAST ON HER TO EXPLAIN AND SUBSTANTIATE THAT ALL SUCH TRANSACTIONS WERE GENUINE TRANSACTIONS WHICH THE APPELLANT HAS MISERABLE FAILED IN THE PRESENT CASE AS DISCUSSED ABOVE IN DETAIL AND HERE IN AFTER ALSO. 4.2.5 FURTHER JUDICIAL NOTICE IN TIRE AFORESAID FACTS IS REQUIRED TO BE TAKEN OF PREVAILING 227 227 MALPRACTICE IN THE FIELD OF MANIPULATION OF STOCK PRICES OF SUCH DUBIOUS COMPANIES BY THE OPERATOR AND MANIPULATORS WITH OR WITHOUT THE ACTIVE HELP AND ASSISTANCE OF MANAGEMENT TO SPREAD RUMOURS OR HIGHLY EXAGGERATED GROWTH/PROFIT PROSPECTS OF SUCH COMPANIES LEADING TO SUCH PHENOMENAL PRICE RISE. REFERENCE CAN BE MADE TO THE FOLLOWING DECISIONS: (A) CWT V. ROHTAS INDUSTRIES LTD., 67 ITR 283 (SC) , WHEREIN IT WAS HELD THAT: IN THE ABSENCE OF ANY DIRECT EVIDENCE, A JUDICIAL OR QUASI-JUDICIAL TRIBUNAL CAN BASE ITS CONCLUSION' ON TIRE BASIS OF WHAT ARE KNOWN AS NOTORIOUS FACTS HEARING IN MIND THE PRINCIPLES OF SECTION 144 OF TIRE EVIDENCE ACT.' (B) ATTAR SINGH GURMUKH SINGH V. ITO 191 ITR 667 (SC) WHEREIN, WHILE INTERPRETING THE PROVISIONS OF SECTION 40A (3), IT WAS HELD THAT - IN INTERPRETING A TAXING STATUTE, TIRE COURT 228 228 CANNOT BE OBVIOUS OF THE PROLIFERATION OF BLACK MONEY WHICH IS UNDER CIRCULATION IN OUR COUNTRY. 4.2.6 AO'S FINDING THAT IT IS A CASE OF DUBIOUS TAX PLANNING, IT HAS TO BE NECESSARILY UPHELD FOR TIRE SIMPLE REASONS THAT: I) THE APPELLANT HAD NO GENUINE OR BONA FIDE ECONOMIC OR FINANCIAL BACKGROUND WHILE ENTERING INTO SUCH DUBIOUS TRANSACTIONS; AND II) TIRE ONLY OBJECT OF THE APPELLANT IN SO ENTERING INTO SUCH DUBIOUS TRANSACTIONS WAS EVADING/AVOIDING INCIDENTS OF TAX BY BRINGING UNACCOUNTED CASH NEEDED FOR INVESTMENT IN THE FORM OF EXEMPT INCOME. IN THE RESULT, THE AO'S ACTION IS FULLY SUPPORTED BY THE APEX COURT'S JUDGMENT IN THE CASE OF MCDOWELL V. CTO (1985) 1 54 ITR 148 (S.C.) AND THE APPELLANT'S CASE CAN NOT DERIVED ANY BENEFIT FROM THE SERIOUS OF JUDGMENTS LIKE CWT V. ARVIND NAROTTAMDAS (1988) 173 ITR 479 (SC) AND UNION OF INDIA V. PLAYWORLD ELECTRONICS P. LTD. (1990) 229 229 184 ITR 308 (SC) IN VIEW OF DETAILED DISCUSSION BELOW:- 4.2.7 THE RELIANCE PLACED BY APPELLANT ON OTHER TRIBUNAL DECISIONS TO SUPPORT SUCH DUBIOUS TRANSACTIONS IS AGAIN OF NO AVAIL AS IT IS SETTLED PROPOSITION OF LAW THAT EACH AND EVERY DECISION IS RENDERED ON THE PREMISES OF ENTIRE SET OFF ACTS AND CIRCUMSTANCES OF THE CASE AND ANY SLIGHT VARIATION IN ANYONE' OF THE MATERIAL FACTS OR PARTICULARS MAY RENDER THE DECISION INAPPLICABLE TO OTHER CASES. REFERENCE CAN BE MADE TO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SUN ENGINEERING PVT. LTD. VS. C1T 198 ITR. FURTHER SINCE THAT APPELLANT HAS REFERRED TO DECISIONS OF VARIOUS BENCHES OF THE TRIBUNAL ILL HIS SUPPORT IT WOULD BE WORTHWHILE TO REFER THAT IN THE CASE CITED BELOW TRIBUNAL OIL APPRECIATION OF FACTS AND SURROUNDING CIRCUMSTANCES OF THE CASE UPHELD THE AD'S ACTION IN NOT ACCEPTING THE CLAIM OF ASSESSEE IN LONG TERM CAPITAL GAIN OIL SALE OF SHARES: 230 230 I) ITO VS. SHANTILAL MUNNALAL (2009) 31 DTR (BANG)(TRIB) 388 II) ACIT VS. RAMESH AND R. PATEL (2005) 94 TTJ (AHD) 361 THUS, IN VIEW OF DETAILED DISCUSSION ABOVE, TILE AO'S ACTION IS FOUND TO BE FULLY JUSTIFIED IN THIS BEHALF AND GROUND NO.3 IS ALSO REJECTED BEING DEVOID OF ANY MERIT AND SUBSTANCE. ' IN VIEW OF THE DETAILED FINDINGS, RECORDED IN THE ABOVE REFERRED CASE IN APPEAL NO. IT- 238/09-10, THE GROUND NO. 2 OF THE APPELLANT IS HEREBY REJECTED. 80. THE ADDITION MADE BY THE ASSESSING OFFICER WAS CONFIRMED BY THE LD.CIT(A) AFTER RECORDING DETAILED REASONING NARRATED HEREINABOVE, REJECTING THE ASSESSEES CON TENTION OF LONG TERM CAPITAL GAINS IN RESPECT OF SHARES OF MAN TRA ONLINE LIMITED. AS THE TRANSACTIONS WERE FOUND TO B E BOGUS, FOR THE DETAILED REASONS GIVEN BY BOTH THE LOWER AU THORITIES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR 231 231 CONFIRMING ACTION OF ASSESSING OFFICER IN NOT ACCEP TING LONG TERM CAPITAL GAINS ON SALE OF SHARES OF M/S. MANTRA ONLINE LIMITED. 81. IN THE RESULT, THE APPEALS OF SMT. CHANDNI PANJ WANI AND SHRI HIRALAL PANJWANI IN RESPECT OF ALL THE YEA RS UNDER CONSIDERATION ARE HEREBY DISMISSED. M/S. SUNDARAM ENTERPRISES : 82. IT IS A PARTNERSHIP FIRM, WHICH RELATES TO THE PANJWANI GROUP IN WHICH SEARCH OPERATION U/S 132 WA S CONDUCTED ON 14.12.2007. DURING THE COURSE OF ASSES SMENT, THE ASSESSING OFFICER MADE ADDITION OF RS. 28,32,35 2/- ON ACCOUNT OF UNACCOUNTED PURCHASES FROM M/S. MAA SHAR DA ENTERPRISES. RELEVANT OBSERVATION OF ASSESSING OFFI CER WAS AS UNDER :- II) DURING THE COURSE OF POST SEARCH INQUIRIES, IT WAS OBSERVED THAT THE ASSESSEE HAS PURCHASED CERTAIN GOODS FROM M/S. MAA SHARDA ENTERPRISES, BUT BILLS ISSUED TO M/S. SUNDERAM ENTERPRISES DO NOT MATCH FROM THE BILLS PRODUCED BY SHRI RAJESH RAMSIHGHANI, PROPRIETOR OF M/S. MAA SHARDA ENTERPRISES IN HIS STATEMENT, VIDE QUESTION NO. 12, 232 232 SHRI RAJESH RAMSIGHANI HAS CATEGORICALLY STATED THAT THE ALLEGED DUPLICATE BILLS WERE ISSUED, FOR WHICH NO RECORDS HAS BEEN MAINTAINED. HE ALSO SUBMITTED THAT APART FROM THE BILLS, PRODUCE BEFORE THE ADIT NO OTHER SALE BILLS ARE MAINTAINED FOR THA T FINANCIAL YEAR. DURING THE ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED TO EXPLAIN THE ABOVE DISCREPANCY. ASSESSEE VIDE ITS SUBMISSION DATED 14.10.09, SUBMITTED AS UNDER : 'THE FILE CONTAINING THE ORIGINAL BILLS ISSUED BY THE ABOVE NAMED CONCERN THAT GOT MISPLACED AT THE END OF THE ASSESSEE AND THEREFORE HE PROCURED DUPLICATE PURCHASE BILLS FROM THE ABOVE NAMED CONCERN. SINCE, THE ABOVE NAMED CONCERN HAD PRODUCED CARBON COPIES OF ORIGINAL BILLS BEFORE THE INVESTIGATION WING AND THEREFORE THERE RESULTED VARIATION IN THE FORMAT OF SUCH CARBON COPIES IN COMPARISON TO THE HAND WRITTEN DUPLICATE COPIES OF THE PURCHASE BILLS FOUND IN THE PREMISES OF THE ASSESSEE. IT SHALL BE APPRECIATED BY YOUR GOOD SELF 233 233 THAT (A) THERE WAS NO DIFFERENCE IN THE BILL NUMBER , DATE DESCRIPTION OF GOODS AND AMOUNT IN THE PURCHASE BILLS FOUND FROM THE PREMISES OF THE ASSESSEE AND THAT PRODUCED BY M/S MAA SHARDA ENTERPRISES (B) SINCE M/S. MAA SHARDA ENTERPRISES DID NOT PRESERVE SECOND COPY OF THE DUPLICATE BILLS ISSUED TO THEM AND THEREFORE THE SAME WERE NOT PRODUCED BY THEM BEFORE THE WING DURING POST SEARCH ENQUIRY (C) ALL THE PAYMENTS AGAINST PURCHASES HAVE BEEN MADE BY THE ASSESSEE TO M/S MAA SHARDA ENTERPRISES THROUGH ACCOUNT PAYEE CHEQUES ONLY (D) THE ACCOUNT OF THE FIRM M/S. MAA SHARDA ENTERPRISES IN THE BOOKS OF THE ASSESSEE AND VICE VERSA ARE GETTING FULLY TALLIED, ENTRY BY ENTRY, WITH EACH OTHER ( E) SINCE THE ASSESSMENT PROCEEDINGS OF M/S. MAA SHARDA ENTERPRISES ARE ALSO UNDERGOING UNDER S. 153C AND THEREFORE ABOVE STATED FACTS MAY BE VERIFIED BY CALLING THEIR BOOKS OF ACCOUNT AND RELEVANT RECORDS.' THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE 234 234 BECAUSE OF THE REASON THAT AT ANY TIME DURING THE SEARCH PROCEEDINGS, AS WELL AS, DURING THE ASSESSMENT PROCEEDINGS, NEITHER ASSESSEE NOR SHRI RAJESH RAMSIGHANI COULD PRODUCE THE BILL BOOKS FROM WHICH THE ALLEGED DUPLICATE BILLS WERE ISSUED. FURTHER IT IS SEEN FROM THE BOOKS SEIZED AS BS-5, TWO BILLS HAVING SAME NUMBER 195 WERE ISSUED FOR THE AMOUNT BUT THE CARBON COPY OF BILLS PRODUCED BY SHRI RAJESH RAMSIGHANI, PROPRIETOR OF M/S. MAA SHARDA ENTERPRISES, REVEALS THAT ONLY SINGLE BILL O F THAT AMOUNT WAS ISSUED. IT FURTHER STRENGTHENS THE BELIEF THAT' M/S. SUNDERAM ENTERPRISES IS RESORTED TO PRACTICE OF UNACCOUNTED PURCHASE OF DIFFERENCE PRODUCTS THE AVAILABILITY OF TWO BILLS OF SAME AMOUNT BUT NONE OF THEM MATCHES WITH THE CARBON COPY OF THE BILLS PRODUCED BY SHRI RAJESH RAMSIGHANI CLEARLY PROOFS THE MODUS OPERANDI ADOPTED BY M/S. SUNDERAM ENTERPRISES FOR RESORTING UNACCOUNTED PURCHASES. ABOVE DISCUSSION PROVES BEYOND REASONABLE DOUBT THAT THE ASSESSEE IS ENGAGED IN UNACCOUNTED 235 235 PURCHASES FROM M/S MAA SHARDA ENTERPRISES OF EQUAL AMOUNT OF THE REGULAR BILLS AND HENCE UNACCOUNTED PURCHASES FROM M/S MAA SHARDA ENTERPRISES OF RS. 28,32,352/-( EQUAL AMOUNT OF PURCHASES AS PER REGULAR BILLS) IS TREATED AS UNACCOUNTED INVESTMENT IN THE HANDS OF THE ASSESSEE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 83. BY THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITION AFTER HAVING THE FOLLOWING OBSERVATIONS :- LASTLY COMING TO THE MAJOR ADDITION OF RS.28,32,35 2/- , AGAIN PRIMA FACIE THE AOS ACTION HAS FOUND TO BE TOTALLY UNJUSTIFIED IN SO MUCH AS IF HE WAS OF THE VIEW THAT THE APPELLANT HAD INDULGED IN UNACCOUNTED TRANSACTIONS TO SUCH A HUGE EXTENT, THERE WAS NO REASON FOR AO NOT TO HAVE MADE SEPARATE ADDITION FO R CORRESPONDING UNRECORDED SALES IN THE HANDS OF THE SELLER NAMELY M/S. MAA SHARDA ENTERPRISES, WHICH HAS NOT BEEN DONE. THE SAME AO HAS ON ONE HAND RECORDED FINDINGS OF UNACCOUNTED PURCHASES BEING MADE BY THE APPELLANT FROM M/S. MAA SHARDA 236 236 ENTERPRISES, BUT HE HAS RECORDED NO PARALLEL/SIMILA R FINDING IN THE CASE OF SHRI RAJESH KUMAR RAMSINGHANI, PROPRIETOR OF M/S. MAA SHARDA ENTERPRISES, WHOSE ASSESSMENT PROCEEDING WERE ALSO SIMULTANEOUSLY TAKEN UP AND DECIDED BY THE SAME ASSESSING OFFICER A S PER THE COPY OF THE ASSESSMENT ORDER FILED BY THE APPELLANT. FURTHER, STILL EVEN I F AO WAS OF THE VIEW THAT TO THIS EXTENT THE APPELLANT H AS MADE UNACCOUNTED PURCHASES THE ENTIRE UNACCOUNTED PURCHASES COULD NOT HAVE BEEN ADDED AND AO WAS REQUIRED TO CONSIDER THE PEAK INVESTMENT REQUIRED FOR MAKING SUCH UNACCOUNTED PURCHASES CONSIDERING THE AVERAGE STOCK HELD BY THE APPELLANT AND THE OTHER FACTS AND CIRCUMSTANCES WHICH HAS ALSO NOT BEEN DON E BY ASSESSING OFFICER. THESE OBSERVATIONS PRIMA FACIE ESTABLISH THAT ADDITION HAS BEEN MADE BY THE AO WITHOUT PROPERLY APPRECIATING THE FACTS AND THE LEGAL POSITION AS WAS APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 237 237 4.4.1 NOW REVERTING BACK TO THE BASIC FACTS RELIED UPON BY THE AO FOR MAKING SUCH HUGE ADDITION, THE AO'S CASE IS SIMPLY BASED ON ONE SINGLE FACT THAT T HE DUPLICATE BILLS ISSUED TO APPELLANT DO NOT MATCH TH E CARBON COPY OF BILLS PRODUCED BY M/S. MAA SHARDA ENTERPRISES. HE HAS TAKEN NOTE OF THE STATEMENT OF SHRI RAJESH KUMAR RAMSINGHANI THAT FOR THESE DUPLICATE BILLS .ISSUED, NO RECORD WAS MAINTAINED B UT HE HAS WITHOUT ANY VALID REASON REJECTED THE EXPLANATION OFFERED BY THE APPELLANT THAT SINCE THE TILE CONTAINING ORIGINAL BILLS ISSUED BY M/S. MAA SHARDA ENTERPRISES GOT MISPLACED THE APPELLANT PROCURED DUPLICATE BILLS. HE SHOULD HAVE APPRECIATED THAT IF AT A LATER STAGE DUPLICATE BILLS WERE PREPARED BASED ON THE CARBON COPIES OF BILLS AVAILABLE WITH THE SELLER, T HERE WAS BOUND TO BE SOME DIFFERENCE IN HAND-WRITING IF THERE WERE HAND WRITTEN AND IF THEY WERE COMPUTER GENERATED, IN THE TYPEFACE OR THE FONT SIZE. ONCE A LL THE FACTS OF THESE DUPLICATE COPIES OF THE BILLS I. E. BILL NUMBER, DATE, DESCRIPTION OF GOODS AND AMOUNT OF TH E 238 238 BILLS PERFECTLY MATCH WITH THE CARBON COPY OF BILLS PRESERVED BY M/S. MAA SHARDA ENTERPRISES, THERE WAS ABSOLUTELY NO CASE FOR DRAWING SUCH ADVERSE INFERENCE UNLESS THERE WERE OTHER CORROBORATIVE EVIDENCES TO LEAD TO THE CONCLUSION THAT APPELLANT HAS MADE UNACCOUNTED PURCHASES OF THE SIMILAR AMOUNT FROM M/S. MAA SHARDA ENTERPRISES. LASTLY, AT THE CO ST OF REPETITION IT HAS TO BE STATED THAT IF THE AO WA S OF THE VIEW THAT THE APPELLANT HAS INDULGED IN UNACCOUNTED PURCHASES FROM M/S. MAA SHARDA ENTERPRISES THERE WAS ABSOLUTELY NO REASON FOR NOT MAKING CORRESPONDING SIMILAR ADDITION THE CASE OF M/S. MAA SHARDA ENTERPRISES, WHICH HAS NOT BEEN DONE. COPY OF ACCOUNT APPEARING IN THE BOOKS OF BOT H PARTIES ARE IN AGREEMENT, ALL THE PAYMENTS HAVE BEE N MADE BY THE CHEQUE AND THEREFORE, THERE IS NO MERIT AND SUBSTANCE IN THE ADDITION MADE BY THE ASSESSING OFFICER AND THE SAME IS HEREBY DIRECTED TO BE DELET ED. 84. AGAINST THE ABOVE DELETION, THE REVENUE IS IN A PPEAL BEFORE US. 239 239 85. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GO NE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOU ND THAT ADDITION WAS MADE BY THE ASSESSING OFFICER IN RESPE CT OF PURCHASE BILL FOUND AT THE PREMISES OF THE ASSESSEE AND WHICH WAS ISSUED BY M/S. MAA SHARDA ENTERPRISES AMOUNTING TO RS. 28,32,352/-. AS THE ORIGINAL BILLS WERE MISSING, THE ASSESSEE HAS GOT ISSUED DUPLICATE BILL S, WHICH WERE HAND PREPARED. AS THE ASSESSING OFFICER FOUND DIFFERENCE IN THE ORIGINAL BILLS AND COPIES SO ISSU ED, HE MADE ADDITION IN RESPECT OF ENTIRE PURCHASES. AFTER RECO RDING FINDING TO THE EFFECT THAT THE ASSESSEE HAS PROPERL Y ACCOUNTED FOR ALL THESE BILLS IN THE BOOKS OF ACCOU NT, WHICH ALSO TALLIES WITH THE ACCOUNT MAINTAINED BY MAA SHA RDA ENTERPRISES IN ITS BOOKS AND THAT OF THE BILLS NUMB ERS AND AMOUNTS WERE TALLYING EACH PAYMENT WAS MADE THROUGH ACCOUNT PAYEE CHEQUE, THE LD. CIT(A) DELETED THE AD DITION. THE DETAILED FINDING RECORDED BY THE LD.CIT(A) HAVE BEEN REPRODUCED HEREIN, WHICH ARE AS PER MATERIAL ON REC ORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) FOR DELETING THE ADDITION MADE ON A CCOUNT OF PURCHASE BILLS ISSUED BY M/S. MAA SHARDA ENTERPRISE S. 240 240 86. IN THE RESULT, ALL THE APPEALS FILED BY THE ASS ESSEE ARE DISMISSED, WHEREAS APPEALS FILED BY THE REVENUE ARE ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2013. SD/- SD/- (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH FEBRUARY , 2013. CPU* 5122528